Contractors and subcontractors: obligations and tools to optimise the success of your project
When a subcontracting contract is signed between a principal and a subcontractor, this confers responsibilities on both parties. Compliance with these obligations is essential and legally indispensable.
So to ensure the success of your commercial and contractual relationship, you need to be aware of the various regulations that govern it, as well as the different tools you can use.
What are the obligations of both parties? What are the penalties and what tools can help you manage and monitor their services? Find the answers in this article.
Principal and subcontractor: definitions
The principal, also known as the " project owner" in the construction industry, is a natural or legal person for whom a project is to be carried out.
The principal is the person commissioning the project. He follows the project through all its stages, from creation to completion, through to monitoring and checking the results. He is the pilot and owner of the project. It is therefore the client who defines the various elements of the project and the commercial contract:
- the objectives to be achieved
- the resources (material, financial, human, etc.),
- monitoring methods, etc.
To complete the project, the client calls on the services of a subcontractor.
A subcontractor, also known as a " prime contractor ", is a natural or legal person responsible for carrying out work or a service on behalf of another natural or legal person (subcontracting company), namely the principal.
👉 Example: You are the principal and are in charge of a worksite. You call on one or more subcontractors or service providers (plumber, electrician, painter, etc.) to help you complete your project.
What are the obligations of a principal?
Duty of care
With the aim of combating illegal and concealed work , Law no. 2017-399 of 27 March 2017 on the duty of vigilance of parent companies and companies supplying subcontractors has been amended.This duty of vigilance is based on the principle that the employer is responsible for verifying the identity of its contractors.
This due diligence obligation is based on verifying the identity and status of the subcontractor(s). The client must therefore check that its prime contractor :
- is properly registered
- is legally registered with Urssaf,
- has a valid status.
💡 The duty of care is compulsory for any contract worth at least €5,000 excluding tax.
But that's not all.
According to Articles L. 243-15 and L.8222-1 of the French Social Security Code, as the principal, you must ask your subcontractor/prime contractor to provide you with the following compulsory documents:
- a certificate of vigilance issued by Urssaf less than 6 months old,
- a KBIS extract or an identification card from the trade register,
or
a document containing certain information,
or
the receipt for the declaration filed with a CFE, -
the list of foreign employees subject to a work permit.
💡 According to Decree no. 2015-364 of 30 March 2015 on the fight against fraud in the posting of workers and the the fight against illegal employment, if the subcontractor is foreign, you, as the principal, must request additional specific documents from the subcontractor:
- the intra-Community VAT number for the EU,
- an A1 certificate for EU employees subject to EU national legislation,
- a certificate issued by Urssaf for employees outside the EU.
Duty of care
The duty of care requires you, as the principal, to check the authenticity of the documents submitted by the subcontractor(s). This is an essential step, as it involves checking the accuracy of the information contained in the certificate submitted, as well as its validity (less than 6 months).
To do this, you need to go to the Urssaf website and enter the security code that appears on the attestation.
💡 As the principal, you must check that the subcontractor(s) comply with their obligations when the contract is concluded and every 6 months until the end of the performance of the contract.
What are a subcontractor's obligations?
Obligation to achieve results
Once the contract has been signed, the subcontractor or prime contractor is obliged to carry out the work for which he has been hired. They therefore have an obligation of result towards the principal.
👉 Withdrawal is impossible, except in cases where the subcontractor can provide proof of a cause or fault of external origin.
Obligation of transparency and traceability
The subcontractor must comply with certain conditions of transparency towards the principal:
- draw up a contract specifying the obligations of each party, in accordance with Article 28 of the European Regulation,
- make available to the principal all the documents and information needed to demonstrate the validity of your status and enable audits to be carried out,
- keep a register listing the various principals or customers for whom you carry out work.
What penalties are incurred, and how can they be avoided?
As a principal, if you fail to meet your obligations of vigilance and diligence, and decide to continue a business relationship knowing that your subcontractor's status is not valid, you incur civil and criminal liability.
The principal may also be held jointly and severally liable for several payments owed by the subcontractor:
- remuneration
- compensation,
- penalties and surcharges.
The principal may also be required to repay sums corresponding to the amount of public aidreceived by the subcontractor.
👉 Please note: The offence of concealed work is punishable by 3 years' imprisonment and payment of a fine of €45,000.
💡 Our advice for avoiding penalties : use online work management software such as Praxedo, an all-in-one platform that helps you manage and monitor your work and subcontracting contracts. Thanks to its control functions, and its accessibility via app and tablet, you can monitor all your subcontractors' operations in real time and optimise your operations!
Using software to manage your subcontracting contracts automates time-consuming tasks, so you can concentrate on your core business.
👉 F or example, the software sends you reminders every 6 months to notify you that your subcontractors' documents have been checked. It is also capable of identifying risky information such as missed deadlines to help you comply with your duty of care as effectively as possible.
Article translated from French