Labour Clauses (Public Contracts) Convention, 1949 (No. 94) - Finland (Ratification: 1951)

Direct Request (CEACR) - adopted 2022, published 111st ILC session (2023)

The Committee notes the observations of the Central Organization of Finnish Trade Unions (SAK), the Confederation of Unions for Professional and Managerial Staff in Finland (AKAVA) and the Finnish Confederation of Professionals (STTK), communicated together with the Government’s report. The workers’ organizations refer to their joint statement of 2006 and 2016, in which they underlined the lack of clarity in relation to whether municipalities could be considered central authorities within the meaning of Article 1(1) of the Convention. Moreover, they observe that there are cases of underpayment in municipal contracts, particularly in those for the provision of construction and cleaning services. To avoid this discrimination, especially of immigrant workers in sub-contracting, it should be also obligatory for the municipalities to inform tenderers about labour clauses and include collective agreements as one part to the public contracts. The Committee requests the Government to provide its comments in this respect.

Articles 1(1) and 2(1) and (3) of the Convention. Scope of application. Contractual provisions. Determination of clauses after consultations with social partners. The Government indicates that, following the adoption of the EU Directives on public procurement in April 2014, Finnish public procurement legislation has undergone an extensive reform. Overall, the reform aims, among other things, to simplify and improve procurement procedures and practices. In this context, the Committee notes with interest the amendments introduced to public procurement legislation beginning in 2015. These include amendments to the Act on Public Procurement and Concession Contracts (1397/2016), the Act on the Contractor’s Obligations and Liability when Work is Contracted Out (1233/2006), reformed in 2015, and the new Act on Posting Workers (447/2016), amended in 2020 (Amendment 743/2020) to improve supervision and to ensure that companies posting workers comply with Finland's terms and conditions of employment. With respect to the inclusion of clauses ensuring workers’ rights in public contracts, the Government indicates that section 98 of the Act on Public Procurement and Concession Contracts (1397/2016) contains provisions on special terms and conditions of a procurement agreement. The Committee notes that under section 98, subsections 2 and 3 of the Act on Public Procurement and Concession Contracts (1397/2016), a condition shall be included in a procurement agreement concluded between a central government authority and the successful tenderer in competitive tendering requiring compliance with at least the minimum terms and conditions of employment governing work of the same nature under the law and collective agreements of Finland in work that forms part of a procurement agreement to be implemented in Finland. The Committee further notes that this provision is based on Articles 1 and 2 of the Convention. With regard to the observations made by SAK, AKAVA, and STTK, the Government acknowledges in its response, that the provisions of section 98 subsection 2 of the Act (1397/2016) are not applied to municipalities unless the procurement agreement concerns public work. The Government indicates, however, that under subsection 3 of section 98, the provisions of subsection 2 concerning the duty of a central Government authority also apply when another contracting entity, for example, a municipality, concludes a procurement agreement concerning a public work. The Committee notes that, under section 98, subsection 1, the contracting entity may impose special terms and conditions on the implementation of a procurement agreement, provided that the said terms and conditions are linked to the procurement in the manner referred to in section 94. The Committee further notes that the reform of procuration legislation was prepared in a working group, where employers and workers were represented by the social partner’s organizations. The Committee requests the Government to communicate copies of model documents used in procurement procedures that contain labour clauses within the meaning of the Convention, to enable it to assess the manner in which the Convention is applied in law and in practice.

Article 2(4). Ensuring that tenderers are aware of labour clauses. The Committee has previously requested the Government to provide information on the manner in which it is ensured that tenderers have prior knowledge of the terms of the labour clauses. The Committee notes the indication of the Government that sections 13 and 14 of the Act on Confirmation of the General Applicability of Collective Agreements (56/2001) provide for the publication of decisions of the Confirmation Committee and Collective Agreements that have been confirmed as generally applicable. The Committee notes, however, that the Government does not provide any information on measures taken by the competent authorities to advertise the specifications of “labour clauses” to ensure that persons tendering for contracts are aware of the terms of these clauses. The Committee draws the Government’s attention to paragraph 125 of its 2008 General Survey on labour clauses in public contracts, which clarifies with respect to Article 2(4) of the Convention that “the purpose of this provision is certainly to ensure that the requirements of the labour clauses are respected, as well as to ensure that the resulting costs are properly factored into the bid”. The Committee requests the Government to provide detailed information on the manner in which it is ensured that labour clauses are brought to the attention of bidders and tenderers at the pre-selection stage, as required by the Convention.

Article 4. Posting of notices. Notification of all persons concerned. The Committee notes the information provided by the Government in reply to its previous request concerning the application of this Article of the Convention.

Article 4(b)(ii) and 5. System of inspection. Penalties. The Committee notes that section 2 of the Act on Public Procurement and Concession Contracts (1397/2016) repeals the Act on Public Contracts (348/2007), and sets out provisions in its section 154 on sanctions imposed by the Market Court. With regard to the inspection system, the Committee notes the information and statistics provided by the Government on the number of inspections, the number and type of infringements detected, and the sanctions imposed during the reporting period. In particular, the Committee notes that public administration actors, including municipalities, have been subject to monitoring projects related to the supervision of a contractor’s obligations and liability. For instance, it notes that in 2019-2020, a monitoring project targeting joint municipal authorities was implemented. During the project, 107 inspections were carried out from 1 January 2019 to 31 March 2020. A total of 187 guidelines were issued during the inspections. Guidelines for obtaining pre-contractual clarifications were issued in 74 cases, for the validity of clarifications in 23 cases, and the retention of clarifications in 25 cases. The negligence fee process was initiated in four cases, all due to non-compliance with the obligation to check. The Committee requests the Government to continue to provide up-to-date statistics on the number of inspections conducted, the number and type of infractions detected, and the sanctions applied.

Part V of the report form. Application of the Convention in practice. The Committee notes the information provided by the Government in reply to its previous request concerning the application of the Convention in practice.

Direct Request (CEACR) - adopted 2016, published 106th ILC session (2017)

The Committee notes the observations of the Central Organization of Finnish Trade Unions (SAK), the Confederation of Unions for Professional and Managerial Staff in Finland (AKAVA) and the Finnish Confederation of Professionals (STTK), communicated with the Government’s report. The workers’ organizations refer to their joint statement of 2006 in which they underlined the lack of clarity in relation to whether municipalities could be considered central authorities within the meaning of Article 1(1) of the Convention, and noted that in Finland the Convention is not deemed to apply to contracts concluded by municipalities. The Committee requests the Government to provide its comments in this respect.

Articles 1(1) and 2(1) and (3) of the Convention. Scope of application. Contractual provisions. Determination of clauses after consultations with social partners. The Government provides an overview of legislative amendments made in 2012 and 2015 to the Act on the Contractor’s Obligations and Liability when Work is Contracted Out. The Act, which applies when contractors use temporary agency workers or labour based on a subcontracting agreement, require the contractor to check the subcontractors’ and user enterprises’ adherence to their obligations under legislation. As part of this check, contractors are required to obtain information from the subcontractor including on pension insurance, tax payments, the collective agreement or other principal terms of employment, and accident insurance. The 2012 amendments added specific regulations related to the construction industry, including the adoption of higher fines for negligence in construction. The additional reforms in 2015 aim to standardize practices across all industries and facilitate contractors’ adherence to their obligations. The contractor’s checking obligation is now expanded to occupational health care, as well as to pension security for workers mediated from abroad. Fines for negligence have also been increased in the event where the contractor neglects the obligation to perform the checks specified. The Government further indicates that, as part of the current comprehensive reform of the Finnish procurement legislation, a legislative proposal was introduced in Parliament on 22 June 2016 which aims to expand the compliance obligation for terms of employment so that the obligation includes all contract types covered by the Convention. The proposal states that “A public works contract awarded by a central government authority to a private employer shall be accompanied by a clause according to which the work relating to the public works contract shall comply with the minimum terms of employment which must be observed in similar work pursuant to Finnish law and collective agreements”. The Committee requests the Government to indicate whether the reforms include clauses ensuring workers’ rights in relation to wages (including allowances), hours of work and other conditions of labour. The Committee further requests the Government to provide information on the manner in which organizations of employers and workers have been consulted and participated in the determination of the terms and clauses to be included. It further requests the Government to provide information on any developments in amending the public procurement legislation and to provide a copy of the text as soon as it is adopted.

Article 2(4). Ensuring tenderers are aware of labour clauses. In reply to the Committee’s previous comments, the Government indicates that the Ministry of Justice maintains a free and open database which contains the texts of generally applicable collective agreements as well as agreements between the central labour market organizations. In addition, compliance with these agreements as part of the collective agreements is stipulated in every collective agreement. The Government further indicates that notice forms for public procurement procedures provide contracting authorities the possibility of referring to the applicable legislation and collective bargaining agreements in different parts of the notification forms. Recalling its previous comment that informing tenderers of labour clauses seems to be left to the discretion of the contracting authorities, the Committee once again requests the Government to provide information on the manner in which it is ensured that tenderers have prior knowledge of the terms of the labour clauses.

Article 4. Posting of notices. Notification of all persons concerned. The Committee previously requested the Government to indicate the measures, taken or envisaged, to ensure that workers engaged in the execution of public contracts are informed of the working conditions applicable to them through the posting of notices at the workplace, as prescribed by Article 4(a)(iii) of the Convention. The Government provides information on the legal measures regarding notification and posting of collective agreements at workplaces, in accordance with the laws on employment contracts (No. 55/2001) and on collective agreements (No. 436/1946). The Committee recalls that the abovementioned obligations also apply to laws, regulations and other instruments that give effect to the Convention. Consequently, the Committee reiterates its requests that the Government indicate how it is ensured that information concerning the applicable laws and regulations are brought to the notice of all persons concerned and how it is ensured that persons responsible for complying with this obligation are defined. It further requests the Government to provide examples of the notification forms on public procurements.

Article 5. Penalties. The Government indicates that the Act on Public Contracts (No. 348/2007), being part of the Finnish procurement legislation currently under review, sets out the legal remedies available for violations of the Act. If an application is made to the Market Court, as the special court tasked with handling procurement cases, the Court is authorized to: (1) cancel a contracting authority’s decision in part or in full; (2) forbid the contracting authority from applying an incorrect section in a document relating to the contract or otherwise pursuing an incorrect procedure; (3) require the contracting authority to rectify an incorrect procedure; or (4) order the contracting authority to pay compensation to a party who would have had a genuine chance of winning the contract if the procedure had been correct. The Committee requests the Government to provide information of the changes to the Act on Public Contracts as part of the legislative reforms.

Article 4(b)(ii). System of inspection and application of the Convention in practice. Further to a general overview of inspections carried out between 2011 and 2015, the Government states that the Occupational Safety and Health Administration’s Vera information system, introduced in 2016, is able to generate specific information on inspections on public administration. The Committee requests the Government to continue to provide information on inspections focused on public administration, indicating the number of inspections, the number and type of infringements detected, and sanctions imposed. Furthermore, it requests the Government to provide up-to-date information on the manner in which the Convention is applied in practice, including, for instance, statistics on the average number of public contracts granted annually and the approximate number of workers engaged in their execution, as well as information on any practical difficulties in the application of the Convention.

Direct Request (CEACR) - adopted 2011, published 101st ILC session (2012)

Articles 1(1) and 2 of the Convention. Inclusion of labour clauses in public contracts. The Committee notes the adoption of the Public Procurement Act (No. 348/07) and of the Contractor’s Liability Act No. 1233/2006. More concretely, the Committee notes that under section 49(2) of the Public Procurement Act, public works contracts concluded by a central public authority must include a clause specifying that tenderers must comply with the minimum terms of employment determined by national legislation and collective agreements applicable to similar work. The Committee notes the comments made by the Central Organization of Finnish Trade Unions (SAK), according to which the scope of this provision is limited to public works contracts and therefore fails to give full effect to the Convention. If the Government accepts this comment as accurate, the Committee would draw the Government’s attention to the fact that the Convention applies to public contracts concluded for the construction of public works, the manufacture of goods or the supply of services (Article 1(1)(c)). The Committee therefore requests the Government to indicate the measures, taken or envisaged, to ensure the inclusion of labour clauses in all public contracts falling within the scope of the Convention.

Article 2(4). Keeping tenderers informed. The Committee notes that under section 50(1) of the Public Procurement Act, contracting authorities may state, in the contract notice, the bodies from which tenderers may obtain the appropriate information on their obligations regarding, inter alia, the working conditions or terms of employment applicable, and must request that tenderers indicate, in their tender, that they have taken account of these obligations. Noting that, pursuant to this provision, informing tenderers of the labour clauses seems to be left to the discretion of the contracting authority, the Committee requests the Government to provide additional information on how it is ensured in law and in practice that the persons tendering for contracts actually have advanced knowledge of the terms of the labour clauses, as required under Article 2(4) of the Convention.

Article 4. Posting of notices. The Committee notes that neither the Public Procurement Act nor the Contractor’s Liability Act seem to provide for the posting of notices in conspicuous places at the workplace with a view to informing the workers engaged in the execution of public contracts of their conditions of work, as required under this Article of the Convention. In this regard, the Committee notes the comments made by SAK according to which no regulation exists that would provide employees with the right to be informed whether a labour clause has been included in a public contract and, consequently, employees do not have the opportunity to access information on the detailed content of a possible labour clause if the state employer or private business does not wish to provide this information. The Committee requests the Government to indicate the measures, taken or envisaged, to ensure that the workers engaged in the execution of public contracts are informed of the working conditions applicable to them through the posting of notices at the workplace, as prescribed by Article 4(a)(iii) of the Convention.

Article 5. Penalties. The Committee notes the Government’s indication that under section 9 of the Contractor’s Liability Act, a contractor failing to comply with his duties as an employer is liable to a fine, also called “negligence fee”, ranging from €1,600 to €16,000. The Committee requests the Government to provide further information on all measures and sanctions applicable in case of infringement of the relevant legislation, and to indicate in particular whether the withholding of contracts and/or the withholding of payments under the contract may be imposed, as provided for under this Article of the Convention.

Article 4(b)(ii) and Part V of the report form. System of inspection. Application in practice. In its report, the Government indicates that supervision of the application of the Contractor’s Liability Act is entrusted to the Regional State Administrative Agency and that, in 2010, this Agency planned 900 inspection visits, mainly in public administrations. The Committee notes, however, that in its comments, SAK questions the effectiveness of the monitoring mechanism in place. The Committee requests the Government to provide additional information on the measures taken to ensure the effective implementation of the national legislation giving effect to the Convention. It would also be grateful if the Government would communicate, together with its next report, up to date information on the manner in which the Convention is applied in practice, including, for example, extracts from reports of the inspection services, statistics on the average number of public contracts granted annually and the approximate number of workers engaged in their execution, as well as any other particulars which would enable the Committee to have a clear understanding of the manner in which the Convention is applied in practice.

Direct Request (CEACR) - adopted 2006, published 96th ILC session (2007)

The Committee notes the information provided by the Government in its report, particularly that the Parliament was deliberating on a draft Act on public acquisitions, and procurement by public authorities and other units operating in the sectors of water and energy supply services, traffic and postal services (Government proposal 50/2006 of April 2006). The draft legislation, which seeks to implement EU Directives 2004/17/EC and 2004/18/EC on public contracting, includes also a provision (section 49) that any employment contracts arising from a public contract must comply with at least the minimum terms of employment contracts prescribed by national laws and regulations for work of the same nature. Recalling that the Convention aims at ensuring for workers engaged in the execution of public contracts wage and working conditions which are not less favourable than whichever is the most favourable of the three alternatives provided for in the Convention, i.e. collective negotiation, arbitration or legislation, the Committee asks the Government to clarify whether the draft Act on public procurement gives effect to the requirements of Article 2, paragraph 1, of the Convention according to which wage and other working conditions must not be less favourable than the most favourable of the three alternatives.

The Committee would be interested in receiving an advance copy of the draft text, and reminds the Government that it may avail itself, if it so wishes, of the advisory services of the Office in finalizing the proposed Act. It also asks the Government to keep it informed of any progress made in this regard.

As regards the opposing views, expressed by the Central Organization of Finnish Trade Unions (SAK) and the Commission for Local Authority Employers (KT) as to whether municipalities may be considered central authorities within the meaning of Article 1, paragraph 1, of the Convention, the Committee recalls that, according to the letter and spirit of the Convention, it is left to the discretion of ratifying States to determine how and to what extent the Convention is to be applicable to contracts awarded by provincial, municipal or other local authorities.

Part V of the report form. The Committee would be grateful if the Government would supply up to date information on the practical application of the Convention, including, for instance, the number of public contracts awarded, copies of public contracts containing labour clauses, relevant extracts from the reports of labour inspection services showing the number and nature of reported violations, etc.

Direct Request (CEACR) - adopted 2001, published 90th ILC session (2002)

The Committee notes the Government’s report. It also notes the comments made by the Central Organization of Finnish Trade Unions (SAK) suggesting that steps should be taken to ensure that procurement and other contracts entered into by public authorities other than central authorities are in compliance with the requirements of Article 2 of the Convention, and those made by the Commission for Local Authority Employers (KT) indicating that the present legal framework is adequate and that local authorities should not be permitted to intervene directly in the employment relationships of employees of a private entrepreneur.

The Committee notes from the Government’s report that draft amendments to the Employment Contracts Act (320/1970) have been prepared taking into account the provisions of relevant ILO Conventions. The Committee requests the Government to keep it informed of any developments in this regard, especially in so far as the implementation of this Convention is concerned.

The Committee also notes the adoption of the Posted Workers Act (1146/1999) which incorporates Council Directive 96/71/EC into Finnish Law. Moreover, it notes that the Ministry of Labour has launched a study to examine the relationship between the EC Directive on the Posting of Workers and the ILO Convention concerning labour clauses in public contracts, while the Finnish Tripartite ILO Committee has decided to draw up an information bulletin in order to make the provisions of the Convention better known. The Committee asks the Government to continue to supply information on the practical application of the Convention, including copies of public contracts containing labour clauses, extracts from official reports, as well as information on the number and nature of reported violations.