Chain liability
(supply-chain liability) makes companies liable for wage, tax or social-security failures of their subcontractors and labour suppliers. The Netherlands applies it broadly to wages and payroll taxes; Germany to posted-worker minimum wages; EU rules extend it in construction — the client cannot simply outsource the risk away.
How the liability reaches you — and the defences
Mechanisms differ, but the pattern is: a supplier in your chain underpays wages or remits no payroll tax; the worker or authority claims from the next solvent link — often the end client. Dutch ketenaansprakelijkheid lets workers sue any link for wage shortfalls; tax authorities claim unremitted payroll taxes up the chain.
Defences are procedural: contracting certified suppliers (NEN 4400-1 in the Netherlands), paying part of invoices into guarantee (G-)accounts for tax, auditing pay compliance, and contractual step-in rights. Documented diligence converts strict liability into manageable risk.
FAQ
Which countries should we worry about most?
The Netherlands (wages and taxes, broad scope), Germany (posted-worker wages, construction levies), Belgium and France for posted-worker chains, and construction sectors EU-wide under the enforcement directive. If you use labour-intensive subcontracting in these markets, chain liability is part of your cost of poor supplier choice.
Does using an EOR or payrolling provider create chain risk?
It concentrates it in one professional link — usually reducing it, provided the provider is licensed, certified and audited. The residual duty is diligence: registers, certificates and payment evidence. A cheap unlicensed intermediary does the opposite, adding a weak link you answer for.