Chain subcontracting in construction: real risks and current criteria of the Labor Inspectorate (ITSS)
Chain subcontracting is a common practice and, in many cases, necessary for carrying out complex projects in the construction sector. However, it is also one of the main sources of penalties, work stoppages, and joint liability arising from actions by the Labor and Social Security Inspectorate (ITSS).
In this analysis we address the real risks of subcontracting, the applicable regulations and the current criteria of the ITSS, with a special focus on middle market companies that need to operate with legal certainty and control the costs of their subcontracted chain.
What is considered chain subcontracting in construction?
Chain subcontracting exists when a main contractor subcontracts part of the work and that subcontractor, in turn, subcontracts work to third parties, generating several levels of execution.
It is especially common in activities such as:
- Structures and shuttering
- Construction
- Installations (electricity, air conditioning, plumbing)
- Finishing touches
- Earthworks
- Industrial maintenance
Law 32/2006 regulating subcontracting in construction allows this structure, but requires strict compliance with:
- Maximum limits on subcontracting levels
- Registration and maintenance in the Register of Accredited Companies (RAC)
- Business Activity Coordination (BAC) Obligations
Which companies are at the spotlight of the Inspection?
The ITSS focuses its actions on:
- Main contractors with their own equipment mixed with third-party personnel
- Privileged subcontractors operating as “mini-contractors” managing multiple external teams
These actors occupy critical positions in the chain and usually have a decisive role in the actual direction of the work, one of the aspects most closely monitored by the Inspection.
Main risks of chain subcontracting for companies
1. Illegal transfer of workers (the most frequent risk)
The ITSS (Labor and Social Security Inspectorate) recognizes illegal transfer when:
- The subcontractor provides labor, but not material resources.
- External workers receive direct orders from the main contractor
- Subcontracted staff are integrated into internal shifts or teams.
Consequences:
- Workers can claim indefinite employment with the main contractor
- Salaries, seniority and associated compensation
- Fines of up to €225,000
2. Joint and several liability for wages and Social Security
The main contractor is jointly and severally liable for compliance with:
- Payment of salaries
- Social Security contributions
- Compensations
In a sector with tight margins, these costs can turn a profitable project into a loss-making one.
3. Sanctions and work stoppage for exceeding permitted levels of subcontracting
The ITSS can impose:
- Offencement records
- Immediate restructuring of the supply chain
- Work stoppage in cases of organizational mismanagement
4. Sanctions related to the Register of Accredited Companies (RAC)
The most common mistakes are:
- Expired registrations
- Unregistered companies working on construction sites
- Declared activities that do not match those actually carried out
5. Risks in Occupational Risk Prevention (ORP)
With several subcontractors on site, the following are common:
- Lack of communication regarding staff changes
- Absence of mandatory training certificates
- Incomplete, duplicated or contradictory BAC documentation
In the event of an accident, the ITSS analyzes the entire chain, and may assign responsibility to the main contractor for failures in coordination or supervision.
What does the ITSS check in case of an accident or in planned actions?
The inspection focuses on:
- Mandatory training (TPC/TPM, basic level, trades)
- Coordination protocols between companies
- Adapting the safety plan to the actual work system
- Interviews to verify who is in effective leadership
- Existence of main contractor managers directing external personnel
- Material means used
Penalties for violations of occupational health and safety regulations range from:
- 2.451 and 49.180 € (serious violations)
- 49.181 and 983.736 € (very serious violations)
The ITSS can simultaneously sanction the main contractor, subcontractors, and even the developer.
The charge on benefits: the most burdensome responsibility
Following an accident, the Labor Inspectorate may impose a charge of 30% to 50% on all Social Security benefits of the affected worker.
This charge is especially critical because:
- It is not insurable
- It’s personal and direct
- It does not allow for reduction or installment payments.
- It can be extended to long-term or lifetime benefits (IP, widowhood, orphanhood)
In subcontracting chains, it can be applied to the main contractor even if the injured party depends on a subcontractor with an insufficient structure.
Updated criteria for the Labor Inspection in 2025
The ITSS has intensified controls through:
1. Massive data cross-referencing
- REA
- Subcontracting Book
- Employment start and end dates
- Accidents reported via Delt@
Any inconsistency triggers alerts.
2. Verification of actual steering power
The contract matters less than the reality of the work.
3. Detection of companies without their own resources
Companies that only provide labor are considered prohibited intermediaries.
4. Excessively long subcontracting chain
The technical recommendation: do not exceed three levels, unless there is documented justification.
Recommendations for middle market companies
1. Internal audit of subcontracting
Contracts, payroll, contributions, material resources and organizational reality.
2. Clear coordination protocols
Define who can give instructions and document deliveries and supervisions.
3. Strict control of the Subcontracting Register
It must match the reality on site.
4. Require subcontractors to provide material resources and a real structure.
It prevents illegal transfers and strengthens the legal solvency of the chain.
5. Periodic review of the REA
Owned by and for all companies that access the work.
Conclusion: prevention is more cost-effective than correction
Chain subcontracting is essential for the sector, but it is at the heart of current actions by the Labor and Social Security Inspectorate (ITSS). For construction companies, anticipating issues, controlling the supply chain, and demonstrating effective coordination are key to avoiding penalties, work stoppages, and significant financial liabilities.
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