Identification of persons working on construction sites in Lithuania

Seeking to reduce the illegal construction work and the non-accounting of income, as well as the undeclared revenues under the business licenses, the Parliament of Lithuania (hereinafter – the Seimas) adopted a set of amendments to the Construction and related laws.

Getting ready for the identification of persons working on the construction site

Providing with additional obligations for builders (developers), contractors and natural persons performing construction works by themselves. In addition, the Seimas set-up a new instrument − the Transparent Worker Identification Code (hereinafter – the Transparent Worker ID Code) − which enables the competent authorities to verify the status of a worker, a self-employed person, or a person seconded to Lithuania. In other words, it will allow to determine whether the person is working legally on the construction site.

The above-mentioned amendments to the law came into force on 1 April 2022. However, we still have got good news for those who have not been able to fully adapt to the new regulation yet. A moratorium on fines has been agreed by a joint agreement between the controlling authorities, with a transitional period of 2 months until 31 May 2022. Within this period no sanctions to be imposed for the breaches. So, now it is a perfect time for checking whether you have not missed anything. It is really important to make sure if you got prepared properly because a non-compliance with requirements can lead to the substantial fines and other negative consequences.

Mandatory aspects to be taken into account

According to the existing Law on Construction of the Republic of Lithuania, only persons having a Transparent Worker ID Code or, in case the code cannot be issued for them, having the documents substantiating the data encrypted in the Transparent Worker ID Code (e.g. worker status, name, surname, insurer's code or insurer's legal entity code, insurer‘s (employer‘s) title, type of carried out (declared) economic activity, if a person is self-employed, and/or others) can be present at the construction site. In addition, on the construction site might also be persons who have registered time and arrival reason in accordance with the procedure established by the builder/developer or his/her single authorised contractor, and who are in possession of an identification mean established by the builder/developer or his/her single authorised contractor. 

The same law stipulates that a Transparent Worker ID Code must be held by all persons carrying out the construction work on the construction site. If there is no a possibility for generating the code, the documents supporting the data encrypted in the code have to be under possession of all persons on the construction site:

• persons working under employment contracts in the territory of the Republic of Lithuania or outside the territory of the Republic of Lithuania but under the employment contracts concluded with insurers (employers) registered in the Republic of Lithuania
• employees of a temporary employment company
• directors of small partnerships who are not members of the small partnership in accordance with the Law on Small Partnerships of the Republic of Lithuania
• self-employed persons (excluding members of a household), whether under a business licence or a certificate of individual activity
• owners of sole proprietorships
• members of small partnerships
• full members of partnerships
• persons seconded to the Republic of Lithuania

It should be noted that the documents supporting the Transparent Worker ID Code or the data encrypted in the code are obligatory for those persons seconded to the Republic of Lithuania who are not insured under the Law on State Social Insurance of the Republic of Lithuania, meanwhile, the information on such persons is provided to the State Labour Inspectorate under the Ministry of Social Security and Labour of the Republic of Lithuania, as well as  to the Employment Service, in accordance with the procedure laid down in the Law of the Republic of Lithuania on the Legal Status of Foreigners. The compliance with the requirement for the secondees to have a Transparent Worker ID Code or the documents supporting the data encrypted in the Code must be ensured by the company in the Republic of Lithuania that admits the foreigner for temporary work and provides information to the above-mentioned authorities. 

The Transparent Worker ID Code, and in cases if the Code cannot be generated, the documents supporting the data encrypted in the code, must be submitted by the persons required to have them prior to entering the construction site. At the site, upon the request, the documents have to be provided to the builder (developer) or the contractor authorised by the builder (developer). In the course of the inspections carried out, the Code or the documents must be provided to the State Labour Inspectorate, the State Tax Inspectorate, the Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania, the police, and the State Territorial Planning and Construction Inspectorate under the Ministry of Environment. 

It is important to stress that the law imposes an obligation on the builder/developer or its authorised contractor to control whether all persons on the construction site have a Transparent Worker ID Code or the documents necessary for their identification. Furthermore, the mentioned persons − the builder/developer, their authorised contractor − are also obliged to determine the manner and means of the identification of persons not carrying out construction work on the construction site, as well as to fix the registration of such persons, including time and reason for their presence on the site. 

Also, the employer has an obligation towards its employees to ensure that natural persons have a valid Transparent Worker ID Code at the workplace and/or in the course of their work, or, in cases where the Code cannot be generated, to provide the persons and authorities with documents supporting the data encrypted in the Transparent Worker ID Code – when they are required to have such means of identification by law in order to ensure that data are available to the persons and authorities carrying out the control functions. 

In this context, it is recommended for builders (developers) and contractors to establish and confirm the procedures for the provision of identification means to persons who are not carrying out the construction work on the construction site, in order to determine whether persons on the construction site have valid Transparent Worker ID Code or the documents supporting the data encrypted in the Transparent Worker ID Code or means of identification established by them, also, the procedures for carrying out the control, and, in addition, to designate the persons in charge of the implementation of mentioned procedures. It is recommended that employers whose activities are related to construction should also adopt the procedures for the control of their employees in relation to the possession of a valid Transparent Worker Identification Code in the performance of their work and, as in the case above, designate the persons responsible. 

In cases of signing the construction contracts between builders/developers and contractors, as well as between contractors and subcontractors, it is recommended to include respective clauses on the allocation of obligations and liabilities for controlling the possession of the necessary means of identification by persons on the construction site, the validity of such means, the provision of such means to the control authorities etc.

Still without the ID code. What actions should be taken?

If you are still without a Transparent Worker ID Code, a procedure of an acquisition of the Code is simple and quite fast. Both employees and employers can obtain a Transparent Worker ID Code for themselves, their employees and/or employees seconded to Lithuania on the same day by logging into their “Sodra” (The State Social Insurance Fund Board) account, or within 3 working days at latest if the application for a Transparent Worker ID Code is submitted at “Sodra” offices.

However, there are a few aspects related to the acquisition of a Transparent Worker ID Code that are worth keeping in mind and paying attention to. For example, if a person works for several employers and/or performs several self-employed activities, he/she is given separate Transparent Worker ID Codes per employer and/or self-employed activity. The employer or the employer of the seconded foreigner can only receive the Transparent Worker ID Codes that are generated for his/her employees or for the foreigners seconded to him/her. The employer may download more than one Transparent Worker Identification Codes from the “Sodra” information system within one request. An employee seconded to Lithuania can obtain information on the Transparent Worker ID code assigned to him/her by submitting a request at “Sodra” office.
  

What sanctions to be expected?

Failure to comply with the new requirements could lead to penalties and other negative consequences.

Where justified, the administrative liability and fines may be imposed on natural persons (such as employees, self-employed persons, responsible persons of the employer, the host company, the builder/developer or the contractor), and on legal persons (e.g. the builder/developer or the authorised contractor).

Under the existing laws, the breaches of the identification requirements on the construction site may result in a fine:

• for employers or other responsible persons, as well as for the manager of a company in the Republic of Lithuania accepting foreigners for temporary work or his/her authorised person: from EUR 500 to EUR 1,100, and in case of a repeated violation: from EUR 1,100 to EUR 2,550;
• for workers on the construction site, other persons on the construction site: from EUR 50 to EUR 150, in case of a repeated violation: from EUR 150 to EUR 250;
• for contractors or builders (developers) who are natural persons, self-employed persons: from EUR 500 to EUR 1,100, in case of a repeated violation: from EUR 1,100 to EUR 2,550;
• for managers or other responsible persons of contractors or builders (legal persons): from EUR 1,100 to EUR 2,550, and from EUR 4,000 to EUR 6,000 in a case of repeated infringements;
• for builders (developers) or their authorised contractors (legal persons): from EUR 2,000 to EUR 5,000, and from EUR 5,000 to EUR 7,000 in a case of repeated breaches.