Published on 13th October 2025
For regulators, finding the right balance between protecting the public interest and preserving market freedom is a delicate task. The current debate on the role and value of subcontracting initiated in the European Parliament by the Member of the European Parliament (MEP) Johan Danielsson may seem as an illustration of this dilemma. The efforts to (further) regulate subcontracting are presented as a necessary protection of workers, limiting contractual freedoms for business as an unavoidable trade-off.
We challenge that notion.
As the EU is trying to learn the lessons from the Draghi report to remain competitive on the global stage, introducing further burdens and restrictions on business sends the wrong message. In our view, protecting workers can be done without the unnecessary measure of limiting subcontracting chains. The private employment services industry strongly believes in preserving contractual freedoms, while at the same time ensuring a fair level playing field and the appropriate protection of workers.
This call is shared by a range of European employers’ organisations. The European Employers Institute (EEI) – of which WEC-Europe is a founding member – has commissioned a legal study to examine the legal implications of MEP Danielsson’s proposals to introduce an EU general legal framework limiting subcontracting and ensuring joint and several liability through the subcontracting chain. The study warns of the legal complexity and EU fragmentation that could result from introducing restrictions on subcontracting and potentially destabilising a wide array of industries.
Agency Work is not Subcontracting
Subcontracting is a common and essential practice in modern economies, where businesses delegate contractual obligations to third parties. To be clear, it should not be confused with agency work, which is a triangular work relationship in which a worker is employed by a temporary work agency and assigned to a client company to work there under its supervision and control. Subcontracting typically does not imply concluding an employment contract but rather a commercial contract to deliver a product or a service. Both subcontracting and agency work enable companies, including many SME’s, to compete effectively. Yet, there is no common European definition of subcontracting, and practices vary.
Challenges can arise when the responsibilities of the contracting parties in a subcontracting chain are becoming unclear or blurred. Against this background, most EU countries have established national regulations on subcontracting, defining the rights and obligations of subcontracting parties. The best way to ensure workers rights are respected is not by creating even more regulation, but by taking measures for compliance and enforcement of the existing rules.
Another challenging area relates to cross-border provision of services and the mobility of workers. Here, too, there is no lack of EU regulation. EU policies and actions on providing services in the Single Market and the rules on the posting of workers provide a relevant and appropriate framework. However, action could be taken by the European Commission, the European Labour Authority and Member States to improve compliance and enforcement, including in the context of subcontracting constellations.
(Further) Regulation is not the Answer
From an HR services and agency work industry perspective, it is essential to differentiate clearly and fully between the established, well-regulated and compliant agency work industry represented by the World Employment Confederation-Europe and other intermediaries and rogue providers, who act like temporary work agencies, but do not comply with rules and are often at the centre of questionable practices of subcontracting and labour intermediation. The World Employment Confederation has established a Code of Conduct and works with its members across the world to ensure compliance and enforcement of its principles. Key elements of the Code of Conduct are the respect for the law, the respect of the ethical and professional conduct and the respect for the transparency of the terms and conditions of engagement.
As the Members of the European Parliament consider their amendments to MEP Danielsson’s report, the World Employment Confederation-Europe calls for deleting the paragraphs limiting the levels of subcontracting. MEPs should consider that working conditions in Europe are generally well regulated and appropriate, especially in the agency work sector, as illustrated by Eurofound studies. The EU Directive on temporary agency work offers a specific and relevant legal framework for labour intermediaries, including appropriate conditions and restrictions as well as a principle of equal treatment, combined with the option to regulate pay and working conditions through collective bargaining.
Besides the triangular work relationship, private employment agencies may also offer services based on subcontracting, and that role should be valued. As for any other company or intermediary providing subcontracted services, compliance and enforcement of existing rules are essential. Subcontracting and a diversity of contractual arrangements benefit the labour market and the EU Single Market as they respond to economic and labour market needs and contribute to more efficient allocation of labour, which is crucial in times of labour and skills shortages.
As EU institutions continue to debate a possible legislative instrument on subcontracting, the EEI study underscores the risks of implementing overly restrictive measures that could inadvertently stifle business growth and job creation. The solution does not lie in blanket restrictions on subcontracting. Existing labour protections should be enforced more effectively, and where necessary, the role of labour authorities must be strengthened to ensure compliance. We must focus on a balanced approach that protects workers’ rights while maintaining the competitiveness of the EU’s internal market.
First published by EurActiv, October 2025
