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An EUR 800 million battery project in Kotka, Finland has been hit by a labor dispute. Around 300 Chinese skilled workers reported excessive overtime, hefty deductions for accommodation and meals, arbitrary changes of contracting entity, and unfair supplementary agreements — with some workers’ actual take-home pay falling below the local minimum wage. Finnish police have opened a criminal pre-trial investigation on suspicion of labor trafficking and facilitating illegal entry, and personnel of the involved subcontractor have been detained. The case is a warning to Chinese companies expanding abroad: domestic employment models cannot simply be copied to the EU. Cross-border assignments must strictly comply with local labor regulations, or labor disputes can escalate into criminal liability.
The key to avoiding these pitfalls is to abandon path dependence — do not directly transplant domestic employment habits into Europe. Many projects go wrong not because the company intended to violate the law from the start, but because the general contractor and labor intermediaries operated on old habits, letting small conflicts escalate into criminal investigations.
Straighten out the employment chain and control subcontracting risk
Avoid designing multi-layer labor models where workers are recruited domestically, transferred through an overseas intermediary, and then handed to an on-site subcontractor. In the EU, changing an employee’s employing entity without consent is itself a major risk. For short-term project staffing, consider using a locally compliant EOR to hold the employment relationship; if hiring directly, the employing entity must remain clear and stable throughout. When selecting subcontractors, don’t compare prices alone — the main contract must specify labor compliance responsibilities and corresponding accountability clauses. Don’t harbor the wishful thinking that “subcontractor labor issues have nothing to do with the owner.”
Make contracts transparent and balanced, and avoid language traps
Never ask workers to sign only a foreign-language contract. Always provide both Chinese and local official language versions with consistent content. Pay structure, overtime rules, and accommodation/meal deduction standards must all be written in black and white into the main contract. Avoid signing hidden supplementary agreements separately — clauses requiring employees to return wages or defining rights-protection arbitration as a breach of contract are not only invalid in the EU, they are treated as bad-faith employment. Verbal promises made during recruitment must not be changed after workers arrive.
Strictly follow working hours and pay rules, and hold the wage floor
In many EU countries, beyond labor law there are industry collective agreements with binding force — easily overlooked. Working hours, lunch breaks, and holiday overtime must all be fully recorded, with overtime paid in full. Deductions for accommodation, materials, and the like are not decided unilaterally by the company: after deductions, the employee’s actual take-home income must not fall below the local minimum wage. Practices such as off-the-books transfers or cash-back wage schemes should be eliminated entirely.
Open information channels and establish an independent complaints channel
Assigned workers commonly face language barriers and unfamiliarity with local law, leaving them in a weak position. Arrange interpretation at onboarding and clearly explain labor rights and local complaint channels. More importantly, there must be a complaints channel independent of project management. If workers’ only recourse is the on-site supervisor, and they fear retaliation, grievances accumulate and eventually erupt through the media or the police.
Do local due diligence in advance and self-inspect regularly
Before a project starts, engage a local labor lawyer or compliance consultant for due diligence, and distinguish ordinary labor disputes from criminal red lines — the EU’s threshold for determining labor trafficking and forced labor is not high. During the project, regularly spot-check working-hour ledgers, payslips, and deduction vouchers. At the first sign of a dispute, use local mediation channels first; do not attempt to suppress or conceal problems internally.
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This article was first published on the WeChat Official Account “Gonex Global HR”.
