Facebook's upcoming data center site in Odense, Denmark, has been plagued with allegations of tax evasion and unfair labor practices.

According to local publication Fagbladet 3F, the company's subcontractor admitted paying foreign construction workers less than the industry-standard rate, and employee documents show that overtime was paid through foreign bank accounts to avoid income tax.

Facebook Odense
Facebook's Odense data center – Google Maps/DCD

Sweating the human assets

Last week, the tech giant's British-owned subcontractor Tag og Facade DK agreed to a DKK 6.8 million ($1.02 million) settlement for underpaying at least 115 foreign construction workers.

But time sheets and bank statements obtained by trade magazine Fagbladet 3F suggest that some of the workers were paid outside of the Danish tax administration.

There may be more than 200 employees who received their weekly pay through Tag og Facade, but their overtime through foreign bank accounts and UK companies, which could mean that the contractor avoided paying taxes on millions of dollars.

Denmark has some of the highest income tax rates in the world, and the average working individual is expected to pay around 45 percent.

British company Mace was hired as the main contractor responsible for the 56,500 square meter data center in Odense. Subcontractor Tag og Facade DK, created in 2016 to work on Facebook's Danish projects, hired 278 employees to work on the site between August 2017 and December 2018. Most of the construction workers arrived from Bulgaria, Moldova, England, Ireland and Scotland.

Fagbladet 3F found that some of the Bulgarian workers worked a minimum of 210 hours each month, and time sheets show at least one Bulgarian employee spent 40 consecutive days on-site without a day off.

And yet, payslips reportedly show that Tag og Facade DK only paid salaries for about 160 hours per month, at an hourly rate of 129 kroner ($14.91), just a few dollars more than the Danish equivalent of a minimum wage of 110 kroner ($12.70).

The remainder of the wages were allegedly paid through three English companies: BAL Contracts, HH Drywall and KG Drywall.

Two of the Bulgarian construction workers confirmed that they received their salary through both Danish and English companies.

The Odense data center in central Denmark is Facebook’s third European facility. The company already runs major infrastructure campuses in Lulea, Sweden, and Clonee, Ireland.

Peter Münster, Facebook's communications manager for the Nordic countries, responded to the allegations: "We are clear about our expectations for our global contractors: They must complete their construction taking into account local custom and in strict compliance with local regulations. These expectations apply to all subcontractors.

"We are in contact with Mace (main contractor for the construction in Odense, ed.) for further information on their approach to the case. We have full confidence that they can handle all matters relating to their subcontractors appropriately."

Henrik Hansen, CEO of Danish Data Center Industry association, added: "We can only echo Facebook’s official comments that contractors and subcontractors need to adhere to local regulatory frameworks. We have seen similar cases with other hyperscale projects across Europe. This highlights the outsourcing challenges many of these large-scale, and often complex projects, are facing.

"However, to avoid any negative press associated with these build-outs, we encourage data center operators to take a greater responsibility in ensuring processes are in place for their general contractor and its subcontractors to follow local regulations.”

Google faced a similar situation last year, after almost a third of all employees at the tech giant's location in Baudour were banned from accessing the construction site, following revelations that subcontractors failed to supply 340 workers with relevant documentation.