Labor law has differences in relation to other matters, such as commercial law and civil law. However, sometimes the limits between them become blurred or imprecise, and the discussion arises around the nature of a particular relationship, whether it is of a labor, civil or commercial nature. Consequently, the conclusion reached has different consequences and responsibilities.

The main difference in establishing whether we are facing an employment relationship or a commercial or civil relationship (independent contractors) lies in whether there was a "legal subordination". Both jurisprudence and the International Labor Organization have made efforts aimed at establishing indicators or characteristics of legal subordination. Therefore, this concept has been defined as follows:

"Subordination implies for the employer, both the real power to direct, to give orders and to supervise the work of the worker, as well as to discipline him; and, therefore, faced with this power, we find the correlative and indisputable duty of having to submit. Doctrinally, it has been said that legal subordination consists of a general right to supervise the activity of another, to interrupt it or make it cease at will, to draw its limits, without it being necessary to continuously control the technical value of the work carried out” (Sentence no. 2001-00309 Second Chamber of the Supreme Court of Justice).

"It is a state of real dependency produced by the right of the employer to direct and give orders, and the correlative obligation of the employee to obey them... so it is enough... that there is not the possibility of giving orders, but the right to do so and to substitute his will for that of the person providing the service, when the orderer deems it necessary" (Own English translation taken from Cabanellas, Guillermo. “Contrato de Trabajo”, Volumen I, Buenos Aires, Bibliográfica Omeba, 1963, pp. 239-243).

From the above, it is possible to conclude that the concept of "legal subordination" is closely related to the power of direction and control of the employer. If it is not complied with, the employer can impose and subject the worker to disciplinary sanctions typical of this type of relationship, such as verbal and written reprimands, suspensions with or without pay, and finally, the termination of the employment relationship (dismissals).

But how should we determine, in practice, when we are faced with a relationship in which there is legal subordination?

This question has led to a broad jurisprudential and doctrinal development from which a series of indications have been listed that, valued as a whole, lead to the conclusion that we are facing a relationship of a labor nature or that allows excluding "legal subordination". Due to its clarity, the vote issued by the Second Chamber No. 2007-000538 at 11:00 a.m. on August 10, 2007, is especially illustrative. Said vote includes the following indications:

The lack of orders to carry out the tasks and the impossibility of disciplinary action. The conditions of service should not be confused with the existence of "legal subordination".

This distinction indicates that every professional (independent contractor) hired to provide a service must be explained and specified why and for what his services are needed, as well as the expected results. However, this does not imply the possibility of applying disciplinary sanctions in case of poor execution nor of giving orders to carry out the service.

The contracted professional carries out his activity without guidelines, orders, provisions, or mandates. He is a person who, according to his abilities and knowledge, executes the work for which he is hired. To carry out the service, the minimum controls typical of a commercial or civil contract are exercised, but never those of supervision or subordination; neither are orders given, nor is there exhaustive control over the service provided.

The preceding does not exempt the professional from complying with the requested conditions and requirements upon being hired. In case of not executing the service as it corresponds, he assumes contractual and patrimonial responsibilities. Contrary to what happens in an employment relationship, the breach of an obligation in commercial or civil matters would only entail the possibility for the contracting party to penalize the payment for the services rendered, claim the damages or losses suffered, and eventually, in the event of a serious and culpable breach, contractual termination. Nevertheless, a disciplinary sanction could never be imposed on the party that breaches the contract.

- Personal nature of the benefit

In an employment relationship, only the worker can carry out in person the work for which he was hired, while, in a civil or commercial contract, the service can be provided personally, or third parties can be appointed to perform it, in case of absence or impediment of the person who was hired for it. There may even be the possibility that the person providing the service hires the personnel he considers relevant for the development of the activity at his own expense, risk, and responsibility.

- Remuneration or payment

In an employment contract, the remuneration is agreed with the worker, according to the fixings and increases provided by law and following the minimum wage ceilings. In a civil or commercial contract, whoever is hired establishes the economic amount of his fees, and there is no minimum remuneration ceiling, nor is there an obligation to make a semi-annual or annual increase in his payment.

It is important to indicate that although a professional is paid periodically (even monthly), this situation does not necessarily convert said remuneration into salary. Unlike salary, whoever provides a service must be registered with Tributacion Directa (government tax institution) and issue a stamped or electronic invoice to receive the payment of their fees.

- Provision of services to third parties (non-exclusive)

The professional hired to carry out a service should not dedicate himself to attending to that task exclusively since he can provide his services to a third party if he so wishes. On the contrary, a worker is under a permanent and exclusive dependence on the employer while performing his job.

- The lack of a schedule

The hired professional does not have to comply with a work schedule. In general, he decides at what time of the day he carries out his work unless a schedule is agreed upon as part of the conditions of service. There is also no obligation to request permission to be absent or arrive late. However, without requiring authorization, it may be the case that he reports his absence. A worker rarely enjoys those types of freedoms.

- Non-payment of labor benefits and not being affiliated with social security

Unlike an employee, the professional hired to provide a service is not entitled to vacation days, christmas bonuses, or any other benefit associated with the salary precisely because he is not a worker. Likewise, he must not be insured with the INS, or his salary be reported to the social security system. These rights and obligations are specific and exclusive to an employment relationship.

- Place where the service is provided

In the case of a hired professional, there is the freedom to carry out their work in the space or place that best suits their needs. However, among the conditions of the service, it can be agreed to perform it for convenience in the facilities of the person who contracted it without this implying an indication of employment. It is important to note that, even if it is agreed in this way, the professional generally does not have a permanent desk, office, or space within the facilities where he provides the service.

- The supply of tools and materials

In general, the hired professional carries out his work with his own tools and supplies; however, as one of the conditions of the service, it can be agreed that instruments or implements be provided for the development of the activity without this implying an indication of employment, but only as an agreement for the convenience of the parties.

- Use of uniform

The professional who provides the service is not required to wear any clothing or uniform; however, it can be agreed as one of the conditions of service due to a matter of corporate image.

- The impossibility of refusing the commissioned work

In a commercial or civil relationship, the professional who provides the service can reject the offer he receives to carry out an activity. On the contrary, in an employment relationship, the worker is obliged to carry out the work requested by his employer as long as it is part of the functions of his position.

In addition to the previous characteristics developed jurisprudentially, the doctrine, through the author Raso Delgue has listed two additional indications about the non-existence of the employment contract:

1) The non-claim for an extended period of employment benefits.

2) Have a vehicle and take care of your expenses (Own English translation taken from Raso Delgue, Juan. La contratación atípica del trabajo. Editorial y Librería Jurídica Amalio M. Fernández, Montevideo, Uruguay, pp. 62-70).

Finally, it is essential to clarify that the indications described above are not automatically applied; that is, some of them must be assessed in each specific case to determine whether or not there was a relationship of an employment nature. Therefore, the analysis must be casuistic.

At Bufete Godínez y Asociados, we specialize in counseling and advising employers in labor and employment law. If you need any additional information, do not hesitate to contact us by clicking here.


About the Autor

Francisco Javier Bolaños Ulate

Francisco Javier Bolaños Ulate

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