Contractor Liability and Outsourcing Regulations in Spain

Contractor Liability and Outsourcing Regulations

Companies Involved

The primary entities include the Promoter and the Main Contractor.

a) Contracts Under Article 42 of the Workers' Statute (ET)

There are two primary doctrinal theories regarding the scope of "own activity":

• Theory of the Production Cycle: Defines a company's activity circle by operations inherent to the production of goods. The Supreme Court prefers this interpretation, focusing on "essential" activities.
• Theory of Essential Activities: Includes all specific tasks necessary for a particular productive organization to function properly.

The lead company must verify that the contractor is current on tax and social security payments. Obtaining negative certification from the TGSS (Social Security) and the Tax Agency is essential to absolve the company of responsibility.

Liability Scope

• Salary: Solidary liability, lasting up to one year after the contract ends.
• Social Security: Solidary liability.
• Tax Liability: Solidary liability.
• Occupational Hazards: Joint liability, applicable only if the accident occurs in the workplace.

b) Contracts Outside Article 42 (Non-Own Activity)

Governed by Article 127 of the General Law on Social Security:

• Social Security: Subsidiary liability in the event of contractor insolvency.
• Occupational Hazards: Solidary liability.

c) Contracts Outside the Farm Worker's Right

Refers to construction or repair activities commissioned by a head of household for their private residence.

d) Illegal Assignment of Workers (Article 43 ET)

Illegal transfer occurs when the contract's object is merely placing employees at the disposal of the transferee company. This is only permitted through authorized agencies.

Criteria for Illegal Assignment

• The transferor lacks a stable organization or necessary means to conduct business.
• The transferor does not exercise functions inherent to their status as an employer.

Consequences: Solidary liability for wages, social security, taxes, and occupational risk prevention. There is no possibility of exoneration, including civil, criminal, and administrative liability (applying the non bis in idem principle). Affected workers are entitled to acquire permanent status.