Castellán

Laws No. 18,099 and 18,251, known in our environment as laws of "Responsibility in business decentralization processes", impose labor and social security liability on main companies in cases of service outsourcing. As a general rule, it is provided that any employer who uses subcontractors, intermediaries, or labor suppliers, will be jointly liable for labor obligations, social security contributions, accident and occupational disease insurance premiums, as well as penalties and recoveries owed to the State Insurance Bank in relation to those workers.

DOES OUTSOURCING NEED TO BE RELATED TO THE MAIN ACTIVITY?

As mentioned, the phenomenon of business decentralization usually finds its main commercial foundation in the advantages of focusing on the main activities of the business, which are usually the ones that add more value. However, from a legal point of view, the liability regime practically does not change depending on the type of activity. Indeed, there is "subcontracting" when a company entrusts another with the execution of works or services, which will be carried out on behalf of the second company and with workers under its dependence, whether these works or services are part of the main activity of the company, or when it is an ancillary activity expressly listed by the Law, such as maintenance, cleaning, security or surveillance, whether they are carried out inside or outside the same.

As can be seen, the regulation assimilates these activities, and gives the same treatment as to services that are related to the main activity. That is, although the functional link between the works and/or services, and the main activity of the main company is as a rule one of the essential requirements for us to speak of subcontracting, the aforementioned regulations make an exception in this regard, expressly including some "delegable" ancillary activities. However, what is excluded from the scope of application of these outsourcing laws are cases of subcontracting for occasional works or services, understanding by "occasional" extraordinary or non-routine works (which are not permanent or periodic).

To determine this scope, attention must be paid to the main company's activity, what its product or service is and what stages are required to obtain it (stages that could eventually be outsourced and therefore are included). It will ultimately be the judge's task in each case to determine, based on these considerations, whether a contract is included or not in this legal figure, in order to determine whether the main company will have liability or not.

FACING THIS REALITY: HOW TO CONTROL OUTSOURCED COMPANIES?

Any company that uses subcontractors, intermediaries, or labor suppliers, has the right to be informed by them about the amount and status of compliance with labor, social security obligations, as well as those related to the protection of work accident and professional illness contingencies that correspond to their workers. For these purposes, it is suggested to require the contracted company to show the following documents (without prejudice to others that may correspond in certain sectors):

- Employment history statement and payment receipt to the social security agency

- Certificate proving regular payment of social security contributions to the social security entity

- State Insurance Bank certificate proving the existence of accident and professional illness insurance (it should be noted that the policy certificate does not always ensure insurance coverage, because if there is an agreement, even if the policy exists, the payments must be up to date and otherwise the insurance coverage "automatically expires")

- MTSS work control sheet, salary receipts (wages, overtime, etc.).

Likewise, the data of the workers involved in the service provision may be required so that the employer or main company can perform the controls it deems appropriate.

In cases of "subcontracting" we always suggest verifying the identity of the workers who enter to perform tasks in order to verify if, for example, a new person who comes to cover the weekly rest of the one who usually performs the task, appears on the company's Payroll list.

WHAT HAPPENS IF THE CONTRACTED COMPANY DOES NOT PROVE COMPLIANCE WITH ITS OBLIGATIONS? CAN PAYMENTS BE WITHHELD?

When the contracted company does not prove compliance with the obligations in the manner indicated, the main company has the possibility to withhold the corresponding amount from the obligations it has in favor of that company. And then it must pay the worker, the creditor social security entity, and/or the State Insurance Bank.

CAN THE LIABILITY OF THE MAIN COMPANY BE MITIGATED?

Indeed it can. When the main company effectively exercises the aforementioned right to be informed, it will only respond subsidiarily for the payment of labor obligations, social security contributions, accident premiums, recoveries, etc., that the supplying company, subcontractor, or intermediary has regarding the hired workers. On the contrary, when this faculty is not exercised, the main company will be jointly responsible for complying with the mentioned obligations (this means that the worker can make his claim jointly against the supplying company and the main company).

IS THERE CRIMINAL LIABILITY IN OUTSOURCING CASES?

One of the most interesting issues in recent times refers to the existence of criminal liability in outsourcing cases, as a result of the validity of Law 19,196 (Corporate Criminal Responsibility). The Laws on labor decentralization do not extend the criminal liability of the outsourced company regarding the main company just by establishing this commercial link. Consequently, we understand that the main company will not be responsible for the subcontractor's or intermediary's non-compliance, if it is personnel that is not under the first company's "supervision" or "direction". This is because the obligation to provide safeguard and security measures, in principle, exclusively reach the own personnel (worker-employer relationship).

However, when the tasks are carried out within the main company's premises, that is, in the same (physical) place with materials, tools, and infrastructure of the main company, it is not ruled out that the Criminal Justice may understand that there is Liability, if the security and prevention measures must be provided by the main company, even if it is not the employer. Especially if it is the main company that is in charge of supervision or "exercises the power of direction". In short, there could be liability, if it is determined that the main company in fact is in charge of defining the work process and above all, if it has the "power" to adopt security measures and enforce their compliance.

Ultimately, in the analysis of the cost-benefit relationship of the business decentralization phenomenon, it is vital to bear in mind the liability regime of the main company. And especially to consider that there are good practices that can be used to mitigate these burdens.

Montevideo, November 5, 2015.