7 marzo 2019

Independent Freelance Work Advances on Employee-Employer Relationship

The model of labor law currently in place keeps on ejecting workers and replacing job positions with mechanisms and devices based on new technologies, and the law is looking for new forms of hiring.

Published in El Cronista on February 26, 2019
Last year Freelance Work [monotributistas] grew with 50% credible situations and another 50% borderline situations verging on fraudulent evasion of state labor and employment law.

In addition, independent contracting has taken new forms under the National Civil and Commercial Code [Código Civil y Comercial de la Nación] such as contract for services, now services contract, agency contract, brokerage contract, franchise, transportation and others. Curiously enough, these contracts contain specific reference to the non-application of labor and employment law making a clear distinction between freelance agreements and the typical employee-employer contracts under labor law.

The new models proposed by the sharing economy, such as Uber, Rappi, PedidosYa or Glovo, gather a significant number of independent contractor jobs that have nothing to do with the traditional employment relationship, and are done by entrepreneurs working on their own, with links that at least do not meet the requirement of subordination under an employee-employer relationship.

Nowadays, it is clear that all professional links are freelance work, as long as services are not clearly provided at an organization under the control of an employer, and this is how the Supreme Court of Justice has been systematically ruling. As a matter of fact, in borderline cases the Highest Court has ruled in favor of the classification as independent contractors, free to act at their own initiative, free to be hired, with flexible hiring options, earning fluctuating income, enjoying elastic vacation time, working schedules and rest periods, tipping the scales in favor of the elements that characterize freelance work. This is the case of physicians, anesthesiologists, surgeons, cardiologists, consultants and other related medical service providers, who are classified as independent contractors.

Contracts made by unicorn startups and tech companies are creating a new space for development where the elements of the sharing economy are combined with freelancing. Many of those who provide services through the production of services, software, developments, apps and related elements are entrepreneurs who form small groups of up to ten people who reap the fruits of their work and set out the conditions of each hiring they are offered. None of them hold an employment relationship with any of their hiring parties.

In Argentina labor costs have finally pushed more than 40% workers to work off the books, with no rules and regulations, among freelancers with different degrees of subjugation that in some cases may put them in slave-like jobs at sweatshops, laundries and fabric printing factories.

This is the scenario painted by the local labor market, where there are scarcely 6 million registered workers at the private sector and 3 million civil servants who must pay social security taxes to fund more than 20 million pensioners, retirees, and beneficiaries of welfare plans, actually accounting for more than 60% of the national budget.

Reality is the first-hand substantial proof that gives lawmakers a picture of the conducts and behaviors that are accepted by society as valid or lawful so that the community in general can live in harmony. Actually, legislation is the primary source that defines the boundaries of acceptable conduct so that the rights of every individual can co-exist with the rights of other people forming the group.

It is clear to me that in such a long-lasting crisis like this, we are forced to review the legal framework of a system that should keep up with the times, and as stipulated in our National Constitution, work in all its different forms shall be protected by law. In this context, small changes such as those made today are ineffective, and will not help push through a labor, structural, substantive reform like the one that is required today based on the needs of a competitive market where the main driver is efficiency and productivity.

By Julian A. de Diego
Director of the postgraduate course on Human Resources at the School of Business at UCA.

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