a. New or Expected Developments
The new Government is about to create the Integral Law of Independent Contractors. This law, that aims to improve their labor legislation by making more reduced fees and increasing the social protection to them.
The new law aims to ensure that independent contractors whose real income does not exceed the threshold of the minimum wage are not required to pay to Social Security and that are established new formulas for the Social Security pay of part-time self-employed and non-habitual self-employed.
It also aims to achieve full compatibility between the receipt of a retirement pension and the development of a self-employed activity and for the self-employed to have the same social protection as ordinary employees.
The main measures to be taken by the law are as follows:
• increased flexibility to change the contribution base.
• new Social Security formulas adapted with specific fees for part-time self-employed and also for those who carry out the activity on a discontinuous basis or as a complement.
• payment of the fees adjusted to the dates of discharges and withdrawals in the Social Security.
• expansion of the flat-rate from 6 to 12 months.
• bonuses during pregnancy and after leaves for this reason.
• compatibility with the retirement pension.
• greater facilities for conciliation for economic dependency issues in cases of dependency care, maternity, or temporary incapacity; And bonuses for family care, periods of maternity leave, adoption, foster care, risk during pregnancy, risk during breastfeeding or suspension for paternity, as well as for self-employed women who return to their activity after maternity.
• deduction in the Personal Income Tax of the expenses that come from the automobile, the electricity and the water.
• delay of VAT income until the moment of payment to customers.
• smoothing penalties for late payment of fees, from an initial 3 percent to 20 percent currently applied for the delay; and deferrals in the payment of debts with Social Security.
• the new regulations will streamline the procedure by cessation of activity and increase its duration to match it with the unemployment benefit of employees. In addition, a cessation benefit will be created.
b. Recent Amendments to the Law
On October 10th 2015, the Law 31/2015, which modifies the regulations on independent contractors and encourages self-employment, entered into force.
This Act amends the Self-Employed Workers Statute (approved by an Act of 2007) and contains a number of measures to improve the situation of self-employed persons and to facilitate the implementation of self-employment initiatives. Its main new features are:
• limitation of the financial liability of the self-employed worker in respect of his/her debts (in line with the recent changes in Spanish legislation on bankruptcy).
• the possibility that so-called “Independent contractors economically dependent” (TRADE) can, in certain cases, hire workers (basically, in cases where the economically dependent self-employed worker needs someone to take his/her place when taking maternity leave or to care for relatives).
• a change in the composition of the Council for Autonomous Work, a body designed to promote institutional participation in this area.
• the reduction of social security contributions for workers who want to start an autonomous activity, especially for young people under 30 (men) or under 35 years (women) or if they are disabled or victims of gender violence or terrorism.
• compatibility between unemployment benefits and the income from self-employment in the case of workers who launch an autonomous activity (up to 270 days). This measure can also apply to the incorporation of the unemployed person into a cooperative or a worker-owned company. This new Act 31/2007 does not abolish the traditional possibility of receiving all accrued unemployment benefits in a single payment if that amount is used to launching an autonomous activity (an operation known as “capitalisation”).
• the Law allows the capitalisation of economic benefits due to the termination of the self-employed worker’s activity (equivalent to unemployment benefits for self-employed persons) when the worker proves that this amount will be used to launch a new activity (on an individual basis or within a cooperative society or a worker-owned company).
• the Act reduces the social security contributions of the spouse and relatives of self-employed persons who work in the business.
• the Law also reduces the Social Security contributions for cooperatives and temporary agencies that incorporate self-employed (unemployed) persons as partners. Act 31/2015, of 9 September 2015 on self-employed workers.
Suggestions based on Specific Cases
In this section, we will discuss the same case viewed from two different perspectives in order to distinguish the difference between an independent contractor and an employee.
A Company that sells pets requires the services of a veterinarian to care for their animals:
The Company has a contracted worker who is registered in the General Regime of Social Security, and goes every day to the facility to supervise the status of animals. He has a schedule of 9:00 to 15:00, and in the event that an animal become seriously ill, he has to assist it after hours, charging extra for extra time worked. If he cannot go, the Company does not allow him to send someone else in his place. The Company pays him 1.300€ per month (twelve payments) and he has a one month vacation.
Firstly, we can say that, he obeys the dependency note, considering that the worker is subject to the organization of the company, which determines when the services are provided and establishes the holidays, and also the fact that he goes to the place of work of the Company every day.
Secondly, the worker receives a monthly salary, which is why, in this case, he obeys the requirement of payment.
Thirdly, the job reverts to the Company and the worker only receives an economic payment without assuming economic risk.
Finally, we can say that, there is an employment relationship between the employee and the Company, since all the requirements of a contract are done, so in this case, the contracted worker is an employee.
The Company has a contracted worker who goes to the facilities of the Company once a week, when he decides it, or sometimes when there is a serious case, or if the company asks for him. Besides providing his services to this Company, he works for three compa-nies in a more permanent fashion. From each of these companies, he charges 400€ per month, however, there are months that he also provides services to other companies.
Firstly, the employee organizes the work and decides when go to the Company, according to the needs of the client, which does not obey the dependency requirement.
Secondly, receives compensation for the service rendered, but this is not his only or principal income. Also, this payment is not fixed for himself, but for the realization of a service.
Thirdly, the worker decides whether to accept the work and the volume thereof, being for him all the profits, so in this case, the condition of alienation is not carried out.
Finally, we can say that there is no employment relationship between the employee and the Company, considering that, the features of a contract are not obeyed. This is the reason why, in this case, the contracted worker is not an employee.