Outsourcing companies

By Decree No 1694/2006, published in the Official Gazette on November 27, 2006, a new regulation applicable to outsourcing companies was passed, overruling Decrees No 342/1992 and No 951/1999 that previously governed their operation.

Outsourcing companies are companies whose exclusive purpose is to supply other companies (the users) with industrial, administrative, technical, commercial or professional staff in order to perform, on a temporary basis, certain pre-determined extraordinary services or extraordinary duties for such company, business or facility not subject to a scheduled term.

The main features of the new regulation are the following:

1.    Information

The outsourcing company shall include, in all its documents (brochures, invoices, signs) the following legend: “Outsourcing Company” and its registration number.

2.    Type of services

Outsourcing companies may only provide staff to the users in order to render services only in the following cases, exclusively:

a. in case of absence of a permanent employee during the pertinent term;

b. in case of leave of absence or legal or contractual suspension due to strike or force majeure, absence or reduction of work;

c. in case of increased business activities of the user requiring more workers, on an exceptional and extraordinary case;

d. to organize or participate in congresses, conferences, fairs, exhibitions or programs;

e. to perform urgent tasks to prevent accidents or repair equipment when such duties cannot be performed by the regular staff of the user;

f. when, due to extraordinary or temporary needs, tasks not related to the usual business activities of the user are required.

3.    Proportion

There should be a reasonable and justified proportion between outsourced workers and the permanent employees of the user as well as an adequate term of employment. The guidelines to determine said limitations for each activity shall be established by a collective bargaining agreement.

Besides, the Ministry of Work, Employment and Social Security shall create an Outsourcing Best Practices Supervisory Board, integrated by representatives of the trade unions related to the main business activity of the user, of the association representing the outsourcing companies and the users. This Supervisory Board shall be responsible for evaluating the general and specific operating conditions.

4.    Working conditions

The workers hired by the outsourcing company to provide outsourced services to users shall be considered employed by the outsourcing company under a permanent employment contract not subject to a scheduled term (contrato de trabajo permanente discontinuo).

The services shall be rendered subject to the following conditions:

a. the term between jobs shall not exceed 45 calendar days or 90 alternated days per year;

b. the new job may imply another activity or collective bargaining agreement not affecting the worker’s rights;

c. the new job may be subject to different working hours but the worker shall be entitled to decline a night shift, unhealthy or dangerous work, or a full time or part time job to the extent he/she has not accepted such job before;

d. the place of work shall be within 30 km of the worker’s domicile;

5.    Registration and reporting requirements

Outsourcing companies shall be registered with and authorized to operate by the Ministry of Work, Employment and Social Security. At the time of registration, they shall post bonds and accessory securities in favor of the Ministry of Work, Employment and Social Security.

A reporting system is established under which the outsourcing companies shall provide reports to the Ministry of Work, Employment and Social Security every two months.

6.    Invoicing and Accounting

The users shall act as withholding agents in respect of the social security obligations of the outsourcing companies. The outsourcing companies shall directly pay the pertinent union dues.

Outsourcing companies shall attach the following information to their invoices:

a. the aggregate amounts corresponding to salary and benefits payable to the workers that rendered services to the user;

b. The amounts corresponding to social security contributions, indicating those that should be withheld by the user.

Both the users and the outsourcing companies shall register the outsourced workers in a specific section of the special book required by section 52 of the Employment Contract Law.

7.    Penalties

The rendering of services to a user by workers provided by an outsourcing company not authorized to operate shall be subject to the provisions of section 29 of the Employment Contract Law and applicable penalties.

In such cases, the Ministry of Work, Employment and Social Security or the AFIP (the Federal Taxation Authority) may require the user to perform the obligations corresponding to employers under the different social security regimes in force.

8.    Effective Date

Registered outsourcing companies shall implement these regulations within sixty days as from the effective date of the Decree. Upon the lapsing of such term, the outsourcing company shall be automatically stricken off the special record.