The fine line between outsourcing and the unlawful loaning of workers: precautions and recommendations
Against the backdrop of the current financial crisis, one of the most useful ways of optimizing business costs is, without doubt, the “outsourcing” or externalization of certain manufacturing or production processes, enabling companies to downsize their workforces and slash overheads, thus boosting company profits. Moreover, and no less importantly, outsourcing allows for greater specialization both by the company farming out the service, which can therefore devote its resources to its core business, and by the service provider, yielding efficiencies and synergies by optimizing production processes.
Particular care must, however, be taken when it comes to embarking on an arrangement of this kind (a perfectly legitimate one ever since Spanish legislation opened up the possibility of outsourcing both processes specific to a company’s core business and those that are not) since, in certain cases, above all those in which the outsourced activity forms part of a company’s own manufacturing or production process, there may be a risk of the company falling foul of a situation in which an unlawful loaning of workers occurs.
In a nutshell, an unlawful loaning of workers can be said to arise where the principal outsourcing part of its business manages the work done by the contractor’s workers, acting as their real employer, while the contractor merely supplies the manpower.
In order to avoid falling into this trap, the best course of action is to set in place a structure in which the roles of the principal and of the contractor to whom part of its business is outsourced are perfectly defined, so that at no time does the former play any part in the control or management of the latter’s employees. To this end, it is always a good idea for each company to designate a coordinator to act as the sole go-between for conveying orders and instructions under the relationship established, thereby avoiding any direct contact between the principal and the contractor’s workers. Moreover, the key always lies in engaging the services of competent companies with experience of the industry and the activity outsourced, as well as in the field of business and service outsourcing.
Garrigues Labor and Employment Law Department
