Posted workers: learn about the new labor measures in Spain

In spring 2021, the EU Directive 2018/957 relating to the posting of workers in the framework of a provision of services was implemented into Spanish law.

A "posted worker" is an employee who is sent by his employer to carry out a service in another EU Member State temporarily, in the context of a contract of services, an intra-group posting, or hiring out through a temporary agency.

One of the main goals of this amendment to the legislation is to avoid unfair competition among the UE Member States and social dumping relating to Spanish companies and workers.

Spanish law now recognizes the status of a “posted worker” being hired by temporary recruitment agencies in the other EU Member States to perform their services for companies based in Spain or that carry out their activity in Spain. Therefore, the new regulation also applies to these foreign agencies that use to avoid the law.

Thus, workers hired by foreign companies that will perform their services in Catalonia for less than 12 months (up to 18 months following a motivated notification from the employer) will be subject to Spanish labor law concerning the following matters:

• Working time
• Minimum wage
• Equal treatment and non-discrimination
• Child labor
• Health and safety rules
• Non-discrimination of temporary and part-time workers
• Respect for privacy and due consideration for the dignity of workers, including protection against verbal or physical offenses of a sexual nature
• Free association and the rights to strike and assembly
• Accommodation conditions of workers, when the employer provides it to workers who are outside their usual place of work
• Allowances or reimbursements to cover travel, accommodation, and general expenses incurred by workers posted in Spain

If the duration of the posting exceeds 12 months (or 18 months in case of renewal) these workers will be submitted to the entire Spanish law during the period of their posting (including legal proceedings for geographic and functional mobility, substantial modification of working conditions, suspension of the contract, etc.).

However, they will not be submitted to Spanish law concerning procedure, formalities, and conditions of conclusion and termination of their employment contract, including the non-competition clause, as well as of the supplementary occupational retirement pension schemes.

As is, this new regulation puts an end to unfair competition between posted and local workers, foreign companies being obliged to grant mostly Spanish labor conditions.

It is important to highlight that the posting of a worker in Catalonia might have important tax consequences for the worker as it might trigger a change of tax residence.

If the posted worker could be considered a Spanish tax resident, they will be submitted to taxation in Spain on his worldwide income and might be able, under specific circumstances, to benefit from limited taxation in Spain (“Beckam regime”).

On the other hand, if the posted worker is not considered a Spanish tax resident according to Spanish Tax Law, he or she would be submitted to a 19 % withholding tax on his Spanish employment income except if the non-resident posted worker stays less than 183 days in Spain, remuneration is not paid by an employer who is resident in Spain or borne by a Spanish permanent establishment. In this case, there will be no taxation in Spain.

Please note that these considerations are extremely general and that each specific case should be specifically analyzed to take into account other peculiarities (i.e double tax treaties).

Either from a corporal o personal view, this new regulation implies complying with the law in order to avoid responsibilities concerning social and tax authorities that are on the alert.

Authors:

Celia Juega Ocaña and Elodie Loriaud

Article in collaboration with: