Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The final World Cup game is set for this Sunday, December 18. Over the past month we have been staging our own matchups, comparing labor and employment laws of participating countries.1 While there have been plenty of mistakes on the field during this tournament, employers can be a bit more proactive in avoiding legal penalties when operating abroad. In this seventh and final part of this series, we examine the most common mistakes foreign employers make in Argentina and France, and what can be done to help avoid them.
Argentina v. France (December 18)
Employers operating in Argentina commonly make the following mistakes:
- Entering into independent contractor, distributor or sales representative or other designated status agreements without considering the protective nature of the Argentine labor regime, which—generally—results in claims based on incorrect registration of the relationship. Employers have to be careful to avoid subordination clauses, as the existence of the employment relationship in Argentina will be determined based on the facts and subordination of the worker.
- Applying international agreements or policies in a foreign language without local legal review. Based on the protective nature of labor regulations, all documents executed should be in Spanish (by way of analogy, for the Argentine team all penalties should be executed by Messi—by the way, we hope that in the final Argentina will have many penalties, but not in extra time), in addition to any other language that the employer/contractor wishes to use.
- Risks of claims based on creating an employment relationship by means of a commercial agreement. It is advised to avoid: exclusivity; allowing the individual to use business cards with the corporate logo or using the corporate email address; granting employee benefits; creating correlative invoices for services; reducing the frequency of services; or granting direct orders.
- Regarding the use of staffing agency employees, it is important to avoid exposure to labor claims and the creation of an employment relationship between the company hiring services from the staffing agency and the agency employees. It is important to comply with the agency’s time requirements, forms, etc. Otherwise, in case of a conflict, there is a risk that the staffing agency employee argues the existence of an employment relationship with the company.
- Sometimes an employer wishes to apply the law of its country of origin. However, in Argentina, based on the territorial principle, the law of where services are rendered applies, disregarding any agreement about jurisdiction made by the parties. As an example, if Mbappé were an employee of a local branch (registered in Argentina) which belongs to a French company and he renders services in Argentina, Argentine law would apply (not the law of France, even if both Mbappé and the Company agreed to it).
Some of the most common mistakes foreign employers can make in France include:
- Failure to appreciate the complexity of French labor, employment, social security laws, and payroll. Foreign employers should verify and inform themselves of legal requirements before taking action. “Common sense” and instincts will not help enough in a country such as France, and could make matters more difficult to fix.
- Failure to appropriately inform and consult the Social and Economic Council could lead to significant workforce issues.
- Failure to appreciate the importance of not only the substantive rules but also the procedural rules and formalism required by French law.
- Lack of understanding of the significance of the cultural differences in managing French employees.
- Failure to seek advice from the outset especially in the context of special projects such as business transformations, restructuring, mergers, acquisitions, and outsourcing.
The goal of this series was to alert employers operating globally to the complexity of international employment law. Consultation with local referees (i.e., employment counsel) can help avoid those yellow cards and other pitfalls.
Best of luck to Teams Argentina and France on Sunday!
1 The information provided in this series is from our Littler International Guide, which discusses more than 90 workplace law topics in over 45 countries/territories, including jurisdictions in every region of the world. For more information on the International Guide, please contact your Littler attorney or Knowledge Management Counsel Geida Sanlate. Click here to subscribe to Littler’s Global Guide Quarterly, to receive labor and employment law updates from around the globe.