Having reviewed the situation of immigrants working in Argentina (see http://blog.abogados.net.ar/index.php/2015/11/17/requisitos-laborales-para-trabajadores-extranjeros-en-argentina/ and http://blog.abogados.net.ar/index.php/2015/11/03/requisitos-migratorios-para-trabajadores-extranjeros-en-argentina/), let us now discuss the opposite case: an Argentine worker hired by a company to work abroad. Firstly, it is important to point out that this time we are discussing the case of argentine workers abroad, not foreigners. This would be the situation of workers traveling and settling in to provide their services in other countries (this article does not refer to employees who travel and return constantly or people who work remotely for parent companies). Taking into account the myriad of cases that could arise we will focus our analysis on the most common ones from the Argentine perspective.
Competence
Before venturing into the analysis of a particular case, it is important to locate the problem in the corresponding branch of law. While it could be understood that this is a common problem of Labor Law, it is actually typical of Private International Law. The first thing to be determined in these cases is the body of laws applicable to the relationship between the parties in order to understand, on the one hand, the applicable legislation and, on the other hand, before which judge a claim can be made.
As a first step, the parties and their nationalities must be defined. In the case of the worker this is simple, but with respect to the employer there may be several possible scenarios. By way of illustration, we can name companies that have majority shareholders in different countries, parent companies in another country, different branches benefiting from the activities of the workers, etc. in other countries (as a general indication, the real employer would be in charge of the assignment of tasks, the payment of salaries and the accountability). Since the number of cases is infinite, we will not expand on this any further, and we recommend that each particular case be analyzed with an appropriate professional. Although in some legal systems the competent jurisdiction is considered to be of public order (unavailable by the parties), it could be agreed upon in the employment contract —based on the good faith of both parties—to have a certain and clearer legal framework.
In the event that there is no express agreement, the prevailing legal principle regarding legal relations in general and obligations in particular is that the applicable law will correspond to the location of the “seat” or “headquarters”. At this point, it is important to define the types of procurement (especially for complex cases such us the ones we will discuss below; for instance, employees working remotely or for several branches): It can be through an employment contract (the most legally appropriate and correct option in general) or through a service contract (if the worker actually has an employee status, this is illegal for the Argentine legal system; but it is not illegal if the worker is a freelancer who provides services to different clients without the obligation of accepting the works requested).
If an employment contract is entered into, what should prevail is “the place where the contractual obligation must be performed”. Taking this into account, the contract must be entered into according to the law of the recipient country (this is a more complex situation in cases of telecommuting). If a service contract is entered into, the prevailing principle should also be establishment of the interested party and the applicable law. The exception is that, in this case (at least for the Argentine legal system), social security contributions should not be paid for not being considered an employment relationship, since the worker is a freelancer. The applicable tax law and the social security system are also the ones of the recipient country.
Legal Loophole
There is a real loophole in the legislation and integration of labor systems of countries in general. While employment relationships do not transcend borders this is not a problem, but nowadays this is becoming more and more complex.
As we have already discussed, the rules affecting the employment relationship should be the rules of the legal system of the country in which services are provided (if the classic approach is taken) or the rules of the company that benefits from such services (if a modern approach is taken); generally, both are considered competent. In this matter (as in many others) reality has advanced much faster than the integration between legal systems of different nations.
Since there is no unified criterion on working in different jurisdictions, the agreement between the parties on the implementation of any of the mentioned legal systems could be valid (unless it was prohibited by public order laws of any of the legal systems). In neither case should the parties be obliged to register the employment relationship in more than one country.
Another complication arising from this legal loophole is that workers will only be able to make their contributions, be insured and comply with all their tax obligations in the country in which their payrolls are processed. The registration of the employee under an employment contract abroad would not allow making contributions within the Argentine social security system. This implies that, virtually, in the future you may have to choose a single pension fund and lose the contributions made to the other system.
Attorney at Law
Estudio Nunes & Asoc.