As we have already discussed in the previous article, the situation of foreign workers entering Argentina can lead to various problems. In this issue, we will discuss the workers’ labor and registry conditions in such regime.
An extremely important point about each exchange program in companies is who pays the workers’ salary during this period and in which payroll it appears. As in this case there can be countless scenarios, we will set out some fundamental points. Accrual, whether local or abroad, may also have certain migratory implications, as referred to above. Generally, due to exchange rate issues and the possibility of transferring capital abroad, it is very difficult that local companies pay the sums that expatriates earn abroad, but it is a legal option.
The payment of owed salaries by the parent company in no way exonerates the local branch from liability. Moreover, it constitutes a risk, since it does not have in its possession any pay stubs registered by the worker who clearly works under its authority. Since it is common that these situations last for a short period of time (or in cases involving senior managers in which companies trust), the labor contingency is a bit lower. However, it is still a real risk that must be assessed in detail with the company’s attorneys. It is important to clarify that legal payments can only be made by the parent company in very few countries (those with International Treaties) and not by the local branch. The rest of the cases remain in a huge legal loophole in which reality has advanced far beyond the integration between the nations’ legal systems.
Another key point is contributions and social security taxes; on the one hand, because of the strong tax pressure in Argentina, and on the other hand because of the legal consequences of having workers that are not registered correctly. There are Treaties with some countries on this matter, so it is necessary to look for specific information about the country in which the parent company is established. In theory, the contributions made in a country without current Treaties would be tantamount to not paying contributions to a worker, entailing the consequences of unregistered work. It is vital to be well advised on the matter, since neglecting any of these points would mean a serious legal contingency. It is extremely important for the local branch to proceed with caution and in accordance with the legal requirements.
A further aspect to consider about these programs is that the branch is responsible for providing accommodation, transportation and insurance against accidents of all kinds for workers. This happens mainly in cases where the worker can remain on the payroll of the parent company and such company subsidizes part of the remaining expenses. A requirement that is usually demanded by parent companies to the receiving companies is that they become responsible for the legal contingencies that may arise. In order to assess definitively whether this type of procurement is convenient or not, an appropriate preventive legal advice is of vital importance to evaluate risks and total benefits and decide its suitability.
Another legal loophole around workers that remain on foreign payrolls is that, generally, Labor Risk Insurance Companies of the local branches do not allow their inclusion. If this is indeed the case, we do not recommend the implementation of this type of program, as it is not possible to comply with the provisions of the Occupational Hazards Act.
The legal risks that may arise in this kind of employment relationship, as we have already described, are several and diverse, but they will depend on each particular case. As long as the worker is on the payroll of the Argentine branch, all the risks tend to disappear almost completely. However, when they remain on foreign personnel payrolls, this constitutes a serious risk (especially with ill-intentioned workers). It seems that being employees of the parent company is a less likely scenario, but it is still a risk. Our advice to any local company that wishes to be part of this type of workers’ exchange programs is to have a thorough consultation and analysis of the conditions of the program with their trusted Law Firm.
Attorney at Law
Estudio Nunes & Asoc.