Analysing Spain’s traditional subcontracting model

Spanish CELIA member, Ceca Magán, analyses the recent Court of Justice of the European Union's sentence from October 2024, addressing 3 of 5 preliminary rulings referred by the High Court of Justice of Madrid concerning illegal loan
of employees.

Their technical analysis considers:

• Whether the current subcontracting model is limiting the legal assignment of employees to third parties, currently restricted to Temporary Employment Agencies, may be broadened to include service and project contracting companies without requiring administrative authorisation.
  
• Whether the subcontracting model will, in certain activities, face an increase in costs due to the requirement to apply the working conditions of the main hiring company.

Blanca Liñán Hernández, Labor Lawyer and Partner at Ceca Magán suggests that the Spanish traditional mode of Temporary Employment Agency reserved only for those who obtain administrative authorisation, seems to be expanding to include other
contracting companies. Spain may be witnessing an overcoming of the limitation on companies being set up for the sole purpose of assigning labour, allowing the inclusion of other trending models in Europe, such as the Employer of Record (EOR). She also notes that the subcontracting model is expected to become more expensive as it must be governed by the conditions of the main company, rather than those of the subcontracted activity, as has been required since the 2021 Reform.

To read the whole article, please visit Ceca Magán's technical sentence analysis on their website, and get in touch with them for any queries you might have.