Parasubordination: a labor figure that is yet to be recognized

This article explores the figure of parabusordination and its elements in a comparative analysis with the other traditional forms of contracting, with the objective of propitiating the due recognition and regulation of this figure as a novel contracting mo

One might wonder what this is all about. It is true that today’s production processes have evolved considerably thanks to the advance of technology and new corporate policies that seek greater efficiency and productivity. This has given rise to new employment models that adapt to the new needs and ways of working. For example, teleworking or telecommuting has become an increasingly common option, allowing workers to perform their tasks from anywhere in the world and companies to save on infrastructure and equipment costs.

In addition, freelance or project-based jobs have also been on the rise, allowing workers to have more flexibility and variety in their work, and companies to have greater control over costs and resources.

Likewise, the collaborative economy has given rise to new forms of employment, such as working on digital platforms or the sharing economy, where workers provide their services temporarily and on demand, allowing companies to meet the needs of their customers in an agile and efficient manner.

In short, the evolution of production processes has given rise to more innovative employment models adapted to current needs, allowing workers to be more flexible and companies to be more efficient and productive. This being so, these processes have given way to the parasubordination model, which is nothing more than the regulation of the working environment of self-employed workers, who although they have functional independence in the provision of the service, are in economic dependence on their client, creating a relationship of "pseudo-subordination", since they cannot leave their regular client completely for fear of losing the income coming from him.

Although labor law has focused its study on salaried or salaried work, as we noted above, the evolution of society and new trends have given rise to new modalities of service that do not fit this categorization. Consequently, it is argued that the traditional dichotomy between protected subordinate work and unprotected self-employment is not adequate to understand today’s complex and diverse labor reality, in which the demands for protection are not limited to a single group.

That is why the figure of parasubordination came to address these new situations in which workers, although completely autonomous, are economically dependent on one of their clients. This dependence places them in a disadvantageous position with respect to the clients, since they do not have a clear legal subordination.

Currently, in the Dominican Republic there is no specific regulation of parasubordination, since a vertical conception of law still prevails, according to which protection is only provided to workers who meet the requirements of subordination, salary or provision of service. Any other type of personal service that does not meet these conditions is governed by the provisions of common law.

In this sense, it is important to emphasize that the figure of parasubordination must contemplate some essential characteristics. In the first place, the existence of a relationship of economic dependence of the service provider towards his client must be recognized. Secondly, this economic dependence must significantly affect the service provider’s freedom of action, preventing him from working for other clients or from ceasing to provide the service to the main client. In addition, the figure of parasubordination must recognize that the service provider does not have complete control over the form and manner in which the work is performed, which may generate a situation of vulnerability in terms of occupational safety and health.

In short, the figure of parasubordination gives recognition to a relationship of economic dependence that affects the freedom of action and control of the service provider over the form and manner in which the work is performed, and therefore generates a situation of vulnerability.

Indeed, in the figure of parasubordination or Economically Dependent Self-Employed Workers (TRADE) we are not talking about an employment relationship of subordination in which the worker is under the orders and direction of the employer, but of a contractual relationship between a supplier and its client.

In this regard, it is important to note that the figure of parasubordination or TRADE differs from subordinate employment, since in the latter case, the worker is subordinate to the orders and direction of the employer and has an economic dependence on the salary received, while in parasubordination or TRADE, the service provider has some autonomy in the provision of the service, but has a significant economic dependence on the main client.

For this reason, the terminology used in the legislation, as in the case of Law 20/2007 on self-employed workers in Spain, refers to the client instead of the employer, since it is a commercial relationship between two parties in which the service provider is a self-employed worker economically dependent on the client.

At this point it is necessary to clarify, that the dependent self-employed in principle moves away from the figure of the trader and that parasubordination cannot be confused with other figures, such as self-employment or freelance work. In the case of self-employment, the worker has total autonomy in the organization of his work and is not subject to a particular client, but seeks and establishes commercial relations with different clients. In parasubordination, on the other hand, the worker is economically dependent on a particular client and his activity is mainly directed towards that client. Therefore, it is necessary to establish a specific regulation for the figure of parasubordination and not to condition it to articles 632 and 633 of the Code of Commerce, since it is not about the purchase and sale of goods or the provision of commercial services per se, but a relationship between a self-employed worker and a client who presents an economic dependence, whose legislation should ensure the protection of economically dependent self-employed workers, balancing the relationship between them and their clients, avoiding situations of abuse or exploitation and promoting a fair remuneration for the services rendered. Thus, parasubordination is a relationship that is neither civil nor commercial, which has its own characteristics that must be specifically regulated to avoid situations of abuse or exploitation by its clients.

In order for parasubordination to be valid and produce legal effects that can be pursued, the constituent elements of such figure must be present, so there must be a relationship of coordinated collaboration. This implies that between the self-employed worker and his client there must exist a mutual cooperation and a common agreement as to the way in which the service will be rendered and the contractual obligations will be fulfilled. A second essential element is that the relationship must be continuous, which means that the self-employed worker renders his services on a frequent and regular basis, and that his economic dependence derives from the continuity of such rendering of services. As a third constitutive element is the personal nature of the relationship, this must be of a prevalently personal nature, which means that the self-employed worker provides his services personally, without being able to delegate his work to third parties without the express consent of the client, i.e. the service provided depends to a large extent on the skills and knowledge of the self-employed worker, and cannot be easily substituted by another service provider.

Once the elements that determine parasubordination have been identified, we must define the additional conditions that must be met in order to classify a self-employed worker as parasubordinate. The first of the conditions is that the hiring of this worker must be on his own account. In the parasubordinate relationship, the service provider starts as an autonomous and independent worker, but with time and the continuity of his economic dependence to a particular client, he may be considered as a parasubordinate. In other words, the relationship of coordinated, ongoing and predominantly personal collaboration is shaped as the service provider develops economic dependence on the client. It is therefore important to bear in mind that this characteristic is not static, but may evolve over time.

Once the first condition has been determined, we must also bear in mind that the contractual relationship must be coordinated, a term that may be ambiguous; however, in parasubordination, this coordination acquires a particular dimension since it is a contractual relationship between a service provider and its client, in which the former is in a situation of economic dependence with respect to the latter. In this sense, coordination refers to the need for the service provider to follow certain instructions or guidelines established by the client in order to carry out its work. This is because the service provider is economically dependent on the client, and therefore needs to maintain a good business relationship with the client to ensure that he continues to receive work.

It is also important to note that this coordination does not refer to labor subordination, since the service provider remains autonomous in the organization and management of his work. In parasubordination, the service provider has some freedom to organize his work, but must follow certain guidelines or directives from the client. Therefore, coordination in the contractual relationship in parasubordination refers to the need for the service provider to follow certain instructions or guidelines established by the client, without this implying complete labor subordination.

In other words, coordination refers to the existence of an agreement between the service provider and his client as to the tasks and activities to be carried out. The work of the dependent freelancer is connected to the interests of the client, who has an interest in the activity in question being carried out. Thus, coordination implies a collaboration and a connection between the parties involved in the contractual relationship.

Notwithstanding the collaboration and coordination, this relationship must be essentially lasting in time or continuous for it to be determined as parasubordination, which means that relationships that are purely commercial or civil and sporadic cannot be considered as parasubordination. The continuity of the relationship helps to determine whether or not there is economic dependence, which is a distinguishing characteristic of Economically Dependent Self-Employed Workers (TRADE). Therefore, economic dependence can only exist if there is a continuous activity with the client through a continuous relationship in time, in which the dependent self-employed worker performs his economic activity on a regular basis and with certain regularity for the same client or clients.

In that order, we refer to economic dependence as another of the characteristics that is manifested when the TRADE performs its productive activity in a habitual and continuous manner for a specific client or clients, and its economic income depends to a large extent on these continuous business relationships. Therefore, the continuity in the commercial relationship is crucial to determine whether or not a parasubordinated relationship exists, since it allows to evaluate the degree of economic dependence of the TRADE and the implicit subordination that may exist in such commercial relationship.

Another important point is that the relationship must have a prevalently personal character, the economically dependent self-employed worker being the one who performs the service personally. In other words, the provision of services must be mainly performed by the TRADE, with no other workers under his supervision or direction, in order for the relationship to be considered as parasubordination. In the regulation of certain countries, it is required that the TRADE does not have employees under his supervision, in order to delimit this figure for those who have a real economic dependence on their clients. This ensures that the TRADE is the one who performs the productive activity and that its income depends on its own capacity and effort, which is indicative of a true economic dependence on the client.

Lastly, but equally relevant, is the need for the economically dependent self-employed worker to receive adequate remuneration according to the activity performed and to assume the risk of the same. The fundamental difference between a TRADE and an employee lies in the element of risk, since "economic dependence is a manifestation of the risk assumed by the economically dependent self-employed worker, which is manifested in the assumption of the investment and expenses necessary for the provision of the service and in the possibility of making profits or suffering losses in the exercise of his economic activity" . Therefore, the remuneration received by the TRADE must be proportional to its activity and the expenses necessary to carry it out, and in addition, the TRADE must assume the entrepreneurial risk of its productive activity. This differentiates him from an employee, who receives a fixed remuneration and does not assume the entrepreneurial risk of his work activity.

Once we have seen what defines an economically dependent self-employed worker, also called parasubordinate or TRADE, we must establish what the usefulness of this figure is. Indeed, the figure of parasubordination arises to protect those workers who, although they cannot be considered as subordinate employees, have a significant economic dependence on a particular client or company.

In this sense, the list of workers who could benefit from parasubordination may vary depending on the country or region in which it is applied, but in general includes those workers who provide services autonomously and are economically dependent on a particular client or company, such as real estate consultants, computer systems analysts, freelance photographers, parking attendants, franchisees, insurance agents and subagents, transport and delivery drivers, canvassers, tourist guides or informants, cleaning staff, advertising and fine art models, press contributors and photojournalists, sports monitors, and some cases of telework.

In summary, parasubordination seeks to protect those self-employed workers who, although they do not have a subordinate employment relationship with their clients, have a significant economic dependence on them and, therefore, require certain legal protection to guarantee their labor rights. Thus, parasubordination is not a theoretical concept that lacks practical application, but applies to various self-employed workers who, due to their economic dependence on a particular client or company, can be considered as parasubordinate.

This means, that although they do not have a subordinate employment relationship with their clients, they are in a position of significant economic dependence and, therefore, need certain legal protection to guarantee their labor rights. By recognizing the existence of parasubordination, certain protection measures and benefits can be established for these workers, such as the possibility of establishing a minimum wage or a maximum working day, receiving severance payments, paid vacations, among others.

In short, parasubordination is a figure that has a practical application in daily life, since it allows the protection of those self-employed workers who, despite not being subordinate, have a significant economic dependence on their clients or companies and, therefore, require certain protective measures to guarantee their labor rights and improve their living conditions.

In short, parasubordination is a figure that has a practical application in daily life as it is increasingly present in the evolution of production processes, so it urgently requires the initiation of a debate that involves all the necessary actors and consequently leads to its recognition and regulation.

Bibliography

CAAMAÑO ROJO, Eduardo. La Parasubordinación o Trabajo Autónomo Económicamente Dependiente. El Empleo en las Fronteras del Derecho del Trabajo. Revista Laboral Chilena [en línea], 2004-2005, p. 17. Disponible en: https://docplayer.es/32904543-La-parasubordinacion-o-trabajo-autonomo-economicamente-dependiente-el-empleo-en-las-fronteras-del-derecho-del-trabajo.html [consulta: 15 febrero 2023].
CALVO GALLEGO, Francisco Javier. Los Trabajadores Autónomos Dependientes: Una Primera Aproximación. Unirioja.es [en línea], núm. 81, 2005, pp. 41-78. Disponible en: https://dialnet.unirioja.es/descarga/articulo/1395130.pdf [consulta: 15 febrero 2023].
GALIANA MORENO, Jesús M. El Trabajador Autónomo Dependiente dos años después de la aprobación del Estatuto del Trabajador Autónomo. Aportaciones prácticas del RD197/2009 que desarrolla la Ley 20/2007. Op. cit., p. 300.
MARTÍNEZ BARROSO, María de los Reyes. El trabajo autónomo económicamente dependiente. Reflexiones a raíz del Proyecto de ley del Estatuto de trabajo autónomo. España: AFDUDC, No. 11, 2007, p. 457. ISSN-e 2530-6324.

Rodolfo Arturo Colón Cruz
Partner and Director of Labor Law at Estrella & Tupete, Abogados.
r.colon@estrellatupete.com

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