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The Law 20/2007, of 11 July, on the Self-Employed Workers' Statute and the subsequent Royal Decree 197/2009, of 23 February, which develops the Self-Employed Workers' Statute in relation to contracts for economically dependent self-employed workers (known as TRADEs), sets out the minimum content required in TRADE contracts and the procedure for their registration. These contracts must cover matters such as annual leave, rest periods and working hours, and may also include additional clauses such as compensation for dismissal.
In addition, the Royal Decree establishes the National Register of Professional Associations of Self-Employed Workers.
The Self-Employed Workers' Statute and the TRADE
The adoption of the Self-Employed Workers' Statute introduced a set of rights and measures for a group that has traditionally enjoyed less social protection and which encompasses more than three million workers in total. The measures were designed to bring the situation of the Economically Dependent Self-Employed Worker (TRADE) closer to that of employees working under a standard employment relationship.
An Economically Dependent Self-Employed Worker is defined as a self-employed worker who carries out an economic or professional activity on a for-profit basis, regularly, personally, directly and predominantly for a single client, from whom they receive at least 75% of their income from work and economic or professional activities.
This new framework regulating the form of contracts for economically dependent self-employed workers will allow a significant number of self-employed workers to regularise their status, particularly those active in sectors such as transport, insurance and commercial agency, provided they meet the conditions described above. Following publication of the Royal Decree in the Spanish Official Gazette (BOE), TRADEs will have three months to request formal recognition of their status from the companies with which they contract.
DOES TRADE STATUS REQUIRE THE COMPANY'S APPROVAL?
- Following several shifts in case law regarding the formal requirement to put the contract in writing for a relationship to be classified as TRADE, in accordance with the literal wording of Article 12.1 of Law 20/2007, the Supreme Court consolidates and establishes binding doctrine in its ruling of 12 Jun. 2012, Case 2060/2011, holding that the substantive requirements of Article 11 take precedence over formal ones, meaning that where those requirements are met, the working relationship is classified as TRADE.
How to obtain TRADE status?
The self-employed worker must give formal notice to the company of their TRADE status, in accordance with Article 11 bis of Law 20/2007. If the company refuses to formalise the contract in writing, the self-employed worker may bring a claim before the court to have that status recognised.
Requirements to qualify as TRADE
The TRADE must meet the following requirements:
- economic or professional activity carried out for profit, on a regular basis, personally and directly for a client
- economic dependence on the client, receiving at least 75% of their income from that client
- Not carrying out the activity as the owner of a business premises, commercial or industrial establishment, or offices and consulting rooms open to the public
- Not carrying out their activity jointly with other professionals through a corporate structure or any other legally recognised form.
And simultaneously meeting the following requirements:
- Performing their work in a manner distinct from any employee of the client. That is, not carrying out their activity in a way that is indistinguishable from that of workers providing services under any form of employment contract on behalf of the client.
- Having their own productive and material infrastructure, necessary for carrying out their activity and independent from that of their client.
- Carrying out their activity according to their own organisational criteria, without prejudice to any technical guidance they may receive from their client.
- Receiving financial consideration based on the results of their activity
- Assuming commercial risk
- Not having employees on their payroll
- except during pregnancy risk leave or breastfeeding risk leave for a child under nine months
- except during leave for birth, adoption, pre-adoptive guardianship, and foster care
- except when caring for children under seven years of age in their charge
- except when caring for a family member, by blood or marriage up to the second degree inclusive
- except when caring for a family member, by blood or marriage up to the second degree inclusive, with a disability of 33% or more.
- except where two or more of the above conditions apply simultaneously.
Regulation of the TRADE status under Royal Decree 197/2009
From the rules governing contracts entered into by the economically dependent employee and their client, the following aspects are worth highlighting:
- The civil, commercial or administrative nature of the relationship between the economically dependent self-employed worker and their client is emphasised; under no circumstances does it constitute an employment relationship.
- The criteria for determining economically dependent employee status are clarified. This strengthens legal certainty both for the self-employed worker and for those who engage them.
- It is established as mandatory that the economically dependent self-employed worker notify their client of that status at the time of entering into the contract.
- The minimum content of the contract entered into between the economically dependent self-employed worker and their client is established. This includes, among other aspects, the determination of working hours, rest periods and annual leave (of at least eighteen working days), as well as the applicable professional interest agreement. It should be noted that the parties may also agree on other matters, such as the possible remuneration of holiday periods or compensation in the event of dismissal.
In addition, it must be expressly stated that the self-employed worker meets the requirements to acquire the status of economically dependent worker in relation to the client with whom they are contracting.
The Royal Decree sets out certain specific provisions for particular groups: insurance agents, commercial agents and hauliers.
Finally, the Register in which these contracts must be recorded is also regulated. The contract must be registered by the economically dependent self-employed worker within ten working days of its conclusion.
HOW THE TRADE CONTRACT IS TERMINATED
The contractual relationship between the parties shall be terminated upon the occurrence of any of the following circumstances:
- Mutual agreement of the parties.
- Grounds validly set out in the contract, unless those grounds constitute a manifest abuse of rights.
- Death, retirement or disability incompatible with the pursuit of the professional activity, in accordance with the applicable Social Security legislation.
- withdrawal from contract by the economically dependent self-employed worker, in which case the stipulated notice period, or that established by custom and practice, must be observed.
- The will of the economically dependent self-employed worker, based on a serious breach of contract by the other party.
- The will of the client on justified grounds, subject to the stipulated notice period, or that established by custom and practice, being observed.
- By decision of the economically dependent self-employed worker who is compelled to terminate the contractual relationship as a result of being a victim of gender-based violence.
- Any other legally established ground.
STATUTORY COMPENSATION FOR TRADE CONTRACTS
For breach of contract by the other party:
Either party that terminates the contract due to breach of contract by the other party shall be entitled to receive the corresponding compensation for losses and damages caused (Article 15 of the TRADE Act).
The client without justified cause:
If the client terminates the contract without justified cause, the TRADE worker shall be entitled to compensation for losses and damages.The TRADE worker through withdrawal from contract:
- they must respect the agreed notice period, or that established by custom and practice,
- the client may be entitled to compensation where such withdrawal from contract causes them significant prejudice that halts or seriously disrupts the normal course of their business.
Amount of compensation:
The TRADE worker shall be entitled to the compensation set out in the individual contract or in the applicable professional interest agreement.
Where no such compensation is stipulated, the following factors, among others, shall be taken into account:
- the remaining expected duration of the contract
- the seriousness of the client's breach
- the investments and advance expenses incurred by the TRADE worker in connection with the performance of the contracted professional activity
- the notice period granted by the client regarding the contract termination date.
National Registry of Professional Associations of Self-Employed Workers
This is a Registry in which all Professional Associations of Self-Employed Workers operating throughout Spanish territory are required to register and deposit their statutes.
This Registry is national in scope and falls under the organisational authority of the Ministry of Labour and Immigration, attached to the Directorate-General for Social Economy, Self-Employment and Corporate Social Responsibility.
Associations whose activity is carried out primarily within a single Autonomous Community, that is, where more than 50% of their members are domiciled in the same regional territory, are not required to register in this Registry.
This Registry will be of significant relevance for assessing the representativeness of the associations that will, in future, form part of the Self-Employment Council.
ECONOMICALLY DEPENDENT SELF-EMPLOYED WORKER (TRADE) CONTRACT TEMPLATE
Royal Decree 197/2009 sets out the following template contract for economically dependent self-employed workers (TRADE), which we can adapt to your specific needs.
Contact us if you require professional advice:
Economically dependent self-employed employee contract template
In ______________, on the ____ day of _______________, ________
THE PARTIES
On the one part, the CLIENT, company _________________________________, registered address at _______________________, street ______________________________, number _______, and Tax Identification Number (NIF) _______________, represented herein by Mr/Ms _______________________________, of legal age, residing in ________________, with address at street _____________________________________, number _______, and ID/Foreigner Identity Number (NIE) ____________________,
On the other part, the SELF-EMPLOYED employee, Mr/Ms _______________________________, of legal age, residing in __________, with address at street _____________________, number ________, and ID/Foreigner Identity Number (NIE) ____________________
Both parties mutually acknowledge that they have the legal capacity required to enter into this agreement, and on that basis
SET OUT THE FOLLOWING
1. The self-employed employee expressly confirms their status as an economically dependent self-employed worker in relation to the client.
2. The self-employed employee declares that their activity as an economically dependent self-employed worker is not carried out in an undifferentiated manner alongside workers providing services under any form of employment contract on behalf of the client, and that they carry out the activity according to their own organisational criteria, without prejudice to any technical instructions they may receive from the client, and assuming all associated risk.
3. The self-employed employee declares that they receive income from economic or professional activities from the client amounting to at least 75 per cent of their total income from employment and economic or professional activities; that they do not employ workers on their behalf nor intend to subcontract part or all of the work contracted with the client or any work contracted with other clients; that they have their own productive infrastructure and materials necessary for carrying out the activity, independent of those of the client, where economically relevant to the activity concerned; that they will notify the client in writing of any changes to their status as an economically dependent worker during the term of this agreement; that they do not own commercial, industrial or professional premises or offices open to the public; and that they do not practise their profession jointly with other professionals through a corporate structure or any other legally recognised form.
4. Both parties agree to formalise this agreement in accordance with the following
CLAUSES
First., The economically dependent self-employed employee shall provide professional services of ________________ or carry out the assignment or work of ____________ for the client, from whom they shall receive financial consideration for the performance of their professional or economic activity or the assignment or work in the amount of ________________ euros, payable at the time and in the manner agreed. Payment shall be made within _____ days of receipt of the corresponding invoice. In the absence of any specific agreement, the payment period shall be 30 days.
Second., The duration of this agreement shall be __________ days/months/years, or for the duration of the work or service of _________________, running from ____/____ to ____/_____, or until completion of the work or service.
Third. – The working hours of the economically dependent self-employed worker's professional or economic activity may have a maximum duration of _____________ hours per day/week/month, distributed as follows: ________________________________________________________ The applicable weekly rest regime and public holidays shall be: __________________________________
The economically dependent self-employed worker shall be entitled to an annual interruption of activity of ________ days.
In cases of gender-based violence, this clause shall be amended to adapt the working schedule and its distribution of the economically dependent self-employed worker in order to ensure effective protection or the right to comprehensive social assistance.
Fourth. – In the event of termination of contract by withdrawal from contract of the economically dependent self-employed worker, the worker must give the client prior notice of _________ days. In the event of termination of contract by the client on justified grounds, the client must give the worker prior notice of ___________ days.
Fifth. – In addition to those set out in Articles 15.1(b) and 16.2 of Law 20/2007, of 11 July, the following shall also constitute grounds for termination or justified interruption of the contract:
_______________________________________________________________________
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Sixth. – The amount of compensation payable to the economically dependent self-employed worker or to the client by virtue of the provisions of Article 15 of Law 20/2007, of 11 July, shall be: __________________________
Seventh. – Applicable professional interest agreement (where one exists and with the consent of the economically dependent self-employed worker): ___________________________________________________________________________
Eighth. – The economically dependent self-employed worker and the client undertake to enhance the effectiveness of the right to physical integrity, adequate protection of health and safety at work, and preventive training for the economically dependent self-employed worker. To this end, they agree to the following measures:
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Ninth. – Contractual conditions applicable in the event that the economically dependent self-employed employee ceases to meet the economic dependence requirement:
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Tenth. – This contract shall be registered with the Public Employment Service (SEPE) or the corresponding body of the Autonomous Community to which management has been delegated, by the economically dependent self-employed employee within 10 working days of its execution. The economically dependent self-employed employee shall notify the client that the contract has been registered within 5 working days following registration. If 15 working days have elapsed since the contract was entered into without the economically dependent self-employed employee having provided confirmation of registration, the client shall register it with the Public Employment Service (SEPE) within the following 10 working days. Any amendments to the contract and its termination shall likewise be notified within the same timeframes set out above.
ADDITIONAL CLAUSES
In witness whereof, this contract is executed in triplicate at the place and on the date stated in the heading, and is signed by the parties,
Self-employed employee Client
