The challenges facing international companies often involve finding mechanisms to speed up the procedures for recruiting and hiring workers, regardless of where they are based. In a global world that includes digital nomads and workers who easily change their place of residence and area of activity, employers expect there to be no bureaucratic obstacles to hiring talent and the sooner this is possible, the better.
An Employer Of Record (EoR) can be classified as an organisation that assumes legal responsibility for employing a worker on behalf of its company and managing the employment relationship despite not being the beneficiary of the work provided.
Commonly, these companies are seen by public bodies and the general public as providing support services for the selection, recruitment and hiring of workers, but the workers hired will be working for other organisations and, in this sense, EoRs end up being "intermediaries" in the hiring and management of the employment relationship.
They take on all the obligations towards the worker (namely onboarding the workers, drawing up the employment contract in accordance with Portuguese law and checking for any legal changes, paying wages, paying contributions and taxes, taking out workman's compensation insurance and so on), but they don't maintain an active or constant link with the worker since they don't actually give them any orders, instructions or indications about the work or how to carry it out.
This is a convenient solution for foreign employers who don't need to set up structures in Portugal (or be familiar in detail with labour law and all the procedures involved in hiring workers), but also for workers based in Portugal who, when they see that the entity they will be working for doesn't have any physical or legal structure in Portugal, could be afraid of being hired and, in the event of any issue (such as insolvency or abrupt closure of the business in the country of origin), be left somewhat unprotected.
Without prejudice to the advantages inherent in this form of contracting, it is important to emphasise that there is no legal provision for it in Portugal. In fact, the Portuguese labour system is characterised by the need for close ties between employer and worker, with the exception of situations in which this link is lessened and which are allowed in labour subcontracting situations such as temporary work or the occasional assignment of workers. In these cases, and as legally stipulated, there is a tripartite relationship in which - temporarily - the worker is allowed to work for a third party without, however, losing the initial link. The motivations are related to temporary labour needs (as is the case with temporary work, in which case temporary work companies are set up and identified as such) or the use of surplus labour in situations where there are intra-organisational relationships between the parties involved (as is the case with occasional assignments).
However, this is not the case in the EoR situation, since the assignment of the worker to a third party is not temporary (and without taking into account the type of contract used) but constant and permanent, i.e. it will be the way of providing work for as long as the respective employment contract is in force. We believe that this situation could lead to various situations of contractual complexity, particularly in the event of the termination of an employment contract with the possible allegation of unlawful occasional assignment by the dismissed worker.
Belzuz Advogados offers legal advice in the labour area, particularly in the flexible hiring of workers or hiring by foreign entities without a permanent establishment.
For more information on this subject or any other labour-related matter, please contact the team at the Labour Law Department of Belzuz Abogados, S.L.P. - Sucursal em Portugal.
Departamento Direito Laboral | (Portugal)
Belzuz Abogados SLP
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