Starting up a business in Spain, the Spanish agency contract
In the case that the foreign national beginning business operations in Spain would like to avoid the temporary residency requirements for employees, the foreign national should strongly consider hiring agents within Spain (Spanish physical persons or companies) who already have residency and employment authorization and who are already familiar with the Spanish language, customs, way of business, etc. Hiring agents to locally assist the company, at least as it starts up, is an ideal way to allow agents -with their previous knowledge and experience -to help introduce the new company to the region.
It is also recommended that the foreign national beginning a small- to medium-sized company hire agents instead of employees to avoid the application of the protectionist Workers’ Statute. The Spanish Agency Contract Law is much less protectionist over agents than is the Spanish Workers’ Statute over employees. Thus, hiring agents may be a wiser option for a foreign national starting up a business in Spain not only because of the agents’ presumed familiarity with Spanish business culture, but also because hiring agents requires an employer (principal) to comply with fewer strict regulations.
The following are the greatest differences between drafting a contract for employment and drafting a contract for agency:
- In contracts for regular employment, the worker is often referred to an employee throughout the contract.
- Conversely, in contracts creating an agency relationship, the contract usually specifically states that the worker is NOT an employee.
- In contracts for regular employment, the employee’s duties are often specifically defined, including the type of supervision the employee will receive and the tools that the employer will provide for the employee to do his or her job.
- In contracts creating an agency relationship, the agent’s duties are loosely defined; supervision by the employer is either specifically discounted or not mentioned, and the contract usually references no tools that the employer will provide (this helps courts to interpret a worker to be more of an independent agent).
- The main difference between a contract for regular employment and a contract creating an agency relationship is that the contract for regular employment creates and references a dependent, subordinate relationship between the employer and employee; whereas in the contract creating an agency relationship, a tone of independence is often written into the contract to demonstrate that the agent is free to act independently for the principal without specific guidance on how to carry out his or her duties.
This article is not considered as legal advice