Professional services: Can they always be used?
Rubén M. Castillo Gill
Panamanian labor law states that an employment relationship exists if it can be proven that there is legal subordination or economic dependence.
Legal subordination is the fundamental element. This is manifested through the orders that are issued, the marking of cards, the obligation to comply with procedures, etc.
If there are doubts, the criterion of economic dependence, which assumes that the income of the service provider is its main economic source, will prevail.
It must be remembered that labor law is reality law, which implies that the denomination of the contract does not matter, since if there is legal subordination or economic dependence, a judge may conclude that there is an employment relationship.
We have seen that in some cases, for example when hiring retirees, it is done through a professional services contract, which is a mistake and can have serious legal consequences. Get advice first before proceeding.
IMPORTANT: A real professional service implies that the activity performed is not related to the core business of the company, there is administrative autonomy, and there are no pre-established schedules and, among others, services are provided to several companies.
