Joint and Several Liability For Social Security Obligations

The Official Bulletin of the Spanish Parliament has published the draft law 621/0020 amending paragraph 2 of article 42 of the restated text of the Workers’ Statute approved by Royal Legislative Decree 1/1995, of 24 March, which - once approved as law - will read as follows:

«2, The Principal shall, during the three years following the completion of its order, be jointly and severally liable for the Social Security obligations of contractors and subcontractors during the term of the contract or sub-contract.

The joint and several liability for salary obligations of contractors and subcontractors will survive for a year following the completion of the assignment.

There will be no liability for the actions of the contractor when the contracted activity exclusively relates to constructions or repairs that the head of a family can contract with respect to its own dwelling, as well as in those cases where the owner of the work or industry does not contract them as a part of its entrepreneurial activity.

These rules comes as a supplement to the traditional one year joint and several liability of principal/contractor already existing  in wage matters, now also covering the obligations of contractors and subcontractors in the area of obligations vis a vis the social security system. This makes more stringent the need to increase the usual control over contractors, in order to avoid situations of non-compliance that could lead to joint and several liability of the principal.

Contracts must foresee this circumstance, also expressing clearly that a single breach of these obligations of the contractor shall entitle the principal to terminate the contract, although it is always possible to include a term for the subcontractor to cure the default, but such term should, in no case, extend beyond the period of normal fulfillment of these obligations, in order to avoid situations of non-compliance prolonged in time.////