#CostaRica 🇨🇷 #BDS_Article: Outsourcing: The Thin Line Between the Provision of Services and an Employment Relationship

In today’s business landscape, marked by operational flexibility, outsourcing or subcontracting services has become a key strategy for delegating ancillary or non-core functions, managing costs, and maintaining leaner organizational structures. However, this practice may entail significant legal risks if not managed with due legal rigor, particularly when the boundaries between a commercial relationship and an employment relationship become blurred.

In Costa Rican practice, it is common to find outsourced services under outsourcing contracts or professional services agreements. In such cases, the individual performing the service does not have a direct employment relationship with the beneficiary company but is instead legally dependent on the service vendor. Nevertheless, when day-to-day operations begin to reflect elements characteristic of legal subordination, the situation may give rise to what is known as the “laborization” of the relationship.

From a labor law perspective, what determines the existence of an employment relationship is not the label assigned to the contract by the parties, but rather the factual circumstances surrounding the relationship. This has been repeatedly confirmed by the national jurisprudence. Accordingly, if an individual performs their services under direct instructions from the staff of the contracting company, adheres to fixed schedules, is functionally and operationally dependent on said company, and lacks technical independence, then the arrangement amounts to a disguised employment relationship, regardless of the formal designation as a commercial agreement.

Assigning a corporate email address, for example, may seem like a harmless or purely operational measure. However, in the context of legal proceedings, it may be construed as an indication of integration into the internal structure of the company—especially if there is no contract that restricts its use exclusively to technical or cybersecurity purposes. The same applies to the use of uniforms or physical badges bearing the client's logo, slogan, or corporate colors, particularly when used without any clarification regarding the individual's status as a contractor.

The situation becomes more serious when, in addition to such signs of integration, the contracting company allows or encourages the functional inclusion of external personnel—for instance, by inviting them to internal activities, granting access to company benefits, or incorporating them into organizational charts or corporate communication channels. These actions, although they may stem from practical considerations or courtesy, can create a legitimate expectation of entitlement to labor rights and may even serve as evidence to support claims of disguised subordination.

When these atypical arrangements are challenged in judicial or administrative proceedings, the consequences for the beneficiary company may be manifold and significant. From a legal standpoint, the company could be required to assume obligations that were not originally its responsibility, either due to the judicial recognition of a disguised employment relationship or as a result of the finding of joint and several liability for the vendor’s noncompliance.

In both scenarios, the financial implications can be severe, including the payment of labor entitlements, unpaid social security contributions, and administrative penalties. Moreover, the reputational risk of being associated with hiring schemes that infringe upon workers’ rights should not be underestimated, as this may negatively impact the public image of the organization.

In conclusion, the key to avoiding legal contingencies lies in maintaining consistency between the agreed terms and the actual development of the relationship. Outsourcing, in and of itself, is neither illegal nor inherently questionable. The risk arises when, in the pursuit of efficiency or control, the contractor becomes indistinguishable from an internal employee as a result of certain practices implemented.

At a time when labor inspections are increasingly active and relationship traceability is enhanced by technology, companies must strengthen their internal governance, provide training to those who interact with external staff, and properly document the boundaries of each relationship. Only in this way can organizations harness the benefits of outsourcing without compromising their legal security.

Melissa Sandoval 

Attorney, BDS Asesores

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