Inspectorate Spain is hunting thousands of companies that cheat with permanent contract

by Lorraine Williamson
permanent contracts

The inspectorate is still hunting thousands of companies that commit fraud with permanent contracts. Uncertainty in the labour market in Spain remains despite various reforms, an increase in permanent contracts and a decrease in agency contracts. 

Although Spain, at the insistence of the EU, implemented labour reforms in 2021, the country continues to struggle with a large number of temporary contracts. Consequently, this still means there is a lot of uncertainty among employees. The labour reform of two years ago punished the temporary hiring of staff. Furthermore, it gave priority to contracts for an indefinite period. 

Decreasing trend, but fraud still prevalent on the Spanish labour market 

Carmen Collado, general director of the labour inspectorate, says that in absolute figures these are fewer numbers, as the number of contracts is also declining, but that fraud is still being committed in multiples. According to data from the EPA (Labour Force Survey), one in 16 contracts (6.2%) still involves fraud. 

Her company reports that inspectors have traced 227,000 employees in 2022 alone, whose contracts have been tampered with. This discovery led to the temporary contracts of these people being converted into a permanent contract. In 2021, this number will still be 370,000. “So there is a downward trend, but the numbers are still large,” says Collado. 

ASSSA - health insurance in Spain

How is fraud committed with contracts in Spain? 

Inspectors most often encounter contracts that end on Friday, before the weekend, or on the last day of the month. In this way, employers save considerably on the payment of wages or social security contributions. 

Despite the fact that there is still a large number of cheating with contracts, the number of employees on permanent contracts has increased from 12.45 million to 13.6 million in one year. At the same time, the number of temporary employees fell from 4.16 million to 3.64 million in the same year. 

Number of bogus self-employed people in Spain still high 

The principle of bogus self-employment was also addressed in 2021. This was the case, for example, with delivery platforms that forced their couriers to become self-employed. Since the reform, employers have been forced to offer the couriers who work for it a contract of employment. Despite this so-called Rider Act, in 2022, 39,000 people – at delivery platforms but also in other sectors – were still being traced who were working as bogus self-employed persons. 

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