Labour Inspectorate fines 5,500 companies for fraud in ERTE

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MADRID – The Spanish Labour Inspectorate has found violations in one in six ERTE examined. Consequently, €1million in aid would have wrongly ended up with companies. 

ERTE schemes are temporary redundancy schemes to alleviate the negative effects of the corona pandemic on companies. However, 5,459 violations have been uncovered up to 1 June. And, therefore the labour inspectorate has imposed sanctions for a total value of €26million. This was announced by the Minister of Labour, Yolanda Díaz, on Monday. 

A total of 33,553 files were completed from which the aforementioned 5,459 violations emerged. Of the companies currently surveyed 16% were found to have committed fraud. 

One of the most common abuses was maintaining business activity even though that business activity was officially suspended in order to qualify for that ERTE scheme. Another abuse involved employees having to work more hours than included in the partial ERTEs for short-time work. 

Fraud rate above average 

The fraud rate currently being discovered is well above average. Overall, the Labour Inspectorate found 89,230 violations in 2019 from a total of 1,060,484 actions carried out. This equated to 8.4% of the total. 

The number of violations detected in the ERTE is expected to increase in the coming months, as there are still 5,583 Inspectorate actions pending completion. The latest official figures show that there were approximately 97,000 ERTE schemes in effect on July 31, applicable to approximately 331,500 employees. 

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€26 million in fines 

The amount of sanctions imposed for fraud in ERTE already amounts to almost €26million. The Labour Inspectorate has also obliged the offending companies to pay for the unjustified exemptions from social security contributions for their employees that fraudulent companies have benefited from by being in ERTE. In this regard, the labour authority is claiming almost €1million (996,947.25 euros) from the companies for unjustified exemptions. 

ERTE scheme ‘usually’ works well 

The Vice President and Minister of Labour, Yolanda Díaz, has emphasised the mostly smooth functioning of the ERTE. The fraud concerns a minority of the more than half a million companies in Spain that use the mechanism to temporarily lay off all or part of their employees. 

Decrease in use of ERTE 

With the advance of vaccination and the reduction of restrictions against the virus, employment is increasing and this is reflected in an increase in social security affiliation, but also in a decrease in employees and companies covered by ERTE. 330,000 people are still covered by an ERTE scheme. A third of these are still partly at work. 

The government is still considering whether there will be another extension of the ERTE schemes in a context where the restrictions caused by the pandemic are increasingly limited to certain sectors such as tourism. 

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