What is a bogus self-employed worker and what are the legal consequences?

The number of bogus self-employed workers (falsos autónomos) has risen considerably. These are workers whom companies have engaged as self-employed but who should in fact be employees.

Bogus self-employment is in the sights of the Labor Inspectorate (Inspección de Trabajo). In this article we analyze what a bogus self-employed worker is, the characteristics of their work, their relationship with the company, and the heavy penalties for companies that commit labor fraud.
To determine clearly who is a bogus self-employed worker, a number of characteristic features can help you identify one:
• The company sets the instructions and guidelines for carrying out their activities.
• The company sets the pay received by the bogus self-employed worker.
• The bogus self-employed worker is dependent on the company, since by providing services on behalf of another party they become an employee.
• Likewise, to carry out their activities, the bogus self-employed worker must use the resources and production processes of the company to which they provide their services.
Penalties for hiring a bogus self-employed worker
Companies that hire bogus self-employed workers face financial penalties for these irregularities. The penalties range from €3,126 to €10,000 and are divided into three grades: minimum, medium, and maximum. The penalty for each grade is as follows:
• Minimum penalty: from €3,126 to €6,250.
• Medium penalty: from €6,251 to €8,000.
• Maximum penalty: from €8,001 to €10,000.
However, these are not the only penalties imposed on employers who hire self-employed workers.
The penalty also carries further financial consequences. In such cases, the Labor Inspectorate requires the company to pay all Social Security contributions for the relevant period. Where that period cannot be established, the company must pay, at a minimum, the amount corresponding to the last four years. The penalty ranges from 100% to 150% of the unpaid contributions.
Nevertheless, although the worker generally does not have to pay any fine, on some occasions they do. The bogus self-employed worker must pay a penalty where they have deducted VAT (IVA) in their quarterly returns, and also where, together with the company, they have received Social Security benefits.
If these contributions for the last four years of activity total more than €50,000, the conduct will be treated as a criminal offense, which may even lead to a prison sentence for the employer.
TRADE: economically dependent self-employed worker
Economically dependent self-employed workers (trabajadores autónomos económicamente dependientes, TRADE) are those who carry out an economic or professional activity for remuneration, on a habitual, personal, direct, and predominant basis, for an individual or legal entity, referred to as the client.
They are economically dependent on that client because they receive approximately 75% of their employment income and business and professional income from that client.
These workers enjoy certain advantages compared with both employees and ordinary self-employed workers.
The most significant advantages are the following:
• They are entitled to receive unemployment benefit in the event of dismissal or breach of contract by the client.
• The right to 18 days of unpaid vacation.
Differences between a bogus self-employed worker and a dependent self-employed worker
Although these two figures may appear to share similarities, or even to be practically identical, this is not the case.
A bogus self-employed worker has nothing in common with a dependent self-employed worker; in fact, they are opposites.
First, economically dependent self-employed workers have a commercial, not an employment, relationship with the company, unlike bogus self-employed workers.
The requirements that a self-employed worker must meet to be considered economically dependent under the Self-Employed Workers’ Statute (Estatuto del Trabajador Autónomo) are as follows:
• Not having employees and not contracting or subcontracting all or part of the activity to third parties.
• Having their own resources to carry out the work. However, a dependent self-employed worker cannot be the holder of premises or an office open to the public, because they would then be considered to be working for another person.
• The activity must be different from that performed by the client’s other workers.
• Not holding the status of a partner.
• Carrying out the activity according to their own judgment, with no one but themselves directing how they act, without prejudice to any instructions the client may give.
• Receiving consideration based on the activity performed. Self-employed workers normally do not receive a fixed monthly salary; instead, they issue an invoice for the income from their economic activity.