False self-employment: a punishable practice in the company

False self-employed persons are people who, being registered within the self-employed system, nevertheless work under a dependent relationship with a company.

Occasionally, companies sign contracts with third parties that imply that persons (self-employed persons) render their services in the company´s main work centre and have constant contact with the company’s personnel. In these cases, and when there is no clear distinction between both groups of workers, the services that each provides or the way they perform those services, great risks for the main company can occur.

In order to prevent these workers from being considered self-employed persons, it is necessary that the four features of employment which are included in art. 1.1 of the Workers’ Statue exist: remuneration, voluntariness, alienation and dependence, with respect to the main company.

The features of employment

Remuneration

The self-employed person must receive a variable remuneration associated with the work he or she performs. Although there may be a fixed part, there cannot be a total wage guarantee. The remuneration will depend on the services rendered and billed each month. Thus, the calculation of the remuneration or of the same principal concepts must be done according to a criterion that is related and proportionate to the specific activity rendered.

Voluntariness

The self-employed person must provide his or her services voluntarily just as a common ordinary worker would.

Alienation from risks and benefits

This feature of employment does not exist in the relationship with a self-employed person because it is work for his or her own account and not for that of someone else. The professional self-employed person assumes the risks inherent in the provision of his or her services in his or her company and profits from the benefits derived from this service. It is the self-employed person who is responsible for the costs and risks of providing the services, as well as who obtains the benefit and the economic result of the activities in which he or she participates.

Dependence

This feature of employment does not occur in the relationship with a self-employed person to the extent that the experienced self-employed person provides his or her services within his or her own organization and direction. He or she does not receive orders, guidelines or instructions from anyone.

Interpreting and reinforcing these employment features of article 1.1. of the Workers’ Statute, especially those referring to alienation and dependence because they are the most problematic ones, the Spanish Supreme Court has recently ruled in two judgments delivered by the Social Chamber of January 24, 2018 and in a third judgment of the same Room of February 8, 2018.

For the unification of doctrine, three identical factual situations are adressed through the resolution of three appeals filed by the company Zardoya Otis against three judgments of the Spanish Superior Court of Justice. The judgments recognize the existence of a salaried contractual labour relationship despite that the contract initially signed by each of the three plaintiffs with their company was called framework collaboration contract for the execution of works and the three were informally considered self-employed workers.

The judgments state that for the declaration of the existence of a commercial and non-labour relationship, the self-employed worker’s performances must be limited to the practice of specific professional acts. And thus without any subjection to working hours, vacations, orders, or instructions. He or she completes said work with complete freedom, meaning, doing his or her work independently and being in charge for the business risk inherent to the activity.

Regarding the feature of dependency, the most common signs in this area are:

  • Assistance to the work centre of the main company or to the place of work designated by the company
  • Following to a schedule
  • Insertion of the professional in the work organization of the main company, which is ultimately in charge of planning his or her activity

Regarding the feature of alienation, the judgments indicate the most significant signs as:

  • Adoption of decisions by the main company – and not the worker – concerning market relations or public relations, such as pricing or tariffs, the selection of customers, or indication of the people to attend
  • Delivery by the worker to the main company of the products made or services performed.

Regarding alienation, and as the most relevant fact for the determination of an employment relationship, these judgments underline that not only workers provide their services within the scope of organization and direction of the commercial company. The company itself provides them with equipment as well as instructions – in this case assembly – and specific training for performing duties. To this end, it is also noticeable the very small amount of worker´s investment in order to develop the entrusted activity (mobile phone, vehicle, common tools) against the enormous investment made by the main company and delivered to the worker (specialized tools, specialized vehicles for the transportation of parts, training to know the facilities to be assembled and the way to do it).

It is fundamental that companies know the type of professionals who provide them services. In the case of having self-employed workers and the concurrence of any of the employment features, the company must proceed to make the appropriate changes since the rendering of services by the false self-employed person can cause serious consequences.

This article is not considered as legal advice

Mariscal Abogados

Mariscal Abogados is an international and multidisciplinary law firm with proven experience in diverse areas of the Law. Our working languages are English, German, French and Spanish. For any further enquiries please Contact us