Using a freelancer to perform the work of a full-time employee is a legal fraud and can have serious consequences for the company. Let’s take a closer look at these common cost-saving measures in this article.
A fake freelancing situation is when a company hires independent contractors to perform the work of a full-time employee without providing benefits. This is an illegal cost-cutting strategy used by some businesses.
After the economic crisis, fake freelancing is on the rise. This allows businesses to avoid taxes and other costs incurred by hiring full-time employees.
While this can be beneficial for business in the short term, it is highly deceptive and can have serious legal consequences.
So , let’s take a look at how to identify fake freelancers and the legal implications of hiring them.
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Fake Freelance: What is it and how to identify it?
There is no official legal definition of fake freelancing in Spain.
Basically, fake freelancers are people who are registered as independent contractors for tax purposes, but work as if they were full-time employees at the company.
- The company determines the salaries of its employees.
- Employees must comply with company rules and guidelines. In other words, they do not work independently.
- Employees use the company’s resources, facilities and business strategy .
Fake freelancers are freelance workers who follow company guidelines and use business resources.
Therefore, they have no autonomy in their work. Do whatever your boss tells you, and act as if you were a full-time employee. As such, fake freelancing itself is a contradictory and harmful situation. Because employees have certain privileges that fake freelancers don’t, fake freelancers don’t count as full-time employees.
The legality of the situation
What is legally important is not what is written in the document. It suffices to refer to the phrase “a contract is not what an employee says who he is, but a contract in itself”. At the end of the day, the ‘freelancer’ follows the requirements and conditions of a full-time employee. As a result, the company was committing fraud by not paying the amount it was owed when it actually hired an employee as a full-time employee.
Companies use fake freelancers to avoid the cost of hiring employees like this. However, this kind of fraud can have serious consequences, including fines.
Fake Freelancing: What are the downsides?
Since workers are technically independent contractors, they are not subject to the general laws relating to the protection of employees. That means you will not have the minimum wage, paid leave, sick leave, bonuses, or other benefits that regular employees may have.
At the same time, freelancers register and pay taxes as self-employed, and fake freelancers must do the same.
Not only that, but if anything happens, the fake freelancer has no right to unemployment benefits (unless he himself pays the scheme directly). Finally, if fired, he will not receive any severance pay unless he has signed a contract with the company.
This illegal situation can be easily proved. So, if you’re working as a fake freelancer, you should reveal yourself. The company will then be fined for not registering the fake freelancer and offering the benefit.
Also, we can require the company to pay social security fees and taxes for the past four years.
If you find yourself in this situation in Spain and decide to object to the company, you can file a complaint with the social court or the Labor Inspectorate.
Financially dependent freelancers
To address this problem, the Spanish government has created a category called “economically dependent freelancers”. This is a contract that freelancers can use if they receive more than 75% of their salary from a single client.
At first glance, the fake freelancing situation may seem legitimate. In practice, however, it offers several advantages to the self-employed.
- The right to receive unemployment benefits.
- maternity leave.
- 18 days of unpaid leave.
But is this solution really suitable for solving the current problem? In fact, economically dependent self-employment contracts do not offer many advantages. They also have to pay self-employment taxes and social security fees.
In conclusion, you should keep these two possibilities in mind when signing a contract with a company. Don’t let them take advantage of us, and let’s not pressure them into legally dangerous situations.
These days, many companies like Glovo and Deliveroo (with pending lawsuits over fake freelancing issues) are profiting at the expense of their employees’ rights.
