Blog

Although the persecution of false freelancers, by the Labor Inspectorate, has intensified in recent times, there are still many entrepreneurs who encourage covering up an employment relationship with a false business relationship.

Why does the false freelancer exist?

The main reasons why entrepreneurs promote this type of fraudulent relationships are the following:

Social Security costs

First, the Social Security costs for an employee with a salary of €1,500 can be around €500-600. However, if the same person performs the same job but is registered as self-employed in RETA, the minimum fee is over €300.

This setup results in an economic benefit of nearly 50%. Employers often offer to cover the self-employed payments, though this doesn’t always happen in practice.

Holidays

If the worker only gets paid when they work, and receives nothing when they don’t, the employer saves significantly on costs. This arrangement means the employer avoids paying a steady salary, benefits, or other fixed costs typically associated with hiring an employee.

Dismissal

Dismissals are often complex and costly. With a false freelancer, the employer avoids these issues. If the employer no longer wants their services, they can simply end the service contract.

Difference between employment relationship and commercial relationship

The objective of this article is to differentiate an employment relationship (employer-employee) from a business relationship (entrepreneur-self-employed).

So let’s apply the legal definition of employed worker found in art. 1.1 of the Workers’ Statute and which mentions the four defining notes:

– WILLFULNESS

– ALIENATION

– DEPENDENCE (or subordination)

– REMUNERATION

The main challenges are in understanding alienation and dependence. The Supreme Court ruling on November 26, 2012, focuses on clarifying criteria to distinguish an employment relationship from a commercial one. Let’s explore these concepts…

Criteria to differentiate an employment relationship from a commercial relationship

Two written contracts with the same content can cover up an employment relationship or a service lease contract of art. 1544 of the Civil Code. The name given to the contract by the parties (that the signed contract is called “work contract” or “service lease”) is not decisive.

Dependence

Dependence refers to the worker being subject, even in a flexible or non-strict way, to the company’s organizational and governing structure. It means the worker is integrated into the employer’s disciplinary and management system, providing services under the direction and organization of someone else, whether a person or a legal entity.

The Supreme Court explains the common signs of dependence as:

1. Attending the employer’s workplace or a location designated by them.
2. Following a set schedule.
3. Performing personal work, which can include occasional substitutions in certain services.
4. Being part of the employer’s work organization, with the employer scheduling the worker’s tasks.
5. The absence of the worker’s own business organization.

Alienation

Alienation refers to the transfer of the benefits or value of the worker’s work to the employer. The employer then assumes the obligation to pay the salary, regardless of whether any profits are made. The signs of alienation are:

1. The worker delivers the products or services to the employer.
2. The employer, not the worker, makes decisions regarding market relations or public interactions, such as pricing, client selection, or assigning people to attend to.
3. The worker receives fixed or periodic remuneration.
4. The worker’s compensation is calculated based on a criterion that reflects the activity performed, without the risks or special profits associated with entrepreneurial or independent professional work.

To sum up…

In summary, if you’re a freelancer and have signed a commercial or service lease agreement with an employer, and if your relationship shows one or more of these signs, you might be a false freelancer.

This means your relationship with the employer should actually be an employment relationship, not a commercial one.

Related articles

All About “Pluriactividad” for Self-employed in Spain

Start Working as a Freelance Teacher in Spain

7 Essential Expenses for Self-Employed In Spain