False Self-Employment

A Common Risk for Foreign Companies Operating in Spain

When international companies expand into Spain, they often choose flexible hiring models to bring in talent quickly and reduce costs. One increasingly common practice is engaging workers as self-employed contractors rather than employees. While this may seem convenient, it can easily cross the line into what Spanish law defines as false self-employment (falsos autónomos).

What Is False Self-Employment?

A worker is considered falsely self-employed when, although formally registered as a contractor or freelancer, the actual relationship meets the legal criteria of an employment contract under Spanish law.

The Spanish Statute of Workers (Estatuto de los Trabajadores) establishes that employment exists when there is:

• Dependence: the worker is subject to the company’s instructions, schedules, or supervision.

• Alienation (Ajenidad): the worker bears no business risk and is paid a fixed wage, not based on profit or loss.

• Integration: the worker is embedded into the company’s structure, performing tasks essential to its activity.

• Provision of means: the company provides tools, resources, or even accommodation to carry out the work.

  
  

If these factors are present, Spanish courts will reclassify the relationship as employment, regardless of the wording of the contract or the chosen jurisdiction.

Why Do Companies Fall Into This Trap?

Foreign companies—particularly from the UK, Ireland, or other EU jurisdictions—may assume that a service contract governed by their home country’s law shields them from Spanish employment regulations.

In practice, Spanish labour law applies if the work is performed habitually in Spain, even if the contract says otherwise. This principle is reinforced by European Court of Justice rulings (such as Koelzsch C-29/10 and Voogsgeerd C-384/10).

What this means is simple: if someone is working day-to-day in Spain under the company’s control, they are very likely an employee in the eyes of Spanish law.

Legal and Financial Consequences

The consequences for companies can be severe:

• Reclassification of the contract as an employment relationship.

• Unfair dismissal claims if the “contractor” is terminated without proper grounds.

• Back payment of social security contributions, plus surcharges and interest.

• Fines from the Labour Inspectorate under the Labour Infringements and Sanctions Act (LISOS).

• Damaged reputation in Spain and potential liability for future hiring practices.

Best Practices for Foreign Employers in Spain

1. Assess the real nature of the work: Are you setting hours, providing tools, or supervising the worker closely? If yes, you may need an employment contract.

2. Comply with Spanish labour law: When in doubt, use standard employment contracts under Spanish law.

3. Seek local legal advice: Cross-border employment issues are complex, and small oversights can create major liabilities.

4. Be transparent with workers: Avoid contractual structures that disguise the reality of the working relationship.

   
   
   
   

Final Thoughts

False self-employment is not just a technicality—it directly affects workers’ rights and creates serious risks for businesses. While foreign companies may unintentionally rely on contractor models they use at home, Spanish authorities and courts will always prioritise the reality of the relationship over the wording of the contract.

For international employers in Spain, prevention is the best strategy: structure your contracts properly, respect local employment rules, and avoid turning flexibility into liability.