Staying compliant when employing workers in Spain can be a challenge when new policies or regulations constantly change. Not only will companies need to pay attention to HR and payroll requirements, but they will also need to stay updated on any changes to the country’s labor laws—which can be challenging for those based outside of Spain.
This is especially true for how you classify a worker for your organization. Even if you’re not aware of all misclassification laws, you will still be accountable to the legal consequences for any mistakes. In Spain, a “self autonomo” is a person that is registered as self-employed, usually as a freelancer or contractor.
A false autonomo (or false freelancer) is hired as an independent contractor but is treated like an employee by the organization that hired them. Here are just a few examples of how something like this would be legally defined:
The self autonomo can work for several companies at the same time if they so choose
The self autonomo has full control over their working status and schedule
These individuals usually only work for an organization for a predetermined amount of time to avoid the risk of being classified as an employee
In September 2022, Spain passed new legislation that would inflict severe penalties on employers that violate the rights of their workers. If you hire an independent contractor but expect them to have the responsibilities of a full-time employee, it can be punishable by imprisonment for up to six years.
Within Article 311 of the Criminal Code, the following conditions are established for employers:
Enforcing illegal conditions upon workers that did not relate to their original employment contract
Imposing illegal working conditions through deceit or abuse of necessity, which harms, suppresses or restricts the rights of recognized workers
Violating this policy also falls within their parameters of labor fraud, which can result in fines between 3,000-10,000 euros.
Maintain compliance and minimize risk
Hiring workers in other countries is a natural process for expanding companies. It’s just a smart way to stay competitive, reduce costs, increase productivity, and improve revenue opportunities.
In many cases, leveraging international contractors is an effective strategy for rapidly growing businesses because it helps save on costs on taxes and benefits. But as you can see from Spain’s new false freelancer policy, even innocent mistakes in how you hire or use contractors can have harsh consequences. In addition to the penalties listed for Spain’s new law, you’ll likely face repercussions for employee misclassification in countries across Europe. Examples include:
If a contractor was treated as an employee, governments may assess your company back tax withholdings on wages
If an individual decides to sue your company, you may be forced to pay benefits or overtime for the duration of your earliest working relationship
Companies may be required to pay other benefits, including vacation, sick leave or severance pay
Many governments will side with a worker if they file any grievances regarding employment classification. This is why it’s important that all employment contracts comply with the local laws and that you are holding up your end of the agreement.
Supporting your Spain workers
Working with an employer of record (EOR) provider like GEO from Safeguard Global can help you reduce these compliance risks and ensure your workers are classified correctly under Spain regulations. If you’re currently working with independent contractors and are worried about this new policy, we can help transition these workers to the appropriate employment status.
GEO keeps you compliant in Spain, without the added time and effort of registering a local business entity. We handle all the administrative burdens so you can continue to leverage the top talent for your business.
Connect with a global solutions advisor today to explore how we can eliminate compliance risks and give your business peace of mind with your workers in Spain.