Fraudulent practices in the field of work have significant consequences for labour markets, economies and social cohesion. The misuse of employment relations to sidestep regulations is a concern for employers, trade unions and governments. It affects competition, labour market integration, social protection and working conditions.
Eurofound has carried out research on regular employment, undeclared work and the fraudulent contracting of work in the EU and Norway.
Research aims to better understand the fraudulent forms of contracting work and the impacts on workers and working conditions, as well as on business competition and collective bargaining. It seeks to explore policy measures initiated by national authorities and social partners to identify, prevent and combat such practices. While the policy debate at European level has focused mostly on cross-border fraudulent practices, evidence of domestic fraud also challenges the implementation of national labour laws and the regulation of taxes.
An initial mapping exercise across the EU Member States and Norway reported on seven prevalent fraudulent contracting of work practices. Fraudulent practices can occur through employment relationships, such as fixed-term contracts, posting of workers and traineeship status, or through other commercial forms, such as self-employment and the creation of companies. The abuse of self-employment and freelance work, the abuse of fixed-term employment and the posting of workers were reported most by countries.
The analysis then explored the impact of five of these fraudulent contracting practices on the rights of workers and businesses (omitting temporary agency work and on call/casual work):
The research focused on eight countries: Austria, Belgium, Czech Republic, Estonia, Finland, Italy, Spain and the UK.
Employment practices were examined in three sectors (construction, industrial cleaning and road haulage) across at least three of the following countries: Austria, Finland, France, Poland and Spain.
This work builds on previous Eurofound research on posted workers, non-standard employment and undeclared work in Europe. Eurofound also occasionally reports on fraudulent and undeclared work practices at national level.
Policymakers are seeking to address violations of basic protections resulting from the fraudulent use of employment or commercial contracts in cross border and domestic practices. Several important steps have taken place at EU level. The 2014 Enforcement Directive on the posting of workers aims to address issues related to fraud, circumvention of rules and exchange of information between Member States. Ongoing discussions on undeclared work are facilitated by the European Platform tackling undeclared work, which became a permanent working group at the European Labour Authority (ELA) on 26 May 2021.
