Fraudulent work

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 recently 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 against undeclared work.

• EUR-Lex: Directive 2014/67/EU on the enforcement of Directive 96/71/EC concerning the posting of workers
• European Council: Fighting against undeclared work

Eurofound’s work

Eurofound has carried out research on regular employment, undeclared work and more recently the fraudulent contracting of work in the EU and Norway.

Recent 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 recent 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 EU28 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): 

• bogus self-employment
• abusing fixed-term contracts
• abusing the posting of workers
• sham companies
• abusing traineeship status.

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. The European Observatory of Working Life (EurWORK) also occasionally reports on fraudulent and undeclared work practices at national level.

Resources

• Eurofound’s European Industrial Relations Dictionary is a collection of employment and industrial relations terms used at EU level: See entries on atypical work, economically dependent worker, posted workers, precarious work, self-employed person, temporary agency work and undeclared work.
• Publications on tackling undeclared work