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Employment relations remain defined vis-à-vis the standard employment relationship (permanent, full-time, direct). Fixed-term contracts are therefore understood as non-standard employment contracts by which an employer hires an employee for a fixed duration. The main difference between permanent and fixed-term contracts is the certainty, in the latter employment situation, of the expiry date. This characteristic allows for fixed-term relations to be terminated usually at a lower cost than open-ended contracts, as they are built to end at the expiry of the contract.‘Fixed-term employment’ often co-exists with, or is used as a synonym for, ‘temporary employment’. However, temporary employment is a more comprehensive concept, usually referring to situations that, in different contexts, affect workers with various non-permanent contracts – such as training or temporary agency work contracts.

Among the fraudulent contracting of work practices, one of the most difficult to identify is the creation of sham companies (usually, in another country). Sham companies are essentially new entities created to disguise the real employer. Creating a company, even abroad, is – of course – legal and may well be institutionally and economically advisable. However, when the only purpose of its creation is to benefit from more favourable regulations relating to labour and tax - and not to develop an activity in the country - then questions should be asked about the ‘genuine’ nature of the company. The Eurofound study Exploring the fraudulent contracting of work in the European Union emphasises that the term ‘sham contracting’ or ‘sham companies’ embraces a diversity of fraudulent practices, embedded in different institutional contexts. Fraudulent practices are perpetrated for different purposes, the most important of which are to avoid paying, or to save, employment-related taxes and social security contributions, and to evade employers’ liability towards employees.

The fraudulent contracting of work is an important issue in many European countries today. EU and national policymakers have turned their attention to violations of the basic protection provided by employment law and collective bargaining that are linked to the fraudulent use of certain employment or commercial contracts. This report looks at these practices across the EU and examines measures initiated by national authorities, including labour inspectorates and the social partners, to identify, prevent and combat such practices. While governments and public bodies focus largely on improving regulation – reducing loopholes in legislation and strengthening detection and inspection – the social partners endeavour to achieve compliance, particularly through organising information and awareness-raising initiatives. Based on 29 national reports, covering the EU28 and Norway, the research finds that the potential of collective bargaining to respond to the challenges of fraudulent use of contracting work is largely underexploited. It points to the contribution that EU actors could make, given the crucial role of cross-border cooperation in detecting and sanctioning fraudulent practices involving a transnational dimension.