Fraudulent work

24 Martie 2020

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.Read more

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.

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EU context

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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.Read more

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.

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Definitions
  • Fraudulent contracting of work: It is possible to identify the fraudulent use of an employment/contractual relationship when two conditions are simultaneously met:
    • A specific employment/contractual arrangement is used to hire workers or to subcontract certain activities that involve the performance of work;
    • The factual circumstances of the specific employment/contractual relationship do not correspond to the (legal/formal) requirement that qualify that specific form of contracting work, directly via an employment relationship or indirectly through a subcontracting relationship.
  • European Industrial Relations Dictionary: Atypical work , economically dependent worker , posted workers , precarious work , self-employed person , temporary agency work and undeclared work

Research

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

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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):

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.

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Policy pointers

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  • Favouring a holistic approach: National and sectoral measures prove to be more efficient when they cover both prevention and deterrence. This helps to stem ‘translation effects’, in which the employment relationship is better regulated and protected from abusesRead more
  • Favouring a holistic approach: National and sectoral measures prove to be more efficient when they cover both prevention and deterrence. This helps to stem ‘translation effects’, in which the employment relationship is better regulated and protected from abuses.  
  • Fostering compliance with regulation: Advice could be developed to support companies on their path to compliance, especially small and medium-sized enterprises. Expertise and adequate resources in the bodies tasked with monitoring compliance needs to be ensured. 
  • Developing workers’ information and voice: Raising awareness of rights, providing workers with practical, easy-to-understand information and encouraging them to negotiate for their rights are important. This would mean supporting employee representation at all levels, helping to denounce fraudulent situations. 
  • Supporting joint actions by all stakeholders – social partners and public authorities firstly but not exclusively – is crucial within and across countries.
  • Addressing the consequences of precarious work and raising awareness of its impacts on workers and on business models is necessary to ensure job quality and a level playing field for all.
     
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Publications & data

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The sections below provide access to a range of publications, data and ongoing work on this topic. 

  • Publications (64)
  • Data

Data

A selection of related data on this topic are linked below.