Fraudulent work

29 August 2017

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.

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.

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.

Featured: Fraudulent contracting of work: Definition (Eurofound 2016)

It is possible to identify the fraudulent use of an employment/contractual relationship when two conditions are simultaneously met:

  1. A specific employment/contractual arrangement is used to hire workers or to subcontract certain activities that involve the performance of work;
  2. 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.

Publication: Exploring the fraudulent contracting of work in the European Union

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.

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.

Other related research topics where fraudulent activity can occur include:

  • atypical forms of work
  • trafficking of labour
  • economically dependent workers
  • temporary work
  • self-employment.

Resources

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