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Bogus Self-employment and Double Employment Contracts

Christer Thörnqvist

The problem with 'bogus self-employment' has been known at least since the turn of the millennium. Entrepreneurs in several industries such as construction, cleaning, and restaurants began to contract workers as 'self-employed' instead of hiring them, in order to avoid social expenses and related costs. Although still a major problem from a labour exploitation viewpoint, the move however numerically peaked at the time for the EU's first eastbound extension in 2004. Workers from the new EU countries did no longer need work permits to work in the old ones; thus they could make successful claims for remuneration with social costs covered, and better working conditions. Instead a new form of exploitation has arose, the problem with 'false collective agreements'. This problem is also more difficult to cope with for trade unions and authorities. While the definition of an 'employee' has become more distinct within the EU and accordingly helped curbing bogus self-employment, the double contracts flourish, in particular among posted workers. In such cases the worker has two contracts for the same assignment. One contract is valid in the home country and obliging the company to only pay the country's minimum wages plus subsistence allowance for working abroad. The other contract's only purpose is to be shown to the host country's governmental bodies, public institutions and trade unions, to convince them that the entrepreneur observes legislation and collective agreement. This paper discusses both the issues.

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