At first glance, working without an official contract might seem beneficial.
But this practice is illegal in Spain and carries more disadvantages than it may appear.
Risks for Employers Hiring Without a Labor Contract:
- Hefty fines: A government labor inspection can fine an employer €10,000 or more per undocumented worker.
- Surprise inspections: The Inspección de Trabajo (Labor Inspectorate) has the right to carry out unannounced business inspections. The constant stress can negatively affect both mental and financial health.
- Criminal liability: If you employ a foreign worker without a contract, this may be classified as labor exploitation, which is criminally punishable.
- Loss of access to subsidies: You cannot apply for state grants to grow your business.
- Ongoing risk of tax audits from the Hacienda (Tax Authority).
Risks for Employees Working Without a Contract:
- No social protection: Without a contract, you have no right to sick leave, maternity leave, or paid vacation.
- No insurance – especially dangerous in jobs involving physical labor.
- No work history – you won’t qualify for unemployment benefits or a pension in the future.
- No proof of employment: This becomes critical if your salary is not paid or you are unlawfully dismissed.
- Problems with legalizing your stay in Spain – you can’t prove work integration, contributions (cotizaciones), or employment history.
That’s why working without a contract = risk, no rights, and no way to protect yourself.
If you need help with employment registration, hiring workers, or other labor-related matters — contact us.
