Automation and increased sanctions by the Labour Inspectorate

The Labour Inspectorate is becoming more effective in sanctioning by increasing sanctions in the social sphere and implementing automation processes using mass data analysis.

Royal Decree 688/2021, of 3 August, amended the General Regulations on procedures for the imposition of penalties for social security infringements and for the settlement of social security contributions.

This amendment, which will take effect from 1 January 2022, means in practical terms that the Labour and Social Security Inspectorate (ITSS), using the possibilities afforded by new technologies, will be able to generate through its information system, by means of automated administrative actions, the infringement reports that are relevant by virtue of the data, background information and reports contained in the system without the direct intervention of an official acting in their issuance and without reducing the legal guarantees of those administered.

For these purposes, automated activity is understood to be any action carried out entirely by electronic means by the ITSS in which the intervention of staff with inspection functions takes place indirectly.

In this case, a resolution of the Director of the State Agency for Labour and Social Security Inspection, which must be published in the electronic headquarters, must previously establish the cases in which this activity will be used, the competent body or bodies, depending on the case, for the definition of specifications, programming, maintenance, supervision and quality control of the information system. Likewise, the body to be considered responsible for the purposes of contestation must also be indicated. In these cases, the ITSS State Body must identify itself and guarantee the authenticity of the exercise of its competence through the use of the ITSS Qualified Electronic Seal.

These automated infringement reports will be notified within ten working days from the date of the report, and a written statement of allegations may be submitted within fifteen working days from the day following its notification, accompanied by any evidence deemed relevant, to the body responsible for the investigation.

In the event of payment of the sanction proposed in the report within the period indicated for making allegations, the amount of the sanction shall be reduced by 40 percent. For this purpose, the corresponding letter of payment will be provided together with the infringement report, in which the aforementioned reduction will be applied.

If, within the period indicated for making allegations, the person responsible proceeds to pay the proposed penalty, the procedure shall be deemed to be concluded. Such payment shall imply the acknowledgement of liability and the waiver of any action, allegation or appeal in administrative proceedings.

On the other hand, in the event that no allegations are made and no payment is made, the infringement report shall be considered as a proposal for a decision.

However, if allegations are made alleging facts or circumstances other than those stated in the report, insufficiency of the factual account in the report, or defencelessness for any reason, the case shall be assigned to an official with inspection functions to report on them. In the event that this assignment falls to a Sub-Inspector or Sub-Inspector of Labour, the report must be endorsed by the Inspector or the Inspector of Labour and Social Security to whom they technically report, when they correspond to reports of serious and very serious infringements.

With regard to its entry into force, it has already been indicated that it will begin to apply as of 2022, so that those sanctioning procedures whose processing had been initiated prior to that date will be processed and resolved in accordance with the provisions in force until that date.

In this way, through the cross-referencing of data with other related bodies (Public Employment Service, Mutual Insurance Companies, National Social Security Institute, Public Health Service, Tax Agency, General Treasury of the Social Security, etc.) and using processing and analysis systems, the new system will be able to process and analyse the data of the different types of cases.) and using “Big Data” massive data processing and analysis systems, the Labour and Social Security Inspectorate will be able to know and act in the detection of possible non-compliance fraud, especially in the area of Social Security (contributions), theoretically without a reduction in the legal guarantees of the obligated parties and without prejudice to the subsequent intervention of personnel with inspection functions.

It is therefore shown that this greater control over contributions is already a reality and companies and professional practices will need to be more rigorous when applying, among other things, bonuses (ERTES), non-contributory items such as allowances or travel expenses or variable salary payments accrued over a month such as commissions or bonuses for objectives, as well as keeping a close eye on all movements in due time and form (registrations, modifications and cancellations of affiliates) to avoid possible automatic sanctioning proceedings by the Labour Inspectorate.

In addition to the above, and following in the wake of ITSS action, Law 10/2021 of 9 July (remote work law)included in the text the modification of article 40 of the revised text of the Law on Social Order Infringements and Sanctions (LISOS).

The aim of this amendment was to make the transgression of labour regulations economically harsher by raising all penalties by 20% as of 1 October in the field of labour relations, employment and risk prevention. Infringements committed before that date will be sanctioned at the amounts currently in force.

Schematically, for infringements committed as from 1 October 2021, the fines for these matters will be as follows:

Labour relations and employment			Risk prevention
Graduation		Amount	Graduation		Amount
Minor	Minimum	70 a 150	Minor	Minimum	45 a 485
	Medium	151 a 370		Medium	486 a 975
	Maximum	371 a 750		Maximum	976 a 2.450
Severe	Minimum	751 a 1.500	Serious	Minimum	2.451 a 9.830
	Medium	1.501 a 3.750		Medium	9.831 a 24.585
	Maximum	3.751 a 7.500		Maximum	24.586 a 49.180
Very serious	Minimum	7.501 a 30.000	Very serious	Minimum	49.181 a 196.745
	Medium	30.001 a 120.005		Medium	196.746 a 491.865
	Maximum	120.006 a 225.018		Maximum	491.866 a 983.736

As has been the case until now, certain infringements will be subject to their own graduation due to their special relevance.

Thus, among others, the serious infringement set out in the LISOS in Articles 22.2(failure to request the initial affiliation or registration of workers who enter their service (undeclared work); 22.7 a) (failure to request registration in the RETA for workers obliged to do so) and 22.16(communicating the deregistration from a Social Security scheme of employed workers even though they continue the same work activity) will have a minimum amount of 3,750 to 7,500 euros, a medium amount of 7,501 to 9,600 euros, and a maximum amount of 9,601 to 12,000 euros.

The very serious infringement of Article 23.1.a(employing as workers beneficiaries or claimants of pensions or other non-compatible periodic Social Securitybenefits ) shall have a minimum fine of 12,001 to 30,000 euros, a medium fine of 30,001 to 120,005 euros, and a maximum fine of 120,006 to 225,018 euros.

Or, finally, the infringement for obstruction of inspection work may be classified as serious with amounts, in its minimum degree, from 3,750 to 7,500 euros; in its medium degree, from 7,501 to 9,600 euros and, in its maximum degree, from 9,601 to 12,000 euros; or as very serious with amounts, in its minimum degree, from 12,001 to 30,000 euros; in its medium degree, from 30,001 to 120,005 euros and, in its maximum degree, from 120,006 to 225,018 euros.

The AddVANTE Labour Management Department remains at your disposal for further information or to answer any queries you may have regarding this article.