What is Worker misclassification?

Worker misclassification

Misclassification is invoicing as an independent professional while working under employee-like conditions: imposed hours, company equipment, exclusivity and hierarchical dependence. It is a live risk in international remote hiring, because inspectors look at the facts on the ground rather than at what the contract says.

The indicators that weigh most are control over how and when the work happens, integration into the company's structure, and the absence of other clients. In cross-border hiring the risk falls on both sides: the company can face reclassification with back contributions, and the professional can lose the deductibility of their expenses.

Also called: disguised employment, false self-employment, reclassification

Related terms

International contractorAn international contractor is a self-employed professional who provides services to a company in another country and invoices for them, with no employment relationship. They handle their own taxes, contributions and time off, and in exchange usually command higher rates and more flexibility than an equivalent employee.
Employer of RecordAn Employer of Record is a company that legally employs a worker in their own country on behalf of another, foreign company. It takes on payroll, social contributions and local labour compliance, while day-to-day work is directed by the client company. It allows hiring in a country without opening a subsidiary there.