Sick Leave Without Oversight: How Regulation Has Opened the Door to Labour Fraud

The latest annual report from the Bank of Spain revealed a series of truly alarming data regarding the management of temporary incapacity situations in Spain and the resulting workplace absenteeism.

Specifically, sick leave due to temporary incapacity (TI) has become a structural stress factor for the Spanish labour market: the proportion of employed individuals on leave rose from 2.7 % in 2019 to 4.4 % in 2024, placing Spain as the third-highest country in the EU for medical absences. This increase is widespread—affecting men and women equally, across all ages and regions—and already represents an additional cost of over €15 billion per year for Social Security (a 78.5 % rise since 2019, nearly 1 % of GDP) and €4.613 billion for companies (62 % higher than before the pandemic).

From a labour law perspective, the supervisor notes that the phenomenon cannot be attributed solely to post-pandemic health deterioration or the ageing of our society: historically, sick leave increases when employment expands. Thus, the current phase of job creation—combined with overburdened healthcare services and evolving work–life balance preferences—explains part of the rise in absenteeism.

But are there factors beyond environmental or contextual ones that help explain this unusual and sustained increase in sick leave in our country? It is hard to address this situation without mentioning the elephant in the room: dismissing an employee on sick leave in Spain is incredibly difficult given the current legal framework.

Law 15/2022 of 12 July, on equal treatment and non-discrimination, strengthened the protection afforded to employees on sick leave. Although it does not mandate nullity of dismissal “in all cases”, in practice it has resulted in an excessive level of protection in this context. As a consequence, employers are extremely cautious before taking action due to the associated risks (unfair dismissal, nullity with additional compensation, etc.), even where there are, for example, clear indications of fraudulent sick leave.

On the other hand, the abolition in 2020 of objective dismissal on the grounds of absenteeism meant that justified absences due to temporary incapacity can no longer constitute a statutory cause for termination.

Thus, in practice, companies are left solely with the disciplinary route – increasingly restricted – or with duly evidenced economic, technical, organisational or production-related grounds, which are subject to very strict judicial scrutiny. Moreover, in cases where the employee alleges a discriminatory motive behind the dismissal, the burden of proof is reversed, placing on the employer the obligation to demonstrate that no such motive exists.

Given this narrow range of options and the risk that any link between a medical leave and the termination decision may trigger anti-discrimination protection, dismissing employees who accumulate successive sick-leave periods has become legally highly complex and costly. In practice, the mere temporal proximity between an IT situation and a dismissal —regardless of the stated grounds— is often deemed by the Labour Courts to constitute sufficient indication of discrimination.

All of this, combined with the fact that employees are no longer required —since 2023— to provide the company with medical reports for sick leave, follow-up or discharge, has made monitoring employees’ IT processes increasingly complex.

In this context, companies have recently seen the proliferation of two types of employees who “take advantage” of this combination of legal constraints and the limited monitoring capacity of public healthcare services and mutual insurance entities to string together unclear periods of sick leave.

Absenteeism has become so sophisticated that two particularly challenging employee profiles now coexist: on the one hand, the “professional absentee,” who combines legal knowledge with a pattern of minor recurring ailments to chain together sick leaves with remarkable regularity; and on the other hand, the employee who uses temporary incapacity as a tactical lever, requesting sick leave precisely when sensing an organisational change or after receiving a warning, and prolonging it until securing a renegotiation of their role or an exit settlement.

In both scenarios, the company is faced with the already-mentioned regulatory maze, which translates into direct additional costs —salary payments borne by the employer during the initial days of sick leave, advances of statutory benefits, Social Security contributions, collectively agreed IT supplements, etc.— and an even greater “shadow cost” that often goes unnoticed: ad-hoc replacements, overtime, drops in productivity, a deteriorated working environment, or consequences as damaging as the loss of clients due to delays in delivery or in customer service.

In a large corporation, although these situations may strain internal structures, there is still room for manoeuvre. In contrast, for SMEs the equation is far more dramatic: their cash flow operates with minimal margins, and a single long-term sick leave can consume the financial capacity needed either to invest or simply to survive a weak quarter.

However, the lack of formal control mechanisms does not mean the absence of solutions. The first safeguard lies in anticipating clear and proportionate agreements with the workforce, ensuring that both parties are informed in advance of the possibility of occasional monitoring of sick-leave situations, always within the limits of data-protection rules and the worker’s dignity.

The second relies, when objective indications of fraud arise, on private investigations, which are lawful provided that public spaces are respected and there are reasonable doubts regarding the employee’s conduct.

Finally —and perhaps most often overlooked— awareness: training staff to detect psychosocial risks or workplace tensions early on, which reduces the use of temporary incapacity as an escape route and restores its original purpose: not to negotiate or shield oneself, but to recover health, benefiting both the employee and the company’s financial stability. Only by combining these levers, and until a different practical and regulatory framework exists, can the right to protection for employees on temporary incapacity be balanced against the obligation to safeguard the sustainability of the productive fabric, particularly in the network of small and medium-sized enterprises that cannot afford a prolonged absence to become the difference between growth and closure.

Víctor Mamolar, Employment, Malaga's Office Director, de act legal Spain

Published on LegalToday