By Sofia Lindqvist · Legal & Employment
The arrangement works perfectly for years. Ana comes every fortnight to clean the villa, mow the grass, and check the pool equipment. She charges €50 per visit in cash. Miguel comes in October to winterize the pipes and take the garden furniture inside — €120 cash. The owner transfers money from a UK bank account to Ana's personal account and is grateful the property is looked after.
Under Spanish employment law, this is an illegal employment relationship. The owner is the employer. Ana is an unregistered domestic worker. If she slips on the wet pool tiles and breaks her wrist, the owner faces: an unregistered employment penalty, back social security contributions for every month Ana worked, and liability for Ana's medical costs, lost earnings, and potential compensation for the workplace injury — all without the protection of employer's liability insurance, which most holiday-home policies explicitly exclude for unregistered workers.
The Legal Reality in Four Popular Jurisdictions
Spain. The Royal Decree 1620/2011 on domestic service requires all domestic workers working more than four hours per week for a single employer to be registered with the Social Security system (Sistema Especial de Empleados del Hogar). The employer — the property owner — must register as an employer, contribute the employee's and employer's share of social security (approximately 28% of gross salary), and manage payroll. Working outside this system is a labour-law infringement with penalties of €625–€6,250 per worker, multiplied by the number of months the arrangement was unregistered. Foreign nationals owning Spanish property are not exempt: the employment relationship is where it occurs, not where the employer is resident.
Portugal. The Código do Trabalho requires domestic workers to have a written employment contract and to be registered with the Segurança Social. Contribution rates for domestic workers are 22.3% employer plus 11% employee of gross salary. The Portuguese labour inspectorate (ACT) has significantly increased enforcement of domestic worker registration since 2022, with campaigns targeting tourist areas where second-home ownership is concentrated.
France. France's CESU (Chèque Emploi Service Universel) system was specifically designed to simplify the formal employment of domestic workers, including gardeners, cleaners, and maintenance staff. It handles payroll, social charges, and declarations automatically. The CESU rate for an occasional domestic worker is approximately 24% on top of the agreed wage for social contributions. Not using CESU when employing any domestic worker is travail dissimulé (concealed work) — a criminal offence in France carrying fines of up to €45,000 and imprisonment of up to three years in serious cases.
Italy. Italy has a robust domestic worker (colf and badante) registration system under INPS (Istituto Nazionale della Previdenza Sociale). Any domestic worker working more than 4 hours per week for a single employer must be registered. Combined employer-employee social contributions are approximately 34% of gross salary. Italy's labour inspectors have authority to investigate second homes following complaints from neighbours or workers themselves, and penalties for irregular domestic employment include back contributions plus fines of €1,500–€12,000.
The Injury Liability Gap
The most significant exposure for holiday-home owners with unregistered domestic arrangements is personal injury liability. In all four jurisdictions, an employer owes a duty of care to employees working on their premises. A registered worker is covered by the national workers' compensation system — in Spain, INSS; in France, CPAM. An unregistered worker who is injured has no workers' compensation coverage and must instead pursue the owner directly through civil litigation.
A realistic claim: a cleaner slips on an uneven path and suffers a fractured hip. In France, where she would have been covered under the CESU scheme, the social security system covers medical costs and disability benefits. As an unregistered worker, she sues the property owner. French courts typically award €30,000–€80,000 for moderate permanent injury from workplace accidents, including lost earnings during recovery, medical costs, and pain and suffering. The owner has no employer's liability insurance — the standard holiday-home policy excludes cover for unregistered workers — and pays out of pocket.
This is not a hypothetical. A French employment lawyer in Provence described three cases from 2023–24 involving British second-home owners facing such claims, each resulting in settlements of €25,000–€60,000.
The Employer-of-Record Route
The cleanest solution for most holiday-home owners is not to directly employ the caretaker but to hire them through a local property management company that acts as employer of record. The management company employs the caretaker, handles payroll, social security, insurance, and labour compliance. The owner pays the management company a monthly service fee.
The counterintuitive finding: this is typically 30–45% cheaper than the apparent cash cost of direct employment, once the owner accounts for the true cost of legal compliance. A direct employment arrangement for a caretaker working 40 hours per month at €12/hour in Spain requires: €480 gross salary + 28% employer social security (€134.40) + administrative cost of running payroll = approximately €650/month total employer cost. A management company charging €450–€480/month for the same caretaker service — paid in a single invoice, fully compliant, with employer's liability insurance — is both cheaper and eliminates the legal exposure.
The management company route also provides operational benefits: continuity if the caretaker is ill or leaves, managed replacement, professional reporting to the owner, and a single point of contact rather than coordinating directly with individual workers across language barriers.
Formalising Existing Arrangements
For owners who already have long-standing cash arrangements, the transition to legal employment requires care. Suddenly registering a worker who has been employed informally for years creates a paper trail that could trigger back-payment assessments. The standard professional advice is to transition the arrangement through a management company going forward rather than attempting to retroactively formalize the historic informal arrangement — the management company employs the same individual going forward, with no requirement to disclose or document the prior informality.
The important exception: if the informal worker has reached Spanish, Portuguese, French, or Italian entitlement thresholds for employment protections based on the duration of the arrangement (in Spain, more than 2 years of continuous informal work can give rise to deemed indefinite employment rights), specialist employment law advice is needed before any change in arrangements.
The lesson is simple: the cash arrangement with Ana is not a favour to either party. It exposes her to no social protection and exposes the owner to open-ended liability. The management company route costs roughly the same, transfers the risk, and lets both parties sleep easier.