Spain's Labour Inspectorate Algorithm — Automated Detection of Contract and Overtime Fraud

Spain's Inspección de Trabajo y Seguridad Social (ITSS) needed a way to identify employers likely misusing temporary, part-time or 'fijo-discontinuo' contracts, or under-paying overtime, without inspecting every employer individually.

Use data-crossing software comparing billing volume, payroll size and contract types across tax and social security records to flag likely fraud, sending warning letters before escalating to inspection and sanction.

Since a 2018-2019 nationwide campaign, ITSS has cross-referenced tax, payroll and contract data to flag employers. A January 2021 reform of the LISOS sanctions law extended the model, allowing inspectors to issue some infraction records from automated data-crossing without a site visit. In Catalonia, the regional inspectorate applied the same big-data approach in 2025-2026.

The 2018 campaign converted 193,946 temporary workers to permanent contracts in its first year, more than double the 92,925 conversions recorded in 2017, with two-thirds of employers regularising voluntarily after a warning letter alone. By 2022, a related overtime campaign logged 32,644 inspections, 11,070 infractions (more than double the 2019 total), and €13.7 million in sanctions. Catalonia's 2025-2026 campaign flagged fraud indicators in 4,100 contracts across 2,500 companies, more than half involving misuse of fixed-discontinuous contracts.

The programme shows large, officially reported year-on-year changes in contract regularisation and sanctions, but the inspectors' own union (SITSS) has warned that automating infraction records risks replacing inspectors' direct judgement with insufficient legal guarantees, and legal commentators have compared its opacity risk to the Netherlands' SyRI system, which courts annulled in 2020. Spain has not published the algorithm's scoring criteria.