If you have doubts about your employment situation in a family business, this article will help you understand your rights and obligations. Before we start, if you need personalized advice, contact Fernanda Vargas via WhatsApp or book an appointment through Calendly.
“Among family, no contract is needed”: the story of Andrés and Lucía
Imagine this scenario: Javier, the owner of a family bar in Madrid, tells his employee and nephew, Andrés, “Among family, no contract is needed.” Andrés, a 24-year-old Colombian with residency and work authorization, lives in his uncle’s apartment and works at the bar from Tuesday to Sunday, 8 a.m. to 4 p.m., receiving 900 euros in cash and accommodation in exchange. Meanwhile, Lucía, Javier’s sister-in-law, helps out in the kitchen on Saturdays without pay while also living in the same house. However, when it comes time to renew his residency, Andrés must prove that he makes social security contributions and requests a contract. Javier replies, “Among family, no contract is needed, and besides, you live here.” In this article, we explain how the law applies to these situations and why the outcomes differ.
What the Law Says: Family Work and Its Two Conditions
The law establishes that work performed for a family member can be excluded from the Workers’ Statute if two cumulative conditions are met: the employee lives with the employer and is a spouse or a relative up to the second degree. However, unless proven otherwise, if there is a fixed salary, set working hours, and direct instructions, the employment relationship is recognized.
For example, in Andrés’ case, being a nephew (a third-degree relative) means the exclusion does not apply even if he lives with Javier. In other words, a verbal contract is presumed according to Article 8.1, which states that a work contract can be oral or written. In contrast, Lucía, as a second-degree relative by affinity who lives with Javier, may be excluded from the statute unless it is proven that she actually works as an employee.
Understanding Degrees of Relationship (with Table)
To clearly understand the exclusion based on family ties, it’s essential to know how the degrees are calculated:
| Degree of Relationship | Examples | Exclusion Applies if Living with the Employer? |
|---|---|---|
| First Degree | Parents, children; in-laws such as parents-in-law, sons-in-law, daughters-in-law | Yes |
| Second Degree | Grandparents, grandchildren, siblings; in-laws like siblings-in-law | Yes |
| Third Degree | Uncles, nephews, great-grandparents, great-grandchildren | No |
| Fourth Degree | Cousins | No |
Remember, the law includes living with the employer as part of the exclusion criteria. If one of these conditions is not met, the work is considered a normal employment relationship.
Andrés: Why a Nephew Is Considered an Employee Even When Living with His Uncle
In Andrés’ situation, being a nephew (a third-degree relative) means that the exclusion does not apply. Even though he lives with his uncle Javier, the law presumes the existence of an employment contract as outlined in Article 8.1. Javier’s role in setting work shifts and providing direct instructions clearly signals an employment relationship, allowing Andrés to insist on having his verbal contract formalized in writing as per Article 8.2.
Lucía: When Helping at Home Is Not Working and When It Becomes So
Lucía, on the other hand, is a second-degree relative by affinity since she is Javier’s sister-in-law and lives with him. According to Article 1.3.e, her situation could lead to exclusion from the Workers’ Statute unless it is proven that she works as an employee. Occasional help without fixed hours or pay is considered a friendly favor (as mentioned in Article 1.3.d). However, if her contributions become regular, with set shifts and tasks, her work must be regularized—either with a formal contract or, if Javier is self-employed, potentially as a collaborating self-employed worker.
The Verbal Contract Also Counts
The law explicitly states that a work contract may be verbal or written. Article 8.1 presumes an employment contract exists when services are rendered under the direction of someone else, even if there is no written document. This means that even if you work in a family business without a written contract, your employment is recognized, and you have the right to demand formalization at any time (Article 8.2).
What About Social Security? Relatives, Collaborating Self-Employed, and Children Under 30
Social Security has a similar rule. Under Article 12.1 of the General Social Security Law, unless proven otherwise, the employer’s spouse and relatives up to the second degree are not considered employees when three conditions are all met: they work at the employer’s workplace, live in the employer’s household and are financially dependent on the employer. If any of these conditions is missing, or it is shown that there is actually a paid employment relationship, the family member must be registered with Social Security like any other employee. In addition, Article 12.2 allows self-employed workers to hire their children under 30 as employees even if they live together, although in that case they are not covered for unemployment benefits.
When a relative works regularly in a self-employed business, they are usually classified as a collaborating self-employed worker under the RETA, which differs from being a salaried employee.
The Stakes Without a Contract: Contributions, Unemployment, and Residency Renewal
Not having a formal contract carries serious practical consequences. Without registering with Social Security, you are not making contributions, which affects your right to unemployment benefits and creates a gap in your employment record—a key element when renewing your residency and work permits. Even if your employment is based on a verbal agreement, it is crucial to ensure that it is formalized to safeguard your rights.
What to Do if You Find Yourself in This Situation: Practical Steps
If you are experiencing a situation similar to Andrés or Lucía, consider the following steps:
- Talk openly with your family employer about your situation.
- Request that your employment contract be formalized in writing, knowing you have the right to do so.
- Ask for registration with Social Security so your work is officially recognized.
- Keep records of your working hours, communications (like messages), payment receipts, and, if possible, acquire witness statements.
- If the issue isn’t resolved, seek professional advice.
Summary: Am I an Employee? Table by Relationship and Co-residence
To sum up, the table below helps you understand whether you are considered an employee based on your family relationship and whether you live with the employer:
| Relationship with the Employer | Living Together | Exclusion Applies? |
|---|---|---|
| Parent, child, parent-in-law, son-in-law, daughter-in-law | Yes | Yes (exclusion applies) |
| Grandparent, grandchild, sibling, sibling-in-law | Yes | Yes (exclusion applies) |
| Uncle, nephew, great-grandparent, great-grandchild | Yes or No | No (employment presumed) |
| Cousin | Yes or No | No |
Frequently Asked Questions
Is my uncle obligated to give me a contract?
Yes. The family-work exclusion only covers the spouse and relatives up to the second degree who live with the employer. A nephew is a third-degree relative, so if you work for your uncle for a wage and follow his instructions, an employment contract already exists even if it is only verbal: your uncle must register you with Social Security, and you can demand that the contract be put in writing.
What if I don’t live with him?
Living with the employer is one of the conditions for exclusion. If you do not live with the employer, your work is treated as a standard employment relationship and you have full rights as an employee.
Can my partner help in the business without a contract?
Occasional help done as a favor (friendship or neighborly goodwill) does not count as employment. However, if the help becomes regular and meets the conditions of an employment relationship, it must be formalized.
I’m self-employed, can I hire my child?
The law allows self-employed workers to hire their children under 30 years old even if they live together, though such workers are not entitled to unemployment benefits.
I have been working for months without a contract, what should I do now?
We recommend that you discuss your situation with your family employer, demand a written contract, ensure your registration with Social Security, and keep all evidence of your work. If the situation remains unresolved, seek professional advice immediately.
Remember, having a contract and being registered with Social Security protects your rights, including contributions for unemployment benefits, an official employment history, and the documentation needed to renew your residency and work permits.
For further questions or personalized guidance, do not hesitate to contact Fernanda Vargas via WhatsApp or book an appointment at Calendly.