Beware the "Employee in Disguise" Scam

How companies exploit certain loopholes to cut employment costs

Photo by Sander Sammy on Unsplash

Some employers aren’t just looking for talent—they’re looking for workarounds to pay less taxes. Instead of hiring you as a full-time employee (with all the benefits and protections that come with it), they might try to sneakily bring you on as an independent contractor. Why? To dodge legal and financial responsibilities, of course!

What does that mean for you? No job security, no unemployment benefits, and no access to workplace protections.

In other words, they want you to work like an employee but cost them like a freelancer. Basically dodging employer taxes.

When a Job Offer Seems Too Good to Be True… It Probably Is

Two weeks ago, a recruiter reached out to me with what seemed like a dream job.

✅ Remote work? Check.
✅ The salary I wanted? Check.
✅ Freedom to build my own team? Double check!

I was transparent about my plans to move back to my home country within a year and emphasised that remote work was a must. They reassured me this wouldn’t be a problem as long as I could travel to Ireland occasionally.

That should have been my first red flag. Usually, when you tell a recruiter you're moving countries, they will (un)politely ghost you. So why was this company bending over backward to accommodate me?

Then, during a peer-to-peer interview with someone from the company—who had also moved back to my home country—I figured it out. They wanted me to be a contractor.

The Shady Loophole Employers Don’t Want You to See

Let’s get one thing straight: there’s nothing wrong with being a contractor—as long as it’s done the right way. If all three of these conditions apply, you’re in the clear:
✔ You can work with multiple clients;
✔ You set your own hours (no strict 9–5);
✔ You’re not under the direct control of a company.

But this company? They wanted me to work fixed hours, report PTO and absences, and not work with other clients. In other words, they wanted an employee in disguise.

Why do companies do this? Simple—it’s cheaper. They don’t have to provide benefits, pay employer taxes, or follow labor laws. And sadly, most people don’t realise the risks of accepting these offers.

When "Contractor" Actually Means Full-Time Without the Perks

If a company offers you a so-called "contractor" position that doesn’t allow you flexibility, run for the hills. Here’s why:

🚫 No social benefits – Say goodbye to social security, health insurance, maternity leave, sick leave, and paid PTO. If they decide to ditch you, you’re out of luck—no severance, no compensation for unused PTO.
🚫 You pay all your own taxes – And if an audit reveals that you were misclassified as a contractor, you could face hefty fines (we will talk about this in a minute…). The risk of misclassification is a thing in employment law, and this applies in most of the countries.
🚫 Your employer could get into trouble, too – If they don’t have a legal entity in your country, they might be forced to open one and hire you as an employee with full rights. This what we call in my industry a risk of permanent establishment.

What to Do If You Get an Offer Like This

I pointed out my concerns to the recruiter. His response? “Oh, we’ve never had a problem before.”

That’s the thing—just because no one’s been caught yet doesn’t mean it’s safe.

A decade ago, I fell into this exact trap. A big client convinced me to drop all my other clients and work exclusively for them. The pay was great, so I agreed. Then, boom—audit time. They got fined, I got fined, and my hard-earned savings went to the bin. Needless to say, it was the end of my career as an independent contractor.

So, this time, I suggested they hire me through an Employer of Record (EOR)—a legal workaround that allows companies to hire in countries where they don’t have a legal entity. You can get hired under an “umbrella company” and have all the protections of an employee.

There are EOR (companies in almost every country, so don’t let an employer trick you into accepting a contractor role just because they claim they "don’t have a legal entity" where you live. The only exception is France where portage salarial is the only acceptable model for employers who don’t have a legal entity in the country.

Back to our story. A few days later, the recruiter mentioned they decided to hire someone locally in Ireland. But I knew they weren’t going to stop exploiting the loophole—because they reached out to my two of my work colleagues (who also happen to be my work besties) with the same shady offer. Thankfully, all three of us declined. :)

When a Job Offer is a Trap

Unfortunately, not everyone recognises these red flags. A friend of mine was thrilled when she received an amazing offer from a competitor. High pay, fully remote—what’s not to love? The catch? You guessed, she had to be a contractor.

She went through all the paperwork to set up her own entity, thinking she’d finally have the true flexibility she always wanted. But just one month in, they fired her.

At first, it seemed like bad luck—until we found out they had done the exact same thing to someone else from her previous company. Turns out, they weren’t hiring talent; they were strategically poaching employees from competitors and discarding them once they’d weakened the competition.

Because she was a contractor, she had no legal recourse. No unemployment benefits. No protections. Nothing.

And no, these are not isolated cases, I deal with similar cases in my line of work most of the time.

Final Thoughts: Protect Yourself From Being Professionally Screwed Over

Not every job offer is what it seems. When you’re desperate for a new role, it’s easy to ignore the fine print—but that fine print could cost you everything.

Here’s how to protect yourself:

💡 If the company lets you work for other clients and you want to be a true contractor—go for it! It can be an amazing opportunity to build your own business.
💡 Understand your tax obligations and make sure you’re charging enough to cover them. Ask for a payment that takes into account your pension, health insurance, taxes, PTO etc because the company ain’t gonna pay you these if you are a contractor.
💡 Make sure your employer understands you to are paid for the impact of your work, not the hours you work.

And most importantly—know your rights.Because at the end of the day, you deserve a job that values your talent without exploiting you.

Stay smart, stay sharp, and stay professionally unfuckwithable.

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If you had a similar experience, I’d love to hear from you :)

Have you ever been in a position to accept a contractor role which was a full-time job in disguise? If so, how did you tackle it?