Can my SME be sanctioned for not keeping time registration?

Timekeeping (control horario), far from being a mere bureaucratic formality, has consolidated as an unavoidable legal obligation for all companies in Spain, regardless of their size. If you are an owner or manager of an SME, a self-employed person with employees, or run a business in hospitality or retail, you may have wondered if this regulation truly affects you with the same rigour as large corporations. The answer is a resounding yes. Spanish legislation is clear and establishes no distinctions by turnover volume or number of employees. From the first employee, the obligation to record working hours (registro de jornada) exists, and its non-compliance can lead to significant economic consequences.

This article aims to clearly and concisely break down the implications of not complying with this regulation. It is not about generating alarm, but about informing you with a solid legal basis so that your SME operates within the law, avoiding unpleasant surprises in the event of an inspection.

The Legal Obligation of Time Registration: An Unavoidable Foundation

The requirement for a daily record of working hours was established with the publication of Real Decreto-ley 8/2019, of March 8, on urgent measures for social protection and the fight against precarious employment in working hours. This regulation modified article 34 of the Estatuto de los Trabajadores (Spanish Workers' Statute), adding a new section 9 which literally states:

"The company shall guarantee the daily time registration, which must include the specific start and end time of each worker's working day, without prejudice to the flexible working hours established in this article. Through collective bargaining or company agreement or, failing that, the employer's decision after consulting with the legal representatives of the workers, this time registration shall be organised and documented. The company must keep time registration records for four years and they shall remain available to workers, their legal representatives, and the Spanish Labour Inspectorate (Inspección de Trabajo y Seguridad Social)."

This precept is the fundamental pillar of the obligation. It is important to note that the subsequent Law 10/2021, of July 9, on remote work, also reinforced this need, establishing that people who telework must also comply with time registration, underscoring the universality of the measure.

The main purpose of this law is twofold: on the one hand, to guarantee compliance with working hour limits, especially regarding overtime hours, ensuring they are adequately compensated or rested; on the other, to combat precarious employment and fraud in Social Security contributions. For the Spanish Labour Inspectorate (ITSS), time registration is an essential tool to verify the correct application of labour regulations.

Who Does Time Registration Really Affect?

The regulations are clear: it affects all companies, of any sector and size, from the first employee. This includes:

SMEs and micro-SMEs: There is no exemption for having few employees. If you have a single employee, the obligation is identical to that of a large company.
Self-employed with employees: If you are self-employed and have hired staff, you must comply with this obligation.
Hospitality and retail businesses: Sectors with variable hours and often shifts, where timekeeping is especially relevant and where the ITSS usually focuses.
Offices and services: Although schedules may be more stable, the obligation persists.
Part-time workers: Registration is crucial to demonstrate compliance with contracted hours and avoid undeclared complementary or overtime hours.
Remote or teleworking employees: As mentioned, Law 10/2021 ratifies the obligation, adapting to the particularities of remote work.

The only real exception are workers with special working hour regimes who already have their own registration and control systems, such as senior management executives with special powers to organize their working time, or those with certain particularities in their collective agreement that already contemplate an equivalent system approved by the ITSS. However, for the vast majority of SMEs, this exception does not apply.

The Cost of Infraction: LISOS Sanction Brackets

The legal framework that regulates sanctions for non-compliance in labour matters is the Ley sobre Infracciones y Sanciones en el Orden Social (LISOS) (Spanish Statute of Labour Infractions and Sanctions), approved by Real Decreto Legislativo 5/2000, of August 4. In the case of time registration, its absence or deficiency is mainly framed in article 7.5 of the LISOS, which qualifies as a serious infraction "not registering the working hours referred to in article 34.9 of the Estatuto de los Trabajadores".

Sanctions are divided into three categories, each with a different economic range, which in turn is subdivided into minimum, medium, and maximum degrees:

1. Minor Infractions

These are the least common for time registration, as the total absence of registration is usually serious. They could apply in cases of minor formal defects that do not prevent verification of compliance, or specific and isolated non-compliances that do not affect the essence of control. However, the ITSS tends to be strict.

Minimum Degree: From 70 to 150 euros.
Medium Degree: From 151 to 370 euros.
Maximum Degree: From 371 to 750 euros.

2. Serious Infractions

This is where most non-compliances related to time registration are framed. The LISOS considers "not registering the working hours" as serious. This includes the total absence of registration, incomplete records that prevent verification of actual working hours, data manipulation, or the non-retention of records for the four years required.

Minimum Degree: From 751 to 1,500 euros.
Medium Degree: From 1,501 to 3,750 euros.
Maximum Degree: From 3,751 to 7,500 euros.

The exact amount within each degree is determined based on various factors, such as the number of workers affected, the company's intentionality, reincidence, harm caused to workers, the company's business volume, and the existence of good faith or the rectification of the infraction before the resolution.

3. Very Serious Infractions

Although less frequent for the simple fact of not having registration, a serious infraction can escalate to very serious if reincidence is detected, an obstruction of inspection work, or if the absence of registration is directly linked to other very serious infractions, such as the violation of fundamental rights, discrimination, or massive Social Security fraud. For example, if it is demonstrated that the absence of registration is a deliberate strategy to conceal the systematic performance of unpaid and undeclared overtime hours, the sanction could be much higher.

Minimum Degree: From 7,501 to 30,000 euros.
Medium Degree: From 30,001 to 120,005 euros.
Maximum Degree: From 120,006 to 225,018 euros.

It is fundamental to understand that these amounts are not a company cap, but can be applied per infraction or per affected worker in certain contexts, although in practice, the ITSS usually applies a global sanction for the time registration infraction, modulated by the number of workers.

Concrete Examples and Practical Application of Fines

To illustrate how these sanctions materialise, let's consider some scenarios:

Scenario 1: SME with 10 employees without any time registration for one month.

A common case. The Labour Inspectorate detects that your SME, with 10 workers, has not implemented any time registration system. The infraction would be qualified as Serious. The fine would be set within the range of 751 to 7,500 euros. In practice, and if there are no aggravating factors such as reincidence or refusal to cooperate, initial fines are usually in the minimum or medium degree of the serious infraction. We could be talking about a sanction of 751 euros to 3,000 euros, for example, depending on the inspector's assessment and the company's attitude.

However, if the ITSS considers that the absence of registration has prevented the detection of unpaid or undeclared overtime hours, and this situation systematically affects most of the 10 employees, the sanction could approach the maximum degree of the serious infraction, i.e., up to 7,500 euros. Moreover, if this situation is maintained for a year, and the ITSS decides to apply the sanction cumulatively for each month of non-compliance, or for each affected worker, the figures could multiply exponentially, although this is less common for the fact of not having registration, and more for the consequence (e.g., unpaid overtime).

Scenario 2: Restaurant with 5 employees and incomplete or manipulated manual registration.

An inspector visits your restaurant and observes that time registration records are kept on a paper sheet, but signatures are missing, schedules are systematically identical (e.g., 9:00 to 17:00 every day without variations), or strike-throughs and amendments that suggest manipulation are visible. This would also be considered a Serious infraction, as the registration does not fulfil its function of reflecting the actual working hours. The fines would follow the same range of 751 to 7,500 euros, but manipulation could lead the inspector to apply a higher degree, understanding that there is an intentionality to conceal the reality of working hours.

Scenario 3: Office with 20 employees with correct registration, but not kept for 4 years.

Your SME keeps impeccable time registration, but during an inspection, it is discovered that only the records from the last year are kept, not the four years required by law. This lack of retention is also a Serious infraction, as it prevents the ITSS from verifying compliance with regulations in previous periods. The sanction would be applied in the same range, modulated by the severity of the omission and the number of years of missing records.

Mitigating Factors: Documented Good Faith

If you face an inspection and an infraction is detected, there are factors that can influence the reduction of the sanction. Documented good faith is one of the most important. What does it imply?

Attempt to comply: Having implemented a system, even if it has minor flaws, demonstrates a will to comply. For example, having a manual record that is not perfect, but exists, is better than having nothing.
Cooperation with the Inspectorate: Provide all required information, not obstruct the inspector's work, and show willingness to correct the situation. Obstruction, on the contrary, can aggravate the sanction and lead it to the Very Serious category.
Rectification of the infraction: If, once the infraction is notified, the company immediately proceeds to implement an adequate time registration system and rectify the defects, this can be considered a mitigating factor. The speed and effectiveness of the rectification are key.
Lack of knowledge: In SMEs, sometimes the lack of knowledge of the regulations is real. While it does not exempt from responsibility, a company that demonstrates having acted in good faith and without intention to defraud, and that commits to training and compliance, can obtain a mitigation.

It is crucial that any action of good faith is documented. This means keeping evidence of the actions taken, the systems implemented, communications with advisors, etc. Proactivity in compliance management is your best defence.

Consequences Beyond the Economic Fine

Economic sanctions, although significant, are not the only consequences of not keeping adequate time registration. Consider also:

Worker claims: In case of litigation for unpaid overtime hours, the absence of time registration reverses the burden of proof. That is, the company will have to prove that no overtime hours were worked, which is almost impossible without a record. This can lead to the payment of back wages, Social Security contributions, and possible interest.
Reputational damage: Sanctions and labour disputes can damage your SME's image, affecting the trust of your employees and clients.
Competitive disadvantage: While other companies comply and offer security to their workers, yours could be perceived as less reliable or with questionable labour practices.

Frequently Asked Questions (FAQ)

What types of SMEs does time registration apply to?

The obligation applies to all companies, without exception by size or sector, from the first hired worker. This includes self-employed with employees, hospitality SMEs, retail, services, offices, etc. There is no legal distinction between a large corporation and a micro-SME with a single employee.

What happens if the Labour Inspectorate detects that I am not keeping records?

If the Spanish Labour Inspectorate (ITSS) detects the absence or deficiency of time registration, it will initiate a sanctioning procedure. The infraction will be qualified as Serious, according to article 7.5 of the LISOS, and a fine will be imposed that will range between 751 and 7,500 euros, modulated according to various factors such as the number of affected workers, the severity of the non-compliance, and the company's intentionality.

How is the exact amount of the fine determined?

The exact amount within the range (minimum, medium, or maximum) is decided by the inspector and the competent authority, considering factors such as: the number of affected workers, the existence of harm to workers, the company's intentionality (intent or negligence), reincidence in similar infractions, the company's business volume, and the existence of good faith or the voluntary and rapid rectification of the infraction once detected.

What does the Labour Inspectorate value to mitigate the sanction?

The Inspectorate positively values documented good faith. This includes having attempted to implement a system (even with minor flaws), actively collaborating with the inspector, providing the required information and, above all, rectifying the infraction immediately and effectively once notified. Showing proactivity and willingness to comply can significantly reduce the amount of the fine.

Is a signature sheet sufficient for time registration?

A signature sheet can be a valid system provided that it complies with all legal requirements: recording the specific start and end time of each worker's day, being unalterable, being accessible to workers and representatives, and being kept for four years. However, manual systems are more susceptible to errors, manipulations, or losses, which increases the risk of not fully complying with the regulations and being sanctioned. Digital systems offer greater legal certainty and ease of management.

Avoid unnecessary risks and ensure the peace of mind of your SME. Check the potential impact of non-compliance with our time registration sanction calculator.

Legal Disclaimer: This guide compiles public regulations and offers a general interpretation. It does not replace personalized legal advice for your specific case. For any legal query, consult a labour law expert.