Coordination of inspection activites at workplaces, Slovakia

About

Country: 
Slovakia
Target Groups: 
employers/purchasersworkers/suppliers

 

Since 2000, a number of legislative measures have been introduced in Slovakia to combat and prevent the incidence of undeclared or illegal work. Under these regulations, the relevant labour inspection authorities can impose substantial fines on those violating the law on illegal employment, as well as prohibit them from taking part in public procurement. The most serious penalty for a person carrying out undeclared work is their removal from an unemployment registry. Monitoring is carried out mainly on the basis of planned activities and influences from outside. Due to the relatively small number of labour inspectors, employees of the labour ministry offices and the country’s tax offices, as well as police officers, are also involved in the control activities.

 

Background

Before 2000, undeclared work in Slovakia was only allowed to be checked by labour inspectors in connection with monitoring adherence to the rules defining working conditions at workplaces under Act No. 174/1968 – mainly, with respect to regulations on the employment of women and young people, working hours, night work and overtime work. Since 1 July 2000, however, the control of undeclared work became regulated by Act No. 95/2000 on labour inspection. Following the introduction of the act, the need to coordinate inspection activities in the control of undeclared work was identified, based on initial experiences. Subsequently, in April 2001, an agreement was concluded to provide the organisational framework for the coordination of inspection activities. This agreement was concluded between the Ministry of Labour, Social Affairs and Family (Ministerstvo práce, sociálnych vecí a rodiny Slovenskej republiky, MPSVR SR), departments of the Ministry of the Interior (Ministerstvo vnútra, MV SR), the tax offices attached to the Ministry of Finance (Ministerstvo financií Slovenskej republiky, MF SR), the Social Insurance Agency (Sociálna poisťovňa, SP), the National Labour Office (Národný úrad práce, NÚP) and the National Labour Inspectorate (Národný inšpektorát práce, NIP). Coordination of the regulations was implemented in cooperation with local self-governments and employer organisations. Further legislation which is valid in this area was introduced in subsequent years – namely, Act No. 82/2005 on undeclared work enacted from 1 April 2005 and Act No. 125/2006 on labour inspection brought into effect from 1 June 2006.

Controls on undeclared work and illegal employment at legal and physical persons’ workplaces are performed by the country’s labour inspection authorities – that is, the MPSVR SR, the NIP and regional labour inspectorates, along with the Centre of Labour, SocialAffairs and Family (Ústredie práce, sociálnych vecí a rodiny, ÚPSVaR) and its regional offices, the tax authorities and the police presidium.

Objectives

The aim of the regulations for controlling workplaces is to detect and combat undeclared work and illegal employment. When the inspection body finds that the law has been breached, it imposes a fine; this has a deterrent effect on employers engaging in this practice.

Specific measures

The country’s labour inspection authorities, after informing the inspected subject about the action, have the right to enter the workplace, check if undeclared work is being performed and prepare a report about the inspection. When the inspection body finds that the act on illegal work has been breached, it will write a protocol about the labour inspection, in which it will propose technical, organisational and other measures seeking to improve the situation. The relevant labour inspectorate is authorised to impose a fine for violation of the registration obligation up to the amount of SKK 1 million (about €33,194 as at 19 February 2009). The fine can be imposed within two years from the day when the protocol was discussed and within three years, at the latest, from the day when the obligation was breached. When the labour inspectorate imposes the fine, it takes into account its preventive effect. When defining the level of the fine, it assesses the seriousness of the breach.

The NIP administers a central, publicly available list of physical and legal persons who breached the ban on illegal employment. The individuals concerned do not receive any state aid and they are not allowed to participate in public procurement.

Evaluation and outcome

Achievement of objectives

Activities of labour inspectorates

Several thousand controls of undeclared work are conducted each year by Slovakia’s labour inspector authorities – for example, in the first half of 2008, some 2,138 controls concerning 8,142 persons were implemented. During this period, a total of 470 persons performing undeclared work were detected. Most of the cases concerned breaches of the reporting obligation to the SP and employing people without a valid employment contract. In the first half of 2008, controls of undeclared work were mainly directed at employers with less than 49 employees in the commerce, manufacturing, and hotels and restaurants sectors.

Activities of ÚPSVaR and its regional offices

The number of annually implemented controls fluctuates between 4,000 and 5,000 controls – for instance, in the first half of 2008, some 2,294 controls were implemented during which 5,371 person were checked. Controls implemented during this period detected 139 employers which employed 251 persons illegally, including foreign workers. Labour offices imposed 126 financial fines amounting to a total of SKK 652,000 (€22,640) and removed 24 job applicants from the unemployment register.

Activities of Ministry of Finance – tax offices

In the first half of 2008, the country’s regional tax offices carried out 320 inspections to detect undeclared work. Four cases of illegal work were uncovered following the inspections.

Activities of Ministry of Interior – police presidium

In the first half of 2008, some 7,716 individual controls of undeclared work were implemented, and 246 illegally employed persons were detected.

Obstacles and problems

Inspection bodies state in their reports that it is still lucrative for employers not to pay compulsory insurance contributions for employees employed illegally, mainly in less developed regions with higher unemployment levels. Similarly, it is also attractive for employees to earn extra money without having to pay compulsory insurance contributions. The low number of controls of undeclared work is usually caused by a low number of employees adhering to such controls, their work overload and the fact that they are also performing controls in other areas – for example with regard to occupational safety and health.

Implementing the controls concerning the performance of undeclared work at workplaces is also demanding from the point of view of the number of inspectors involved, and the coordination of activities – including proper timing and administrative management of efficient checking of legal employment. The low number of labour inspectors – at just over 200 in total – who perform mainly planned activities and activities based on external reports, can be considered as one of the main weaknesses.

Lessons learnt

The information from the labour offices and labour inspectorates seems to indicate that the majority of employers adhere to the legislation concerning the ban on undeclared work. The behaviour of entrepreneurs is mainly influenced by the fact that those who breached the law on undeclared work will not receive any state aid and cannot participate in public procurement. Thus, the sanctions in this area, which mainly involve a limited access to public orders and control measures preventing illegal work, appear to have a deterrent effect on employers and employees who are considering engaging in undeclared work.

Impact indicators

The results in the table below give an indication of the extent and outcome of the controls implemented by the various labour inspection authorities in Slovakia with regard to undeclared work.





Number of inspections of illegal employment and outcomes, first half of 2008
Institution Number of controls Number of cases revealed

Number of proposed

sanctions

Amount of fines (in SKK)*
NIP

2,138

470

112

1.412 million

MPSVR SR

2,294

251

144

1.059 million

Tax offices

320

4

0

0

Police presidium

7,716

246

64

0.875 million

Total

12,468

971

320

3.346 million

Note: * SKK = Slovakia Koruny; €1 = SKK 30.13 as at 19 February 2009.

Transferability

In order for the controls on undeclared work to be implemented successfully, the various inspection bodies must have permission to enter the premises of employers. The current inspection system requires administration of the register of actual employed persons in order to be able to prove that the respective individuals are legally employed. Disciplinary sanctions and the level of the fines are also important for discouraging the performance of undeclared work.

Contacts

Main organisations responsible:

Ministry of Labour, Social Affairs and Family, Website: www.employment.gov.sk

Social Insurance Agency, Website: www.socpoist.sk

National Labour Inspectorate, Website: www.safework.gov.sk,

Centre of Labour, Social Affairs and Family, Website: www.upsvar.sk

Slovak Tax Administration (Daňové riaditeľstvo SR), Website: www.drsr.sk

Presidium of the Police Force (Prezídium Policajného zboru), Website: www.minv.sk/?kontakty-prezidia-policajneho-zboru

Bibliography

Bednárik, R., Danihel, M. and Sihelský, J., Nelegálna práca v podmienkach slovenskej spoločnosti, Bratislava, Friedrich Ebert Stiftung, 2003.

EIRO, ‘Industrial relations and undeclared work’, 2004, available online at: /ef/observatories/eurwork/articles/thematic-feature-industrial-relations-and-undeclared-work-20.

EIRO, ‘Undeclared work inspection results’, 2005, available online at: /ef/observatories/eurwork/articles/undeclared-work-inspection-results.

EIRO, ‘New law on undeclared work’, 2005, available online at: /ef/observatories/eurwork/articles/new-law-on-undeclared-work.

EWCO, ‘Inspections find numerous cases of illegal work’, 2008, available online at: /ef/observatories/eurwork/articles/labour-market-undefined/inspections-find-numerous-cases-of-illegal-work.

Law No. (Zákon č.) 231/1999 Z.z., o štátnej pomoci v znení zákona č. 203/2004 – § 4 ods. 1, písm. d, August 1999.

Law No. (Zákon č.) 523/2003 Z. z., o verejnom obstarávaní a o zmene zákona č. 575/2001 Z. z. o organizácii činnosti vlády a organizácii ústrednej štátnej správy v znení neskorších predpisov, October 2003.

Law No. (Zákon č.) 5/2004 Z. z., o službách zamestnanosti a o zmene a doplnení niektorých zákonov, 2004.

Law No. (Zákon č.) 82/2005 Z. z., o nelegálnej práci a nelegálnom zamestnávaní a o zmene a doplnení niektorých zákonov, February 2005.

Law No. (Zákon č.) 125/2006 Z. z., o inšpekcii práce a o zmene a doplnení zákona č. 82/2005 Z.z. o nelegálnej práci a nelegálnom zamestnávaní a o zmene a doplnení niektorých zákonov, February 2006.

MPSVR SR, Informácia o vyhľadávaní a potieraní nelegálnej práce a nelegálneho zamestnávania za I. polrok 2008, Bratislava, 2008

Rastislav Bednárik, Bratislava Centre for Work and Family Studies

 

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