Inspections find numerous cases of illegal work
Published: 10 June 2008
In Slovakia, illegal work and illegal employment – essentially work undeclared to the relevant authorities for tax, social security and other purposes – are regulated by:
In the second half of 2007, the Slovak National Labour Inspectorate conducted inspections at over 2,400 workplaces to monitor whether workers were being employed illegally. It found over 650 cases of illegal work, a figure which has remained almost unchanged compared with the same period for 2006. The main legal infringements detected were failures to report employment for social insurance purposes and to provide employment contracts. The economic sectors most affected were wholesale and retail trade, and hotels and restaurants.
Background
In Slovakia, illegal work and illegal employment – essentially work undeclared to the relevant authorities for tax, social security and other purposes – are regulated by:
Act No. 82/2005 Coll. on illegal work and illegal employment (SK0505103F);
Act No. 125/2006 Coll. on labour inspection, which governs the monitoring of adherence to the ban on illegal work and illegal employment.
The public authorities provide guidance and advice to employers and employees on observing the legislation in this area. Some employers violate the ban on undeclared work due to insufficient knowledge of the legislation concerned. Guidance provided to workers seeks to increase legal awareness and enables them to communicate more effectively with employers on the issues concerned.
In the second half of 2007, the National Labour Inspectorate (Národný inšpektorát práce, NIP), in line with the requirements of the Act on labour inspection, conducted inspections to monitor adherence to the ban on illegal work and illegal employment. The inspections were planned in line with the findings of the NIP’s previous monitoring and, in some cases, based on information provided by individuals to the inspectorate. Allegations of breaches of the legislation relating to illegal work were the second most common subject of such reports.
Other public bodies are involved in the inspection activities of NIP in this field, namely the Centre of Labour, Social Affairs and Family (Ústredie práce, sociálnych vecí a rodiny, ÚPSVaR), the Social Insurance Agency (Sociálna poisťovňa, SP) and the police. While cooperation with SP is aimed at checking the proper registration of workers by employers, the association with the police concerns the personal identification of inspected employees, the work permits of migrant workers and assistance in cases of obstruction of NIP officers.
Aim of inspections
The objectives of the inspections in the second half of 2007 were to identify people involved in illegal work and illegal employment and to enforce measures seeking to prevent the use of labour without the following conditions being met: having a valid employment relationship, or other legal contractual relationship; observance of the statutory obligation to report employment to the SP; and, in the case of third-country nationals, obtaining a temporary residence permit for the purpose of employment or a work permit.
Results of inspections
The NIP inspectors conducted checks in all sectors of the economy, although they focused particularly on sectors such as wholesale and retail trade, hotels and restaurants, manufacturing and construction. Special checks were carried out in sectors using seasonal work during the summer period. Some of the main results from the inspections conducted in the second half of 2007 are shown in Table 1 below. As the findings show, the largest numbers of people employed illegally and of fines imposed were in the wholesale and retail trade sector.
| Sector | Number of people inspected | Number of people employed illegally | Number of fines imposed |
|---|---|---|---|
| Agriculture and forestry | 313 | 36 | 2 |
| Manufacturing | 2,809 | 98 | 14 |
| Construction | 1,088 | 85 | 11 |
| Wholesale and retail trade | 1,984 | 192 | 38 |
| Hotels, restaurants and catering | 1,625 | 110 | 35 |
| Transport, storage and communication | 472 | 38 | 2 |
| Real estate business | 745 | 66 | 8 |
| Public and social services | 306 | 25 | 1 |
Source: NIP, 2007
Table 2 below compares some of the findings of the inspections in the second half of 2007 with those for the same period in 2006.
| 2nd half of 2007 | 2nd half of 2006 | Comparison | |
|---|---|---|---|
| Number of workplaces inspected | 2,425 | 2,554 | -129 |
| Number of people inspected | 10,164 | 11,025 | -861 |
| Number of people employed illegally | 655 | 687 | -32 |
| Number of fines imposed | 111 | 99 | 12 |
Source: NIP, 2007
As shown in Table 2, in the second half of 2007 the NIP inspected 10,164 people at 2,425 workplaces, finding that 655 people were employed illegally. Employment without an employment contract was found in 184 cases. The violations of the law on illegal work and illegal employment which arose in 428 cases related mainly to the employer’s failure to inform SP on time about employing people.
A total of 111 fines, amounting to SKK 1.6 million (about €52,770 as at 5 June 2008), were imposed on employers after the discovery of illegal employment in the 2007 inspections. Wholesale and retail trade was the sector with the most fines, at 38, totalling SKK 350,000 (€11,544). This sector was followed by hotels and restaurants, where 35 fines totalling SKK 450,000 (€14,844) were recorded, and manufacturing and construction, where 25 fines totalling SKK 480,000 (€15,836) were issued.
Comparing the inspection findings for the second half of 2007 with those for the same period in 2006, it emerges that the number of infringements of the law on illegal work and illegal employment remained virtually the same. The only exception was the marginal increase in the number of fines imposed in 2007 compared with 2006, which rose by 12 fines. The lack of progress means that this problem remains one of the most important priorities for labour inspection activities in 2008. In order to increase the efficiency of the inspections, it is expected that the number and level of fines will increase.
Inspections of seasonal work
Specific inspections of seasonal work activities were also conducted in July and August 2007 in all regions of Slovakia and in the most seasonal economic sectors, namely: hotels and restaurants, especially outdoor catering; recreational facilities, such as open-air swimming pools, lakes and campsites; gardening work; business services; agricultural activities; and seasonal construction activities.
In total, 362 workplaces were inspected, 234 of which were companies with up to nine employees. At the time of the checks, 1,384 people were working at these workplaces. Some 72 of the workplaces were found to be illegally employing a total of 187 people. The highest number of illegally employed people was found in hotels and catering facilities, where some enterprises employ additional staff without employment contracts for short periods and are thought to consider the prospect of possible NIP inspections as an acceptable risk. The other main area of illegal seasonal employment was the agricultural sector, mainly fruit and vegetable picking. Illegal work in this sector is believed to result, in some cases, from a low level of legal awareness among farmers.
Commentary
Employers who violate their statutory obligations with regard to illegal work and illegal employment are mainly motivated by the level of tax and social insurance contributions. In a demanding, competitive environment, they may evade these costs by failing to respect the legal requirement to employ workers on employment contracts. Other factors include: the administrative burden relating to employment formalities; and the varying level of economic development of individual regions, with an imbalance emerging between labour supply and demand in some local labour markets. On the workers’ side, certain groups in society still consider illegal work and illegal employment as a way of increasing their income without paying tax and social contributions. This is connected with a low level of legal awareness, as many people do not realise that working illegally exposes them to a much lower level of legal protection than what they would automatically receive if employed legally on an employment contract.
This lack of proper legal protection may affect illegally employed workers in many ways. More specifically, they may not receive their statutory entitlements in areas such as: proper remuneration for work performed; minimum wages or wage allowances; maximum working hours, minimum breaks and annual leave; compensation in the event of occupational accidents or diseases; provision of personal protective equipment and other areas of health and safety.
More widely, illegal work and illegal employment have a negative impact on the state budget and other public revenue and expenditure. At the same time, it hinders the collection of correct data in areas such as employment and unemployment.
Hatina Teodor, Institute for Labour and Family Research
Eurofound recommends citing this publication in the following way.
Eurofound (2008), Inspections find numerous cases of illegal work, article.
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