Undeclared work inspection results

The National Labour Inspectorate and the Centre of Labour, Social Affairs and Family realised inspection of undeclared work immediately after the new act entered into force. During the first two weeks of inspection nearly 1,000 undeclared workers were detected. In April and May the employers registered 51,000 new employees. However, the praxis showed that nearly 60% of them were external employees who did not work under usual employment contracts.

The National Labour Inspectorate (Národný inšpektorát práce, NIP) and the Centre of Labour, Social Affairs and Family (Ústredie práce, sociálnych vecí a rodiny, ÚPSVaR) realised at the beginning of validity of the new act on illegal work and illegal employment (SK0505103F) inspection aimed at detection of undeclared work in Slovakia. Under the threat of potential fines the employers registered more than 39,000 new employees at the Social Insurance Company (Sociálna poisťovňa, SP) in the period of the first 14 days of the inspection in April 2005. During that period nearly 7,100 inspections at employers were realised and they detected nearly 1,000 cases of undeclared work. For comparison, according to the data from the Ministry of Labour, Social Affairs and Family (Ministerstvo práce, sociálnych vecí a rodiny, MPSVR) nearly 16,500 new employees were registered at the SP in 2003-4 but inspections realised during those years detected only 200 cases of undeclared work.

According to the information of ÚPSVaR on the recent inspection, the employers were levied fines in the total amount of approximately SKK 3.5 million. At the same time the lowest fine for the employer was in the amount of SKK 1,000 and the highest one in the amount of SKK 250,000. The fines were levied also to those workers who were detected as illegal ones. The amount of fines varied from SKK 500 to SKK 3,000. The act enables to levy even much bigger fines - for employers up SKK 1,000,000 and for individual persons up to SKK 10,000 (just for comparison, the law in the Czech Republic enables to levy CZK 2,000,000 fine to employers). According to the Minister of Labour, Social Affairs and Family, Mr. Ludovít Kaník 'the activity had only a preventive character and predominantly lower fines were levied' (newspaper Hospodárske Noviny 20 April 2005).

The inspection confirmed assumptions that the biggest amount of undeclared work was in restaurants and catering services where approximately half of the revealed illegal employees worked. The majority of the rest detected undeclared employees worked in other types of services, in wood processing industry, forestry and construction. In 14% of the total number of detected undeclared workers were cases when the worker was at the same time registered at the job office as unemployed. In 7% cases the workers were getting also social benefits and in less than 2% they were foreigners. Approximately 60% of the detected employees were not registered at the SP.

The inspections are continuing and according to the information from the ÚPSVaR more than 51,000 new employees were registered at the SP since the beginning of the inspection until mid of May 2005. However, approximately 60% of these employees did not have a duly employment contract with their employer and they used to work for them externally on the basis of a Contract on work performance. Detection of the undeclared work is not so dramatic now as at the beginning of inspection, eg during one week in May 2005 there were realised 2,550 inspections of employers when in 95 cases 160 undeclared workers were detected. Inspections were done also at night in pubs, gamble-houses and night clubs where 90 undeclared workers were detected. During that one week the inspectors levied fines in the amount of SKK 2.7 million.

According to the opinion of employers the reduced 19% corporate tax does not solve itself the issue of undeclared work. The employers as well as some experts see the main reasons of undeclared work in still high contributions which the employers have to pay to social insurance funds. Beside that the unskilled work is very expensive, too.

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