Illegal Employment-Risks and Sanctions
Although it is illegal and it involves countless risks and sanctions, illegal employment is still common everywhere in the world and difficult to stop.
To be informed about your rights when you begin a job is absolutely essential because illegal employment is against the law and not only. Employers usually benefit from unhired workers by avoiding state taxes required by law. Illegal work means an undeclared or irregular employment relationship without the two parties having signed a regular contract. This means no guarantee for the employee, for whom there is no social security and insurance coverage. Illegal employment is a concern for all countries as it is the root of other serious global problems, such as human trafficking and labor exploitation.
Despite the heavy penalties & sanctions, the unfair hiring practices are still far from being resolved. The number of illegal workplace violations is widespread among small-scale businesses and medium-sized businesses including unskilled workers, people who usually work in households, wholesale and retail trade, agriculture, constructions, hotels and restaurants, industrial cleaning, car-washing services, and auto services.
Forms of Illegal employment
Illegal employment can manifest itself in many forms. Among the most common are:
- An irregular job or activity that is not highlighted and taxed, carried out in the absence of an individual employment contract, without legal payroll and payment of the state contributions;
- Partially taxed work performed through paying a part of salary directly to the employee and another amount in the official documents;
- Work registered only in part-time documents, the basis of a few hours a day, when, in fact, the work is performed on a full-time basis;
- Illegal daily or seasonal activities (esp. In the case of farmers, apprentices, workers in agriculture and in construction);
- Providing activities for an employer, based only on a verbal agreement, without signing an individual employment contract;
- Providing domestic activities or individual households without an individual employment contract;
- Fulfilling the probationary/trial period without signing an individual employment contract;
- Overtime work(exceeding 8 hours of work per day, with no extra payment)
Sanctions for Employers and for Illegal Employees
Illegal employment involves sanctions for those who hire without assuming an individual employment contract and also for those who do not have documents. According to the Labor Legislation of each country, sanctions differ from a country to another.
For the EU countries, thus Germany, France, Belgium, Italy, Spain the most common sanction is fines.
In Germany, illegal work is considered a criminal offence and can be fined with up to EUR 5,000.
In Belgium the fine is a sanction level 1: as of 1 January 2017, from 80 to 800 EUR (with multiplication coefficient).
Another possible sanction regarding to irregular permit is imprisonment. Other less applied sanctions are: temporary/definitive closure, financial gains confiscation, license withdrawal and revocation of residence permit.
In 2016, the UK, in its Immigration Act introduced more severe sanctions. For example, an employer can be sent to jail for 5 years and also pay an unlimited fine if one was found guilty of employing a worker without having valid documents to work on the UK territory.
An employer must thoroughly check if the person:
- has the permit to stay and work in that country,
- if the person leave didn’t expire,
- if he/she is allowed to perform certain types of work and if the papers are correct and not false.
If one of these cases is considered, an employer breaks the law and might have to pay a fine of up to £20,000 for each worker. A civil penalty note will be sent and there will be 28 days for a response. Immigration Enforcement will publish a warning about the employer’s business for others to not hire illegal workers.
The Netherlands began to tackle initiatives fighting against brokering or employment intermediary agencies, parties committing malpractices and exploitation.
The penalties for the employer who hires illegally in Italy are indicated in the Simplification Decree (Legislative Decree 151/2015) implementing the Jobs Act. The legislation in this case has used a hard punch for those who hire an employee without a regular contract, sanctions that can go up to 36 thousand euros. The amount of the sanction for the employer varies according to the days of the illegal employment.
Illegal employment is also widespread in the USA. It is estimated that untaxed economic activity in the United States is totaled 2$ trillion last year, according to a study of the economist Edgar Feige, University of Wisconsin-Madison.
Employment law in Russia is controlled by the Russian Labor Code, supervised by the Ministry of Labor and Social Protection that establishes all specific rights between an employer and all categories of employees.
Illegal employment in Russia is much connected with the illegal immigration, which is a huge problem for Russia. It is estimated that there are around 10-12 million foreigners in Russia and only half of them have residence or working permit. This is due to the immigrants from the ex Republics of the USSR who are residing in Russia on a transitory basis. The difficulty to obtain a work permit in Russia for aliens is an obstacle to live and work legally on Russia’s territory. Russia’s bureaucracy makes it impossible.
Working in the shadow economy, through illegal employment, cost thousands of people’s lives. Many people died being involved in criminal activities and many died performing construction types of work without being protected or in unknown circumstances. Russia became used with the fact that “the dirtiest work” is done by immigrants. It was also proved that prostitution affected mostly foreign women and it is less dangerous for Russian citizens.
Also, the common border with China and the high demographic population, makes migration unavoidable. Once in Russia, the Chinese immigrants, do not follow the registration procedures. In short, working as an immigrant in Russia, without an individual employment contract means to be in trouble and to risk life, because an employer can do whatever he wants and you won’t have any legal access. In Russia, even police can stop you in the street asking for documents and if you don’t have a legal status, you risk to be imprisoned for a while in very unpleasant conditions and then to be deported and even banned to enter on Russian territory for some years.
Having the second biggest market economy in the world, the situation on the Chinese labor market is not so solid. American television ABC News broadcast in 2012 a report on the cruel exploitation of Chinese workers in Apple factories (through the subcontractor, Foxconn, which also delivers products for Sony, Dell, HP, IBM, Motorola, Toshiba, etc.) in Shenzhen.
To make gadgets like Xbox, Playstation and Amazon Kindle, a labor camp is full of 235,000 workers, which is equal with the population of an American city like Orlando. And wherever you look, in any factory or workers’ home, suicide nets are placed. Labor Law of the People’s Republic of China was recently revised by the Chinese Government. The laws mirror practically all laws as in other countries considering discrimination, minimum wage, working hours and protective measures but these laws are not enforced yet. Employers who go against the laws will have to support consequences, such as fines and other termination laws. If an employee worked without a contract for a period of time which surpassed the trial period, then the employer automatically begins an open-term employment, thus being obliged to retain the employee till retirement. Termination is difficult without a written contract and more difficult to apply for those who have an open-contract term.
Illegal Employment Disadvantages
In the absence of an individual employment contract, workers are nowhere listed as employees, so they cannot enjoy the advantages and benefits of a legally employee.
Allowances and financial benefits lost on illegal employment
Unemployment benefit (this can be granted only to the unemployed who contributed to the state, so who had a declared employment contract);
Maternity allowance (pre and post-natal leave), allowance for a sick child;
Personal deductions (employees who have more children);
Funeral aids, aids for serious or incurable diseases;
Allowance for reducing working time and quarantine
Pensions and holidays
Sick leave;
Legal days off, rest;
seniority in work – based on this, legal employees can receive salary increases, without it, the undeclared worker will have a very small pension;
Health insurance
Do not have insurance for disability or other illnesses;
Are not insured in the public health system, also they cannot receive deductions for health subscriptions in private health clinics;
Other disadvantages of illegal employment
- Do not enjoy tourist services or treatment provided by employers to employees during holidays;
- Do not receive meal vouchers;
- Do not have access to bank loans because they cannot prove their income.
Consequently, working outside the legal framework, the employee alone bears all the risks and negative consequences of this option on the labor market.
Illegal employment is usually the choice of immigrant people that do not have any knowledge about how (or they are unable to) become a Self employer of open they own company. The solution for this problem is many times solved by working for an Umbrella Company, which has its own negative sides but it is still a good alternative.
This article doesn’t offer legal advice. Laws related to illegal employment are often changing, sanctions can change, and the above information might not reflect the recent changes of the law or your own state’s laws.