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Harsher penalties to be introduced for illegal employment

Discussion of a government bill introducing harsher penalties for undeclared or illegal employment concluded at the House labour committee on Tuesday.

After the session, Labour Minister Zeta Emilianidou, who was present, said the major change the bill will effect is the introduction of the obligation for employers to declare employees to the Director of Social Insurance the day before employment starts, instead of up to a month after, per current legislation.

“This will make it easier for [Labour ministry] inspectors to identify undeclared workers,” she said.

The bill introduces more stringent penalties on employers for undeclared labour – €500 per undeclared employee, subject to an additional €500 for each month of employment, instead of the current €200 fine.

As an incentive for payment of the steep fines, offenders will be offered a 30 per cent discount for early payment. On the other hand, late payment will incur a €50 per day fine on top of the penalty.

The bill also introduces the concept of “minimum employment period”, according to which any employers caught with undeclared workers will be assumed to have employed them for at least six months unless it can be proved otherwise in court.

An added penalty for repeat offenders of undeclared employment is the lockdown of a business for up to 48 hours.

The government bill allows for a three-month transition period before the law comes into effect.

During this period, anyone who willingly declares previously undeclared employees will not face the new penalties.

Additionally, under the new regime, declaring an employee will be done online, facilitating control and bypassing red-tape.

According to Emilianidou, undeclared labour currently sits around 15 per cent, and illegal employment at seven, but these percentages are “largely dependent on the number of checks done, as well as unemployment levels”.

But the government’s effort to crack down on undeclared labour “does not end here”, she added, noting that another bill creating a unified inspector force is currently under legal review.

Responding to employer associations’ criticism of the new penalties being excessive, the minister said “what is excessive is one company to have undeclared employees, because that is unfair competition versus other businesses.

“Plus, the workers themselves will have no pension when they retire.”

She added that the fines should in fact gradually rise.

Commenting on the exemption of domestic workers from the bill, Emilianidou said it would be wrong “at this stage” to levy fines on the elderly and low-income pensioners over the employment of domestic help.

Committee chair Andreas Fakondis said the bill was “very important, and in the right direction in combatting undeclared and illegal employment”.

He said the bill is expected to be brought to a plenary vote in early May.


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