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Cyprus

Huge fines for employers caught using undeclared workers

Labour Minister Zeta Emilianidou

New legislation came into force on Friday, which seeks to clamp down on undeclared work by imposing heavy fines on employers starting at €500 for each undeclared worker, which will be backdated on the presumption they have been working for six months, bringing the total to  €3,500, Labour Minister Zeta Emilianidou said.

Emilianidou said that no more exemptions would be given to those who break the law, after a three-month grace period.
During a news conference, Emilianidou said undeclared work in Cyprus is estimated at 15.4 per cent of the labour market, but admitted that this percentage was probably not representative of the problem that actually exists in Cyprus.

Around 50 per cent of all undeclared work involves EU citizens, 34 per cent Cypriots and 16 per cent third-country nationals.

According to Emilianidou, the rate of undeclared work in Cyprus is similar to that found in other European countries.
“Undeclared work not only deprives an unemployed person of a job,” she said, but those involved “have neither social security benefits nor a decent pension, or anything”.

She went on to say that there were additional problems regarding the Social Insurance Fund (SIF) but also conditions of unequal competition between businesses.
The hefty fines amount to €500 per undeclared worker. At the same time, a legal presumption was introduced into the legislation, which will consider that the employment was made six months before the date of the infringement, meaning the fine will actually amount to €3,500.

There is a limit to the maximum fine of up to €10,000 for those employing up to 10 illegal workers. If the fine is paid within 30 days, it is reduced by 30 per cent, but if it is not paid in time, it increases by €50 for each delayed day. At the same time, an appeals procedure will be allowed.

The legislation also provides the temporary suspension of the operation of a business or a part of it for a maximum of 48 hours when a new administrative fine is imposed.

Emilianidou said the competent body for the enforcement of the suspension will be a three-member commission, chaired by the Director of the social insurance department. A bill has been readied and will go to the House for approval.

The burden of proof will be on the employer, who will be required to prove that the undeclared employee was not working for him.
Employers are also obligated to make an electronic declaration of recruitment no later than one day before the day of recruitment. This means that the employer has to keep a recruitment register.

The inspection service will have extended powers and will work under the ministry of labour to carry out targeted inspections on the basis of risk analysis.


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