Illegal work – work without a contract
Illegal work is defined in the Law of April 20, 2004 on employment promotion and labor market institutions. In short, it is illegal employment. Performing this work is punishable. The consequences are borne by both the employer and the employee. Based on the law, illegal work is:
- work without a contract (employment contract or civil law contract)
- the absence of social insurance on the employee
- taking up employment or other gainful work or starting a business by an unemployed person without informing the labor office about it
- the performance of work by a foreigner without the appropriate permit (unless he or she has been exempted from having one under other regulations).
Unfortunately, despite the penalties they face for doing illegal work, this phenomenon continues to be practiced. Individuals willingly take up such employment because the employer offers them a higher salary. They also work longer hours than full-time employees. They have no rights, only duties. They receive a salary for them. However, they cannot count on any benefits. There is no guarantee and legal security that they will receive this salary. It is worth noting that such a worker is also not insured, since he does not officially work. Black labor is unfortunately profitable for employers. It reduces the cost of employment. The employee benefits only financially. His income is neither taxed nor taxed.
It is worth knowing that working without a contract is illegal work! The penalty for such employment is very severe.
What are the consequences of illegal work
Black labor is illegal and prohibited in Poland. It carries many negative consequences. As of January 1, 2022, even more severe penalties are imposed on employers than before. According to the Polish Order, penalties for performing black market work will be even more severe. The State Labor Inspectorate is now applying more thorough checks on the legality of employment, or the correctness of contracts.
Illegal work simply does not pay. For the employee it means:
- no guarantee of work (i.e. the risk of being fired overnight)
- no certainty of receiving a salary for work
- no social security
- no possibility of taking a vacation
- no paid vacation leave
- the omission of the entire period of employment in the black economy in the calculation of seniority
- risk of financial penalty from 500 to 5000 PLN
- problems with obtaining compensation for an accident at work
- Before a person decides to engage in illegal employment, it is worth remembering that this is an unfair and dangerous practice. It carries a number of negative consequences not only for the employer himself, but most importantly for the employee.
Consequences for the employee
It does not pay for employers to hire workers illegally. The consequences for the employee are various. One of the most important downsides is the lack of job security. Working without any contract, the employee and his employer are not connected in any way. Therefore, at any time the employee can be deprived of his position or the employer can change his working conditions. In addition, working on the black market means that he has no guarantees about the amount of salary he will receive. This is because it can change at any time, and it is sometimes the case that workers are illegally exploited and not paid at all. The consequences for the employee can also be criminal-legal.
It should be remembered that black labor is very insecure. An employer can fire an employee overnight. Another problem concerns punctuality. Despite performing his duties, he may not receive his salary. An illegally employed person has limited ability to enforce his paycheck. Formally, he has no connection with his employer, as indicated by the lack of a concluded contract.
Another consequence of illegal work is lack of job security. Illegal employment means not paying contributions, and insurance (pension, disability, sickness and health). Employed without a contract, there is no possibility of free treatment at the National Health Service and no right to benefits for an accident at work.
It is worth noting that very often working on the black market, does not comply with the rules of the law in Poland – including, among others, health and safety regulations and rules. In addition, the employee is not covered by medical examinations, or adequate training in occupational health and safety. These are aspects that raise awareness of potential health and life risks in the workplace and enable safe work on the job.
Illegal work also means a lack of job stability. There is no guaranteed continuity of employment. As a result, he can never be sure if there will be a job for him the next day. Working conditions can change constantly, due to their lack of an officially established basis such as terms of reference.
The employee also has no work structure that the employer must follow – we’re talking about working hours, overtime or vacation rights. The lack of stability means that black jobs can be subject to constant change – without the employee’s consent. Ultimately, the employed person never knows what his or her next workday will look like, or even whether work will continue to be available.
All the negative consequences for the employee have a negative impact on him. On his physical and mental health. Therefore, when looking for a job, one should be cautious and look for a safe employer who will provide legal employment.
It is worth noting that if the employee himself reports the practice of illegal employment, he will not suffer any consequences. It is the employer who will bear the social security tax burden. Penalties for this will affect the employed who have the status of unemployed and do not notify the Labor Office that they have received a job. This is among the basic duties of any unemployed person.
He has seven days to do so. Otherwise he faces a fine of not less than PLN 500. In addition, an unemployed person can also be punished by the PIP. This institution can apply to the court for a fine from 500 zlotys to 5 thousand zlotys.
Illegal employment of a foreigner:
Few people know that if an employer hires a foreigner illegally then both parties will bear the consequences. Such a situation results in:
- imposing a fine on the foreigner: from PLN 20 to PLN 5,000
- may be obliged to return, i.e. leave Poland
- may be banned from re-entering the territory of Poland and other Schengen countries for a period from 1 to 3 years
Consequences for the employer
Currently, based on the regulations, an employer choosing to illegally employ workers undertakes to incur a penalty. The entrepreneur will be required to pay payroll tax for illegal employment. The penalty will be that the entrepreneur will have to add to his income the equivalent of the minimum wage (for each month of illegal employment).
In addition, the dishonest entrepreneur will pay in full all social and health insurance contributions on the wages of those working illegally. These contributions cannot be counted as a deductible expense for the errant employer. It should be remembered that in addition to these penalties, he will be charged with criminal or fiscal offenses.
The authority that controls the legality of employment is the State Labor Inspectorate. If it detects irregularities it notifies the Social Security Administration and the Tax Inspection Office. This involves the imposition of a fine. Consequently, the dishonest employer will pay PLN 2,000 for failing to prepare a written contract and PLN 5,000 for repeating this offense. The Labor Court, in turn, has the right to impose an additional fine of PLN 1,000 to PLN 5,000 and up to PLN 3,000 to PLN 5,000 for failure to provide data for calculating contributions to the Labor Fund.
On the other hand, the Social Security Administration can fine him PLN5,000 for non-payment of contributions, and the tax office can charge him with a penalty of 720 daily rates or imprisonment for up to 3 years (if he is found guilty of a tax offense).
In summary, the penalties for employers who illegally employ workers are:
- for working without a written contract or drawing up a civil law contract, while an employment contract should have been drawn up – a fine ranging from PLN 1,000 to as much as PLN 30,000
- for failure to pay an employee’s social security contributions – a fine of up to PLN 5,000 or restriction or imprisonment of up to 2 years (if the violation of the employee’s rights is considered malicious or persistent)
- if the employer is found guilty of a fiscal offense – a fine of up to 720 daily rates and/or restriction or imprisonment of up to 3 years.
Illegal work – how to prove
If an employer has hired someone illegally, it should be reported immediately. Evidence in this case is also important. These can be witness statements, any text messages or photos. No one should be afraid to take such action. If someone agrees to work unregistered, he should be aware of his actions. He is harming himself. In general, such action is completely unprofitable. If the employer decides to hire in this way, the employee has the right to file a lawsuit in court.
Similarly, the situation is in the case of employment of foreigners. The offenses that are associated with their illegal employment include:
- a foreigner working illegally
- entrepreneur entrusts foreigners with illegal work
- the employer by fraud leads the foreigner to perform illegal work
- the employer fails to notify the provincial governor in writing of the entrustment of work to a foreigner
- entrusting work to a foreigner is directed by an entity that is not an employment agency.
- the employer does not notify the starost that a foreigner with a seasonal work permit began to perform other work that requires a new permit.
- the employer downplays the obligation to accommodate a foreigner who is on the territory of Poland to provide seasonal work
- the employer does not notify the District Labor Office of the start or non-start of work by the foreigner
- the employer does not conclude a contract with the foreigner (who has been exempted from the obligation to have a work permit)
Where to report illegal work
An employee who does not want to be illegally employed can file a complaint with the State Labor Inspectorate. He can do so:
- by phone
- by email
- through an electronic form.
Illegal work is most often detected by labor inspectors at the time of an inspection. In such cases, they must refer the case to the Tax Inspection Office, which will check whether there has been a violation of income tax regulations.
If, on the other hand, it is the labor inspector’s conduct that raises your concerns (because, for example, you wanted to report black labor anonymously, and he gave your data to the employer), you can file a complaint with the district labor inspector in charge of the company’s headquarters.