The phrase “undeclared work” is included in the Act of April 20th, 2004, on employment promotion and labour market institutions. According to this law, illegal employment is mainly when:  

• the employer hires a person without drawing up and signing a contract,  

• the employer does not report the person employed or performing paid work to Social Security Institution  

• an unemployed person takes up a job or other paid activity without informing the Labour Office.  

What are the reasons for taking undeclared work? 

Workers may be tempted by the vision of a bigger paycheck, which will not be reduced by an income tax or health contributions. Those who are struggling to find work or are in a difficult financial situation are most likely to work illegally. The employer may see more benefits, such as not needing to obtain work permits or not having to pay Social Security contributions.

Undeclared work involves, among other things:  

• lack of employment guarantees for the employee,  

• lack of certainty about the salary,  

• lack of any social security, even when losing a job,  

• inability to take holiday or maternity leave,  

• difficulties in obtaining compensation for an accident at work. 

Consequences for undeclared work 

The financial and legal consequences of illegal employment fall on the employer. If an inspection by PIP (State Labour Inspectorate) inspectors reveals an illegal form of employment, such information must immediately be reported to ZUS (Social Insurance Institution) and the tax office. Depending on the extent and level of the offense committed, the PIP provides for the following punishments: 

• 2000 zł for lack of a written agreement between the employee and the employer 

• 5000 zł for repeated offence 

From Social Security:  

• 5000 zł for failing to meet the obligation from paying contributions.  

From tax office:  

• 720 daily rates or imprisonment for up to 3 years   

How can undeclared work be reported? 

Illegal employment is most often detected by labour inspectors during inspections. The case is then forwarded to the Tax Inspection Office. Undeclared work can be reported to the State Labour Inspectorate by the employees themselves. The report can be made in writing, by e-mail or by telephone. If irregularities in the way of employment are discovered during the inspection, the employees can claim their rights. 

Our Human Resources & Payroll solutions can help you manage employee relations and benefits correctly, ensuring that you are meeting all necessary obligations. 

Text based on: https://www.livecareer.pl/prawo-pracy/praca-na-czarno; https://zarobki.pracuj.pl/zarobki-i-prawo-pracy/praca-na-czarno-jakie-niesie-konsekwencje