New fine system planned for combating undeclared labor

New fine system planned for combating undeclared labor

Greece’s Labor Ministry, in association with the Labor Inspection Squad, is planning to slash the fine for undeclared labor from 10,550 euros to just 3,500, but with the obligation that the offending firm hire the person/persons found to be working without social security coverage for a minimum of 12 months with all the correct paperwork.

In the context of drafting an integrated plan for combating uninsured labor, which is among Greece’s bailout commitments – to be completed by end-July – the Labor Ministry is preparing a series of measures in cooperation with the International Labor Organization (ILO).

The rate of undeclared labor currently stands at more than 20 percent and the existing fine amounts to 18 times the minimum salary, i.e. 10,550 euros. Just 18-20 percent of the fines are actually collected.

The new bailout agreement states that any future changes to be made to the system of inspections and fines can only be implemented after the country’s creditors have approved them. Discussions are already taking place on a technical level, with the Greek side proposing that the fine be reduced to 3,500 euros per uninsured worker. The proposal also includes the compulsory hiring of the worker for a year so that some 3,500 euros can be channeled to the Social Security Foundation (IKA) in the form of contributions and another 3,500 euros to the state as tax.

The ministry’s proposal also provides for the hiring to have a fixed term, for the protection of the employee, as this type of contract is more difficult to terminate without a good reason. That way the offending employer will eventually pay the same amount of money as the current fine, but the employee will be hired and the money collected more easily.

The main principle will be “equal treatment for similar cases,” but ministry officials have not ruled out the possibility that first-time offenders might avoid the fine as long as they fulfill the hiring obligation. In case of repeat offenses, the fines will be considerably increased.

Yiannis Soukos, the special secretary of the Labor Inspection Squad participating in consultations with the creditors’ representatives, told Kathimerini it is essential that efforts focus on combined campaigns for informing, advising and forcing employers to comply, along with the systematic implementation of multiple checks. This will cultivate a spirit of labor conscience for the rights of workers to be safeguarded and for law-abiding small or medium-sized employers not to feel persecuted.

In the period from August 2015 to March 2016, the Labor Inspection Unit performed 36,242 checks, imposing 139 shutdowns and 5,114 fines totaling 10.73 million euros.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.