Undeclared work; information on combating it

Undeclared work distorts competition, jeopardizes the existence of small and medium-sized enterprises and destroys jobs. The public purse suffers considerable losses in taxes and social security contributions.

The term "undeclared work" is regulated in Section 1 (2) and (4) of the Act to Combat Clandestine Employment (SchwarzArbG).

As a rule, this is understood to mean the provision of services or work

• in violation of tax law,
• in violation of social security law,
• by circumventing the obligation to notify social security institutions and/or
• without a business registration or entry in the register of craftsmen, although a trade or craft requiring a license is exercised.

Illegal employment also exists if the provision of a service or work is faked and social benefits are wrongfully received as a result.

There is a separate definition of illegal employment in Section 1 (3) SchwarzArbG.

Undeclared work and illegal employment can have consequences under civil law, criminal law or public law (in particular administrative law). Section 3 of the SchwarzArbG contains special provisions on fines and penalties.

The Federal Customs Administration is responsible for combating illegal employment. It is supported by various authorities, including the district administrative authorities. These can, for example, initiate fine proceedings against undeclared workers and their clients or inspect companies where undeclared work is suspected in cooperation with the main customs office.