Black market work

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Black market work

• No.82/2005
  Act on illegal work and illegal employment

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Slovakia Heart of Europe
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Time of launch

• Act on illegal work and illegal employment
  approved in February 2005
• In force since 1st April 2005
• Amendment 1st July 2006

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What leads the emloyer to employ workers
illegally?

• Low price of work (enables him to reduce total
  costs and consequently privilege output prices of
  his activities articles products or services)
• Default tax and levy duties for his/her employees
• Ability of flexible regulation of own employees
  number depending on production, seasonal and
  sales parameters
• Ability of working time flexible regulation to
  own employees (overtime work, night work, holiday
  work)
• Informality (administrative acts minimalization)

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Motives leading to the illegal work from
employee's point of view

• Revenues maximalization
• Expenses minimalization
• Formalities derogation
• Possibility to obtain an unemployment benefit, or
  social assistance benefit together with his/her
  wages

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Act subject matter

• Determines illegal work and illegal employment
• Orders illegal work and illegal employment
  prohibition
• Inspection powers and sanction in case of
  violation of illegal work and illegal employment
  prohibition
• 1st July 2006 amendment determines what is
  not illegal work and illegal employment

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Act goals

• Social protection against illegal work and
  illegal employment
• Natural persons guard, against social uncertainty
  which is a result of illegal work
• Increase of legal employment and proper flow to
  state budget and to insurances
• Only two weeks before time of launch 40 000
  persons were turned in authorized offices (social
  insurance company and others)

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Terms specifying

• illegal work is a dependent work, performed by a
  natural person for a corporate body, or for a
  natural person, who is an entrepreneur ( without
  contract of employment, foreigners without
  residence permit and work permit, job candidates
  do not accomplish liability to notify )
• illegal employment is employment performed by a
  corporate body or by a natural person, who is an
  entrepreneur, in case that it exploits dependent
  work (without contract of employment, without
  announcement to authorized offices, employment of
  foreigners without residence permit and work
  permit )

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Terms specifying -amendment

• illegal employment is not a work performed for a
  natural person who is an entrepreneur, and is not
  an employer by his/her direct relative, sibling
  or spouse who has pension insurance, who is
  recipient of a pension pursuant to special
  regulations, or is a pupil or student under the
  age of 26.
• illegal work is not a work performed for a
  natural person who is an entrepreneur, and is not
  an employer by his/her direct relative, sibling
  or spouse who has pension insurance, who is
  recipient of a pension pursuant to special
  regulations, or is a pupil or student under the
  age of 26.

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Prohibition of illegal work and illegal employment

• Natural person is not allowed to perform any kind
  of black market work,
• Corporate body and natural person, who is an
  entrepreneur, must not illegally employ any
  natural person

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Illegal work and illegal employment inspection

• National Labour Inspectorate and 8 Regional
  Labour Inspectorates
• Headquarters of Labour, Social Affairs and Family
  
• and its 128 district Labour Authorities

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Main sanctions(sanctions shall be fined by
inspectorates)

• who executes the black market work shall be
  penalized up to 10 000, Sk (275 EUR) average
  month gross pay in Slovakia is 18 500,- SKK (500
  EUR) and minimum wage is 7 600,- Sk (210 EUR)
• employer shall be penalized for violation of the
  act on undeclared employment up to 1 000 000,
  SKK (27 400 EUR)
• state subsidy ( public procurement, subvention
  for creation of new workstation) shall not be
  granted to entrepreneur who has violated the act
  on illegal work within period 5 years since
  protocol discussion NLI holds database in trust
  for this issue
• employee shall suffer from registration discard
  and following social relief temporary deprivation

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Disadvantages for persons who work on black market

• In case of temporal incapacity to work, as
  employer has not paid social insurance for his
  company, this person (employee) is not eligible
  for benefits
• Duration of illegal work is not included into
  calculation of cash benefit (old age pension
  neither disability pension)
• The length of working time, income, holidays,
  labour protection is not guaranteed

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Development diagram
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Review of employers by legal form with the
biggest share of I.W.
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Review of employers by sectors with the biggest
share of I.W.
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Summary of Labour Inspection outputs for period
of 2nd half 2006
every LI performance (first entry into
organization) is combined with control and
detection of I.W .
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Collective interest

• By the Government Resolution No. 1099 on
  performing the tasks following from the Slovak
  Republic Government resolutions Nos. 363/2001 and
  366/2001, minister of labour, social affairs and
  family in collaboration with minister of
  finance, minister of interior, and minister of
  health were given a task to submit regularly
  reports every half year aimed to searching and
  combating black market work to the government

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Pieces of knowledge and expectations

• Observations from inspection clearly certify that
  legislative environment has a crucial importance
  for the effectiveness of controls and detecting
  black market work.

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Thank you for your attention

• www.ip.gov.sk
• nip_at_ip.gov.sk
• michal.sukovsky_at_ip.gov.sk
• phone [phone],1
• fax [phone]