PORTUGUESE APPROACH TO UNDECLARED WORK: LEGAL FRAME AND INSPECTION METHODS

1. National Workshop on Labour Inspection and Undeclared Work PORTUGUESE APPROACH TO UNDECLARED WORK: LEGAL FRAME AND INSPECTION METHODS Joaquim Pintado Nunes Head of Department for Inspection Support

2. National Workshop on Labour Inspection and Undeclared Work 1. Concepts and why it is a problem

3. Assumed as a public problem:   - Difficulties in financing social security   - obstacle to the European social model of full employment / productivity at work/ quality of life/ social cohesion • Unfair competition • substitution effect: for each undeclared worker there is a declared job that is not fullfiled • contrary to decent work goals • Unprotected workers

4. False benefits on the employer side: • Short term apparent competitive advantages • Work-free of external constraints = High degree of flexibility at several levels: -   Temporal – free adjustment of working hours -   Contractual • -   Functional and geographical mobility of workers • facilitated; • - Financial - Adjustment of remuneration with no • constraint of minimum wages or collective • agreements • Easy adaptation to market fluctuations • No indirect costs with labor (social taxes, insurance, health…)

5. False benefits on the worker side: • Evade the payment of taxes (tax / social security) • - Earning an income, subsidy or other participation of the State which would not have had staying in a formal the job

6. Declaration COM/ 98/219 Activities based definition Any paid activities that are lawful as regards their nature but not declared to the public authorities

7. Types of Undeclared Work • FULLY UNDECLARED WORK • Freelance undeclared work (independent workers) • Undeclared work for informal employers (not declared) • Undeclared work for structured employers • Most usual cases: • Work of minors without minimum age or education • 2. Work of immigrants residing illegally • 3. Workers without legal requirements (professional certificate) • 4. Subsidized workers (unemployment, illness... • SECTORS: • Agriculture, forestry, construction, hotels, restaurants, housework, entertainment • PARCIAL UNDECLARED WORK • Subdeclaration of wages (the wage bill) • Most common cases: • - False independent contracts • Declaration of part-time work when there is full time work;   - Gratuities not declared;   - False subsistence allowances (payment of availability); - Exemption of working hours applied to cases other than those legally provided for (so to make up for overtime)   - Compensation in kind for personal benefit (disguised fringe benefits)  - undeclared overtime (peacefully accepted payment "outside") • SECTORS: • Retail, construction, hotels, restaurants, • banking, general industry (all?)

8. Difficulties Labour Inspection faces... • There is no evidence of these workers in workplaces • They don’t appear in official papers • It doesn’t exist any register in workplaces • they easily disappear • BUT: employers allways have some kind of data on these workers • Increased diificulties (access) in sweatshops and households • they can perform contracted tasks out of the business premises • Workforce is endowed with great "flexibility“ (monitoring of cases • becomes harder)

9. National Workshop on Labour Inspection and Undeclared Work 2. National Legal frame

10. Employer must report to social security, by the end of the first period of work the admission of the worker, through a written form to send by fax, email or directly online in ISS website Workers must receive a copy of this report and – themeselves have the obligation of reporting a new job within 24 hours If the labor inspector identifies an undeclared worker and doesn’t have data on the date on which the work began, the law presumes that he works for at least 6 months for that employer Both employer and worker can be subject to an injunction (fine) If the worker is receiving some kind of unemployment or illness benefit, the employer has liability of returning all received amounts The employer commits a crime of fraud or embezzlement to social security with imprisonment sanctions All obligations towards the worker have to be met (wages, holidays, insurance…)

11. The law presumes the existence of an employment contract when gathered some evidence, such as: • Submission to orders or direct instructions • fixed schedules • the use of facilities or equipment of the beneficiary of the activity • All concealment of employment contracts is considered a very serious breach of the law, with: • Administrative sanctions in the form of heavy fines (up to € 61 200, 00 by each worker), interdiction of participating in public tenders and of receiving public incentives for a period up to 2 years) • Directors and societies within the same group are • liable with the infractor for the payment of fines

12. Organizations dealing with undeclared work

13. National Workshop on Labour Inspection and Undeclared Work 1. The Authority for Working Conditions Role

14. ACT was born in 1 october 2007 Law Decree 326-B/2007, 28 september Former General Labour Inspection Former Institute for Safety and Health at Work (ISHST) 2 core branches: Health and safety promotion branch Inspection branch +

15. OHS Promotion + Inspection • Authority for Working Conditions’ Mission • To promote the improvement of working conditions, by • controlling compliance with labour standards • in the private sector • promoting policies on prevention of OSH hazards • controlling compliance with laws and regulations • concerning Health and Safety in all economic • sectors (private and public)

16. Internal structure General Inspector of Labour • International Relations • Unit • Information and Documentation Unit Consultive Council (social partners) 2 Deputy Directors Executive Coordinator for OHS Regional and local branches Department for Inspection Support Department For Health and Safety Promotion Department for Internal Management • Unit for Inspection • Coordination • Unit for Studies and • Technical Support • 5 Regional Inspectorates • 32 local branches • Unit for External • Regulation • Unit for Projects • Management • HR Unit • Information Systems • Unit

17. HOW TO COPE WITH UNDECLARED WORK CHALLENGES? • To have clear strategic references • To adress correct methodologies departing • from an adequate problem analysis • 3. To know the intervention environment • 4. Plan, evaluate and develop a multilier effect

18. A FUNDAMENTAL APPROACH: Joint action Enforcement through control • Social partners • NGO’s • Inspection tributaire • Immigration Police • Tax Inspectorate • Police authorities • (...) Keeping the mission in mind: Promotion of the improvement of working conditions Information and counseling Cooperation Enrichment of the legal framework

19. Models to approach Undeclared work

20. Inspection Plan 2008-2010 Results oriented action towards effective working conditions improvement • IN ACT’s strategies: • Labour inspection rests on effectiveness and efficiency criteria; • - Priorities are chosen • Action is driven by its possible multiplier effect • proactive action is pursued according to central and regional planning

21. Inspection Plan 2008-2010 Results oriented action towards effective working conditions improvement • IN ACT’s strategies: • a central unit plans, prepares, coordinate and evaluate national actions according to • a constant analysis of external demands, of statistics, mass media and contacts with social partners and ONG’s • nonconfidential information is publicized internally, through intranet and to the exterior, through mass media as a way to disseminate information and assure better results (prevention)

23. A powerfull tool - methodological guides that: • Characterize the sectors to intervene and the • problems to address • define the aims and universe of action • define procedures to be held in specific situations • (harmonization) • specify schedules for intervention, for reporting results and for making procedures • define how to register data in information systems

24. Other instrument - Coordinated visits (multiplier effect) and publicity (prevention) • - involve, usually, at least 1/3 of all labour inspectors • are developed in all local services at the same time • are prepared with specific methodological guides • results are evaluated, in a first phase, within • a limited delay (number of premises visited, number of workers, number of infractions, number and type of procedures) • - qualitative evaluations have place later on • after results are known, mass media are informed in order to spread the notice (journals, radios and tv) • publicity is made through a list of infractors in ACT website (publicly avalilable)

26. WHAT IS EXPECTED FROM LABOUR INSPECTORSIN INSPECTIONS ADRESSED TO UNDECLARED WORK • Promote compliance with respect to: • - Guarantee that taxes are reset to social security and to finances • Guarantee all rights of employees are respected (replacement of the facts due to the worker) • sanction all serious breaches of law (absence of health surveillance, accidents insurance, wages according to collective agreements…) • To act towards effective change (qualitative results – after inspections undeclared workers are expected to be integrated as employees, independently of sanctions applied

27. Effective authority powers of Labour inspectors are a instrument to guarantee success , by: • visiting workplaces without prior notice • interrogating any person within the premises of a • workplace • consulting and requiring any document • giving formal notices of payment to employers, that • if not complied serve as executive orders to court • applying dissuasive sanctions without passing • through courts

28. Methodologies Preparation of visits • Previous study of companies to visit, if possible (through IT system and archives in the inspectorate) • Determination of specific targets • If possible, identification of “helpfull” insiders • Preparation of instruments/ action tools (check-lists, questionnaires...) • Contact with other authorities to analyze possibilities of joint action • Is this is the case, previous briefings

29. Methodologies During the visits • The lightning visit – in a street, a construction site, a workplace • (large group of inspector disseminate rapidly into the hot spots) • brief enquiries are carried out to all people in these spots (requiring • personal identification) • workers representatives are contacted to provide inside information • at the same time, documents are consulted and seized for consultation in place and later on, in the inspectorate • Top management is required to meet with the coordinator inspector • to provide information • Management is confronted immediatly (if possibly) with results • from the visit and “invited” to rectify all found cases and informed on the sanctions that will be applied immediatly and others, if inspectors determinations are not complied

30. A final remark on strategies, according with the leading model