With two key bills aimed at combating undeclared work pending in parliament, Labour Minister Yiannis Panayiotou emphasized the link between reducing the phenomenon and ensuring the sustainability of the social security system. Speaking at the 16th Pan-Cyprian Conference of the Cyprus Industrial Workers’ Federation (OVIEK-SEK) last Thursday, the minister underscored the importance of legislative action.
Panayiotou expressed hope that the parliamentary plenary will soon pass two government bills: one mandating the compulsory registration and documentation of employment terms, and another imposing stricter penalties for undeclared and illegal work. These measures are seen as crucial in tackling the recent rise in undeclared employment.
The bills in focus
The first bill proposes the mandatory use of an electronic system to record employees and their working conditions, such as the nature of their work and hours of employment. The second bill seeks to increase penalties for undeclared work. It introduces a €1,000 fine for violations, alongside an administrative penalty of €500 for each month the violation persists, up to six months, unless the period of non-compliance is proven to be shorter.
Both measures would be implemented through the “Ergani” electronic system, aimed at ensuring transparency in employment documentation.
Recent labour inspections
We spoke with Andis Apostolou, Head of the Labour Inspection Service, to gather recent statistics on enforcement. From March to July 2024, targeted inspections were carried out across sectors including healthcare services, construction, industrial zones, florists, and hospitality businesses.
During this period, 2,894 inspections were conducted, involving interviews with 7,766 employees. Of those, 467 were found to be undeclared, representing 6.01% of the workforce inspected.
The highest proportion of undeclared workers were from non-EU countries, making up 70.24% of violations, followed by EU nationals (16.06%), Greek Cypriots (13.49%), and Turkish Cypriots (0.21%).
A total of 291 penalty notices were issued between March and July, amounting to fines of €789,800 under the Social Security Law, with 287 related to undeclared employment and four concerning undeclared wages.
Enforcement and penalties
Under current laws, any employer found to have undeclared employees is subject to an administrative fine of €500 per month, multiplied by seven months unless the employer can prove the violation was for a shorter period.
In parallel, under the Labour Inspection Service Law of 2020, violations such as failure to pay the minimum wage in the construction industry also incur administrative penalties. During the same period, 209 additional penalty notices were issued, resulting in fines of €223,500.
