What you need to know about illegal employment in private households

It is no secret that illegal employment is widespread in the private sector. Many cleaning ladies and domestic helpers work illegally in Switzerland. We explain why illegal employment is not a trivial offense and what disadvantages it entails for employees and employers.

Most people will have heard the following saying: “Ignorance is no excuse”. When asked why their own cleaning lady was not registered with the authorities, many employers argue the same: registration of the employment relationship was not considered necessary, or they were not aware that this was undeclared work. Therefore, it is important to know how exactly illegal employment is defined.

Definition illegal employment

The term ” illegal employment ” is understood to mean the disregard of employment-related reporting and authorization obligations. Depending on the scope and situation of the employment relationship, the reporting and authorization obligations include obtaining a work permit, registering the employment relationship with the compensation fund, paying source tax at the cantonal tax office, taking out mandatory accident insurance and joining a pension fund for the employee. These are all employer obligations for people who hire domestic help – whether cleaning lady, nanny or caregiver – privately at home.

Important: Even those who perform household work for pay for only a few hours a month and are not registered with the authorities are already working illegally.

Extend of undeclared work in Switzerland

Undeclared work, also known as the shadow economy in an economic context, is omnipresent. Although there are no official statistics on the shadow economy in Switzerland for obvious reasons, there are a lot of scientifically proven estimates. Thus, the share of the shadow economy in the gross national product (GNP) is 6.9% in 2014, as reported by the NZZ in its online edition. Converted to full-time positions, undeclared workers amount to 427’000 people in 2014, plus 63’000 illegal, foreign employees. In addition to the construction industry, household services are particularly affected by undeclared work. According to an article published in the weekly newspaper WOZ in 2013, approximately 400,000 households employed domestic helpers in Switzerland in the same year. Tendency strongly rising. Sans-Papiers (persons without residence status) are employed in a quarter of the households, and as a study referred to by the Aargauer Zeitung in 2010 shows, the majority of cleaning women employed in the household work illegally.

Disadvantages of undeclared work for employers

Those who do not register their cleaning lady or domestic help and thus employ them on a black basis are not fulfilling any of their employer obligations. The disadvantages:

• Sanctions, fines up to imprisonment if the illegal employment is discovered.
• The employer is not insured against accidents. If an accident occurs at work, the employer must pay the follow-up costs of the accident.
• All AHV benefits including interest on arrears must be paid retroactively.

Disadvantages of undeclared work for cleaning ladies and household helpers

Whoever works as a cleaning lady or domestic help on the black market takes various risks and waives his rights as an employee.

• No accident insurance through the employer
• No payments into the compensation fund and the pension fund, thus also no guaranteed pension at retirement age
• No entitlement to unemployment benefits
• No continued payment of wages in case of illness (KTG)
• No vacation compensation
• Persons without Swiss citizenship risk losing their residence permit

Disadvantages of undeclared work in the societal context

• Financial losses in the pension funds
• Taxpayers finance supplementary benefits for undeclared workers who have not paid OASI contributions and therefore cannot benefit from OASI pensions to the same extent as legally employed workers.

quitt vs. illegal employment

Since the foundation of quitt, we have been making an active contribution to the fight against undeclared work. For the correct registration of private domestic helpers, profound knowledge of labor law regulations is necessary. There is also a lot of paperwork to be done. The large, time-consuming effort for this work is often shied away from. quitt is the specialist for the legal registration of domestic workers. Without prior knowledge, in a few minutes and conveniently from anywhere, the employment relationship can be insured, registered and managed. Employee and employer are always on the safe side and a clean working relationship is always ensured.