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Illegal employment of third-country nationals in Germany

Date 19 May 2017
Order number FFWP74
type Survey

This study focuses on the illegal employment of third-country nationals as part of illegal employment and the informal economy in general.The extent, existing preventive measures, the authorities responsible for controlling, their legal framework as the consequences for employers and employees in case of illegal employment of third-country-nationals are addressed.

The curtailing of illegal employment in general is substantially governed in Germany by the Act to Combat Clandestine Employment, which establishes the authority of the responsible unit of the Customs Agencies prescribes the manner and scope of co-operation between various government authorities, and defines the regulations on regulatory fines and punishments for violations. The Act to combat Clandestine Employment, the Act on Temporary Employment Businesses and the Posted Workers Act all contain regulations on regulatory fines and punishments illegal employment, and, in conjunction with the corresponding regulations in the Residence Act, provide the legal framework for prosecuting and punishing employers of third-country nationals and employees alike.

Extent and available data

Conclusive scientific studies, estimates or assessments on the extent of illegal employment of third-country nationals are lacking so far, making it impossible to determine third-country nationals as a percentage of all illegally employed persons in Germany.

Responsible authorities

The Customs Authorities are primarily responsible for uncovering and investigating illegal employment. Furthermore, various actors are involved in curtailing the informal economy in Germany. The responsibility for combating criminal activity in the informal economy lies chiefly with the police (especially organised and white-collar crime) and state tax authorities (especially tax evasion).

Sectors in which illegal employment is most prevalent

Illegal employment can be found in almost all sectors of the economy, but especially in labour-intensive branches which are defined in Section 2a of the Act to Combat Clandestine Employment:

  • Building industry
  • Hotel and restaurant services
  • Passenger transport
  • Freight, transport, and related logistics
  • Fairground entertainment industry Forestry businesses
  • Industrial cleaning businesses
  • Businesses involved in the building and dismantling of fairs and exhibitions
  • Meat industry

Prevention

Various measures have been taken in an attempt to prevent illegal employment, although these, too, are general in nature, with only a few directed specifically at third-country nationals. These measures are primarily campaigns aimed at informing employers of the penalties and risks of illegal employment, as well as offers of legal advice to illegally employed third-country nationals.

Consequences for employers and employees

Cases of illegal employment of third-country nationals that are discovered are forwarded to the public prosecutor's office and the local foreigners authority, which initiate regulatory fine/criminal proceedings and/or take steps regarding the residence status of such third-country nationals where necessary.

Both employers and employees working without the proper residence title or without an entitlement to pursue an economic activity can face criminal and regulatory charges. Employers who hire illegal third-country nationals may be fined up to €500,000. Various violations in relation to the illegal employment of third-country nationals, especially when the offence is particularly severe, are also punishable by imprisonment or disqualification from public contracts and subsidies. Social security carriers will also demand any unpaid social security contributions.

The outcomes for employees from third countries range from administrative fines, imprisonment, the shortening of the duration of stay and expulsion to deportation. However, such third-country nationals – whether in Germany with or without permission to reside – generally are entitled to claim unpaid wages for the labour provided in a labour court. Trade union information centres and consulting offices offer legal representation and legal services in many German cities. Often, out-of-court settlements are sought with the employer to avoid lengthy court proceedings.

Working Paper 74 was authored as part of the European Migration Network (EMN).


The study was drawn up by: Julian Tangermann and Janne Grote

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