The House of Representatives is being asked to approve legislation that would dramatically reduce unpaid penalties linked to undeclared work, cutting outstanding liabilities to the Social Insurance Fund from €65.6 million to €7.9 million.
The bill, prepared by the Labour Ministry and approved by the Cabinet, would abolish retroactively a daily €50 surcharge imposed on unpaid fines for undeclared work and replace it with a capped penalty system.
How debts ballooned
Under current legislation, employers found to have undeclared workers are fined €1,000 per employee, while self-employed individuals face fines of €200.
If the fine is not paid within 30 days, a €50 daily surcharge is added for every day of delay, with no upper limit.
According to Labour Ministry data covering the period from 2 June 2017 to 31 March 2026, a total of 827 administrative fines imposed on 722 employers and 105 self-employed individuals initially amounted to €2.5 million.
Because of the daily surcharge, those liabilities have since risen to €65.6 million.
Fines originally totalling just €74,000 for self-employed individuals have grown to more than €8 million.
New cap on penalties
The proposed legislation would place a ceiling on how much a fine can increase due to delayed payment.
Under the new system, additional charges could not exceed twice the original fine, meaning the total amount payable would be limited to the original penalty plus a surcharge equal to two times that amount.
The measure would apply retroactively from June 2017, when the daily €50 charge was introduced.
As a result, total outstanding liabilities would fall from €65.6 million to €7.9 million.
Labour Ministry: Debts have become unpayable
The Labour Ministry acknowledges that the current system has created debts so large that many have become effectively impossible to repay.
Officials argue that the daily surcharge creates a vicious cycle, with liabilities continuing to grow the longer they remain unpaid, making settlement increasingly difficult.
The ministry also says the current framework complicates repayment arrangements because there is no mechanism to suspend the daily charge while a debt settlement is being negotiated.
Impact on court cases
The issue has also affected legal proceedings initiated to recover unpaid fines.
Civil actions filed by the Social Insurance Services seek recovery of both the original fines and the accumulated daily penalties.
Because the surcharge continues to accrue throughout court proceedings, the amount claimed changes continuously and remains unsettled until a case is concluded.
According to the ministry, none of the relevant cases has yet reached a final judgment.
Why the government wants the change
The government says the bill does not weaken penalties for undeclared work but introduces a more proportionate and manageable system.
Officials argue the reform will make it easier for employers and self-employed individuals to settle outstanding obligations while helping the Social Insurance Fund recover amounts that might otherwise never be collected.
The proposal is due to be examined by the House Labour Committee next Tuesday, with the government seeking its approval as soon as possible.
