Anyone who works as an employee in Germany finds at the end of the month that their wages have been significantly reduced after taxes and social security contributions have been deducted. As a result, some employers and employees are tempted to circumvent this by “moonlighting”. Then social security contributions and taxes are omitted and the wage is paid in cash. But this is not good business; it is illegal. All those involved face penalties, and the employees also suffer a whole range of disadvantages. For migrants in particular, the risks are high.
What is considered moonlighting?
In Germany, moonlighting is defined as working without registering with the tax office and social security authorities. That is, when an employer does not pay health, pension and unemployment insurance contributions for its employees and does not remit taxes. According to the law, an employer must comply with the legal provisions and also pay an employee at least the minimum wage. It is 12 euros in most industries. The Act to Combat Undeclared Work and Illegal Employment (SchwarzArbG) defines what kind of work is illegal:
https://www.gesetze-im-internet.de/schwarzarbg_2004/__8.html
Illegal behavior also includes those who receive social benefits and do not report employment income to the authorities.
What are the exceptions?
Not everyone who helps their neighbor in the garden and gets paid for it is working illegally. Occasional work for relatives or neighbors is not a problem—if it really is in isolated cases. However, if you regularly help your neighbor repair his car and get paid for it on a regular basis, you are considered a moonlighter.
When should an employee become suspicious?
Reputable employers ask for the following documents when applying for a job: tax number, proof of health insurance and current home address. Also, a trustworthy employer will never pay salary in cash. For those who are unsure: The counseling centers of the Fachstelle Faire Integration offer anonymous and free help in matters of labor and social law
https://www.faire-integration.de/de/topic/11.beratungsstellen.html
What are the disadvantages of moonlighting for employees?
First of all, they risk penalties if they are caught. Amounts of up to 5,000 euros are assessed, especially if undeclared workers also employ other people as undeclared workers themselves. Then they may even be arrested. In the worst case, migrants face deportation and a re-entry ban. But there are other risks as well: undeclared workers have no protection in the event of accidents at work or illness—sometimes they do not even have health insurance. They also receive no unemployment benefits. And no one pays contributions for pensions in old age either.
One of the biggest problems associated with illegal employment is exploitation. Illegal workers are often exposed to poor working conditions, such as irregular working hours without adequate pay or unsafe working conditions. Since migrants in particular often still know little about their rights on the labor market, they are particularly at risk of becoming victims of exploitation. This is especially true if they do not yet speak German well. In such cases, the counseling center “mira – Mit Recht bei der Arbeit” can help. The project is aimed at combating the exploitation of refugees and migrants from third countries in the labor market. The counseling center informs migrants about their labor rights and accompanies and supports them in exercising their rights. Anyone can contact the center for free and confidential advice. More info:
https://mira-beratung.de/
What are employers threatened with?
They are also liable to prosecution, with fines of up to 50,000 euros. In particularly serious cases, they also face arrest.
What are the disadvantages of illegal employment for society?
Illegal employment destroys legal jobs, increases unemployment and deprives the state of revenue such as taxes and social contributions, warns German Customs, for example. For 2022, the Financial Control of Clandestine Employment (Finanzkontrolle Schwarzarbeit, FSK) of the German customs administration estimates the amount of damage caused by undeclared work at around 686.4 million euros. In reality, the sum is likely to be significantly higher, as this amount only includes the losses determined by the authority in the course of criminal and administrative proceedings.
Further information on undeclared work can be found on the homepage of the Federal Ministry of Finance:
https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Zoll/Gerechtigkeit-faire-Arbeit/illegal-ist-unsozial.html
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Finanzamt Tübingen. Foto: tünews INTERNATIONAL / Mostafa Elyasian.
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