New measures to combat undeclared work

Last February, the “Decent Work Agenda and Valorisation of Young People in the Labour Market” was approved by the Portuguese Parliament. This new legislation is expected to come into force on 1 April 2023.

This Draft Law foresees a set of legislative measures that aim to meet objectives considered primordial in the scope of the labour market and that have been identified since the worsening of the pandemic resulting from the Covid-19 disease.

In this sense, the nearly seventy measures approved fall under ten different areas:

• temporary work;
• fight against false self-employment and unjustified recourse to non-permanent work;
• digital platforms and algorithms;
• collective bargaining;
• conciliation between work, personal and family life;
• fight against undeclared work;
• protection of young workers-students and interns;
• strengthening of the Authority for Working Conditions and administrative simplification;
• public procurement and public support;
• informal caregivers.

Regarding the measures approved in undeclared work, the criminalization of totally undeclared work was foreseen, punishable by a prison sentence of up to 3 years or a fine of up to 360 days.

It should be noted, however, that this obligation to declare work done to Social Security covers both legal and natural persons.

Therefore, for example, any natural person who fails to declare the domestic work provided by another person will commit a criminal offence. To avoid this, any private individual who hires a domestic worker must inform Social Security that the worker will start working for him/her. Subsequently, Social Security will classify him/her as a domestic worker of that Employing Entity.

Under the terms of the Practical Guide made available by Social Security itself on 10 February 2023, the employing entity must register the worker or communicate his/her admission to Social Security (through form RV1009-DGSS) to be framed as a Domestic Service Worker in the 15 days before the beginning of the effects of the work contract. It is, therefore, mandatory to declare that the worker exercises, regularly and under the direction and authority of the Employer, in exchange for payment, the profession of Domestic Service and that there is no family tie with the worker.

Consequently, the Employer will be bound to pay the respective contributions of the worker, even if the work is performed only part-time. The amount you must pay to Social Security will depend on the declared remuneration (hourly, daily and monthly). You will also be responsible for deducting from your salary the part paid by the worker and handing it over, together with the amount paid by the Employer, to Social Security.

Suppose the Employing Entity fails to register the worker with the Social Security Service within the prescribed period. In that case, it may be subject to the payment of a fine and, if it fails to pay the contributions on time, subject to the payment of late payment interest on the amount owed.

This obligation does not apply to individuals who resort to cleaning companies, as, in this circumstance, what is involved in providing services.

Moreover, it was also foreseen in the Draft Law that it would always be ensured that an administrative offence is committed, even in the case of voluntary regularisation of undeclared work, to discourage using this method.