Illegal labor: a problem faster than you think

Many business owners have to deal with it every day: you work with salaried, self-employed or hired workers through a staffing agency or secondment provider. Most of the time it goes well. Until the Labor Inspectorate comes by and asks for proof of identity.

And then it turns out: you haven’t verified the identity of some workers or don’t have a copy ID on file. Or worse: you’re not actually sure if they’re allowed to work in the Netherlands.

Employed versus hired workers

With salaried employees, the identity is usually established. But with hired workers, things often go wrong. Many companies assume that the contractor or supplier has arranged this. For example:
– the HRM consultant through an external agency,
– the ICT people who manage the networks,
– the cleaners at your office.

Still, you as the client are legally responsible for the identification requirement. Even if you do not have a direct employment contract with these people.

Illegal employment: no proof = no right to work

The law is clear: as an employer and client, you are obliged to:
– Check and record the identity of every worker before the first day of work;
– keep a copy of a valid ID and any residence and work permit in the administration, if the worker comes from outside the EEA.

Failure to do so risks a fine for illegal employment. Even if the person in question does turn out to be an EU citizen. Because: if you cannot prove it, it does not count.

This applies to all workers who perform work in your company.

Who is “employer? The Foreign Labor Act is strict

Many business owners think the rules apply only to their own staff. But that’s not true. The Foreign Labor Act uses a much broader definition of “employer.
Even if you hire an independent company – for example, a cleaning company or construction contractor – you can be seen as an ‘employer’. And thus be held responsible for illegal labor elsewhere in the chain.

Work at your location = your duty to control. Even if you don’t have a labor contract with the person.

Fine of €8,000 per illegally employed employee

The standard fine for allowing a person to work without a permit or without a valid ID check is €8,000 per employee (for a private limited company). This can rise to €11,500 for repeat offenses or if you fail to cooperate.

Do you have several people without correct documents? Then the fine increases quickly.
The fine can be reduced if you:
– Can prove that it was an administrative error;
– cooperate immediately and take measures;
– provide proof before the fine is imposed;
– can prove that it was only a short job.

The Labor Inspectorate assesses the seriousness of the violation and to what extent you as entrepreneur can be blamed.

Prevent problems: here’s how to comply with identification requirements

– EEA employees: verify the identity, note the key data, and keep them in the personnel file.
– Non-EEA employees: copy the ID, work permit and residence permit. Store these securely.
– Hiring: record in contracts with contractors that they fulfill these obligations. Ask for proof regularly (e.g. a copy of the personnel file or verification form).

Audited or investigation expected?

Have you already been inspected or are you expecting a visit from the Labor Inspectorate? We will help you with:
– substantiating your position,
– collecting evidence, and
– limiting the fine or damage.

Seek legal help as soon as the Labor Inspection reports. This prevents misunderstandings – and often high fines.

Do you have questions about the above obligations and how to avoid fines? Our specialized labor law team will be happy to assist you. Please contact one of our attorneys by email, phone or fill out the contact form for a no-obligation initial consultation. We are happy to think along with you.