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EU sanctions against employers of illegally staying third-country nationals - briefing

19 February 2009
by eub2 -- last modified 19 February 2009

Questions and Answers on sanctions against employers of illegally staying third-country nationals


Why are these measures necessary?

One of the factors encouraging illegal immigration into the EU is the possibility of finding work (the so-called pull factor). Employment of third-country nationals who are illegally staying ("illegal employment") is the result of migrants seeking a better life and meeting the demand from employers willing to take advantage of workers who will undertake what are usually low-skilled, low-paid jobs.

The scale of the phenomenon is by definition hard to quantify: estimates vary between 4.5 to 8 million. Illegal employment is concentrated in certain sectors: construction, agriculture, cleaning and hotel/catering.

Illegally employed migrants are actually in a vulnerable position, because if apprehended they are likely to be returned to their country of origin. This often forces them to accept hazardous working conditions. As undeclared workers they do not benefit from health insurance and pension rights that depend on contributions.

What will the measures achieve?

The directive will reduce the pull factor by targeting the employment of migrants who are illegally staying in the EU. This will bring positive effects in the form of reduced losses to Member State public finances, less pressure on working conditions and less distortion of competition between EU businesses.

Building on existing measures in the Member States, all Member States will introduce similar penalties for employers of illegally staying third-country nationals and enforce them effectively.

Why is this action being taken at EU level?

At least 26 of the 27 EU Member States already have employer sanctions and preventive measures in place. Moreover, legislation in most Member States provides for criminal sanctions. However, not only does the scope and scale of these measures vary greatly, but also the enforcement.

The proposed Directive would reduce national differences and bring added value by:

-        improving enforcement,

-        creating more fair competition for EU businesses,

-        sending a clear message to employers and third countries of resolute EU-wide action against illegal employment.

What are the key elements of the directive?

The directive prohibits the employment of illegally staying third-country workers and provides for sanctions for those who do employ illegally staying workers.

As a preventive measure, employers will be required before recruiting a third-country national to check that they have a residence permit or another authorisation for stay, and to notify the competent national authorities. Employers who can show that they had carried out those obligations will not be liable to sanctions.

Employers of illegally staying migrants who have not carried out the pre-recruitment check will be liable to sanctions consisting of:

-             fines (including costs of returning illegally staying third-country nationals),

-             repayment of outstanding wages, taxes and social security contributions, and

-             If appropriate, other administrative measures. These might include loss of subsidies, e.g. EU funding, for up to five years and exclusion from public contracts for a similar period.

Firms that use subcontractors can be held liable to pay fines and outstanding wages in place of a direct subcontractor that has broken the rules by employing an illegally staying migrant worker. This liability is extended to any other firm in a chain of subcontracting if they know that the employing subcontractor has broken the rules.

Fines and other administrative measures may not be enough to deter certain employers. Member States will therefore be required to provide for criminal penalties in the following serious cases:

-        repeated infringements,

-        simultaneous employment of a significant number of illegally staying migrants,

-        particularly exploitative working conditions,

-        where the employer knows that the worker is a victim of human trafficking, and

-        the illegal employment of a minor.

Member States will be required to set up effective complaint mechanisms by which relevant third-country nationals could lodge complaints directly or through designated third parties such as trade unions or other associations. Third parties will also be able to help the workers to recover any unpaid remuneration.

Enforcement will be a key factor. That is why Member States will be required to conduct effective and adequate inspections. Member States will also be required regularly to identify risks sectors and communicate annually to the Commission the numbers and results of inspections in those sectors.

Are individuals covered by the rules, for example when they employ house cleaners?

Yes. From the perspective of reducing the pull factor for illegal employment, it would make no sense to exclude individual employers. Moreover, extreme forms of exploitation often occur in private households.

However, in respect of individuals employing for private purposes, Member States may lay down simplified rules for pre-employment obligations and may provide for reduced financial penalties where there are no particularly exploitative working conditions.

If an employer is sanctioned, what happens to the third-country worker?

The directive does not provide for any sanction against the illegally staying migrant workers. On the contrary, the directive includes measures in their favour. These will operate alongside the general rules laid down in the Return Directive.

First, the directive clearly establishes the employer’s responsibility to pay any outstanding remuneration. In order to help bring claims, a certain level of pay and a 3-month duration of the employment will be presumed – the burden of proof will then be on the employer (or indeed the worker) to prove differently. This should help overcome many of the difficulties in presenting the evidence needed for such claims.

Secondly, the migrant workers will be able to be assisted by third parties (such as trade unions or NGOs) to be designated by Member States. The third parties will be able to help the migrant workers to make complaints and to recover any unpaid remuneration.

Thirdly, in the most serious cases – in particular those covered by the criminal offence relating to particularly exploitative working conditions –  Member States will be able to grant temporary residence permits in a similar way as is already done for victims of trafficking.

When will the directive take effect?

Following approval by the European Parliament, the text will be examined by lawyer linguists before the Council can proceed to its final adoption. This is likely to take place in the spring. Once adopted, published and entered into force, the Member States will have two years to transpose the directive into national law. This means that the rules should be applicable throughout the EU as from summer 2011.

The Commission will report on the operation of the directive after a further three years.

In line with the relevant Treaty rules governing legislation in this area, Denmark will not be bound by the Directive; nor will Ireland and the United Kingdom, as they have not indicated their wish to participate.

Is there a need for more legal labour immigration into Europe?

The European Commission has been pointing to the possible need for more immigrant labour to support the economy and competitiveness of the EU since 2003. In particular, it has drawn attention to the labour market and demographic situation and trends in the EU, with its 2005 Policy Plan on Legal Migration and with its 2006 Communication on demography. The Commission has already in 2007 presented proposals for directives dealing with the admission of highly qualified workers (the so-called "EU Blue Card") and the other creating a single procedure for a single permit and providing for a secure legal status for third-country workers once admitted in a Member State, and will soon be presenting proposals dealing with the admission of seasonal workers, intra-corporate transferees and remunerated trainees.

The reason for this stand is that an overall decline in employment can be expected in the coming years, as a result of demographic changes in the EU. Europeans are living longer, the so called "baby boom" generation is nearing retirement and birth rates are low. Labour and skills shortages are already noticeable in a number of sectors and they will tend to increase. According to population projections produced by Eurostat, by 2060 the working age population of the EU is projected to fall by almost 50 million even with continued net immigration similar to historical levels. By 2060, without such immigration, the working age population would be around 110 million lower than today which would mean that in the EU, overall, the number of people over 65 per person at working-age would more than double by 2060. Such evolutions present risks for the sustainability of our pensions, health and social protection systems and require increased public spending.

Solutions to compensate for the negative impact of demographic ageing on the labour market are to be found in the context of the Lisbon strategy for growth and jobs. Immigration is one of them, but not in itself “the” solution. When addressing this problem, the EU must first make use of its existing human resources (EU nationals and third-country nationals already legally resident on EU territory) through the achievement of the Lisbon objectives, including by bringing unemployed people back into the labour market. However, it is clear that labour immigration may help to alleviate the challenges arising from population ageing, and therefore play a crucial role in helping to address future labour and skill shortages, as well as to increase the EU's growth potential and prosperity , complementing ongoing structural reforms. This has also been recognised by the 2008 Spring European Council.

Source: European Commission