Lawful undeclared workers are unlawful in European Union - Cyprus
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Karma Global is in the business of establishment and vendor compliance management.  It has hundreds of elite domestic clients on its excellent service dispensing list.  The expert staff on its roll deals with thousands of regulatory compliance acts on an Indian basis,  some of the acts being state-specific while others are enacted by the Central Government.

Karma Management has now become Karma Management Global Consulting Solutions Pvt. Ltd. Which was incorporated in the year 2004 and has now completed almost 18 years of its existence.

As late as April 2021, Karma Global took a very bold step of venturing into foreign shores in terms of shoving up its business in countries like the US, UK, UAE, Canada, Philippines, and Asia. 

It has already made its mark in terms of providing excellent services in the areas of payroll, outsourcing, recruitment and talent acquisition, and regulatory compliances.

In fact, the CVO and MD, Pratik Vaidya of Karma Global were selected by SME Forum to lead a Select US Summit last month where he took along a delegation of over hundreds of SME Members for business discussions with the authorities in the States as well as with the entrepreneurs and Innovators of many countries who were present in this forum.

Karma Global thus entails and nurtures the compliances of global clients in these countries as well, and in keeping with the global scenario, it does keep a very hard track of global compliances all around the world, and especially so, it keeps an update on what is happening as far as people,  work and benefits are concerned.


Latest case about Cyprus noncompliances and what does it mean?

In the recent case in July 2022, especially in a small country like Cyprus, there was a report of labour inspectors finding 18 undeclared workers in Cyprus.

For many of you to know a little about Cyprus, it is an island nation in the eastern Mediterranean Sea. Technically Cyprus is located in Asia but it is often considered to be culturally and politically a part of Europe and it has been in the European Union since 2004. Cyprus is a divided island but only the Republic of Cyprus is internationally recognized.

Cyprus is a presidential republic with independent executive, legislative and judicial branches. The Head of State of the Republic of Cyprus is the President. He must be a Greek Cypriot and is elected for five years. The House of Representatives is the country’s parliament.

At the EU level, undeclared work is defined as “any paid activities that are lawful as regards their nature, but not declared to public authorities, taking into account differences in the regulatory systems of the Member States”.


Undeclared work (UDW) is a major issue – that affects governments, businesses, and workers across Europe.

It can have far-reaching consequences for individuals, firms, and societies, including

  • breaches of workers’ rights,
  • unfair competition,
  • reduced tax revenues.

European countries are affected differently by UDW. The Platform has produced factsheets summarising the characteristics of UDW across all 27 EU countries, and the institutions and policy responses currently used to address it. 


Factsheet on Undeclared Work – CYPRUS

The Commission’s definition of undeclared work (UDW) is paid, legal, work that is not declared and not reported. In Cyprus, there is a grey area surrounding the term ‘legal’ in the Commission’s definition which should be brought out. An activity could be publicly legal but may violate individual contractual commitments in the terms of employment. For example, publicly employed teachers are not allowed to tutor their own students under a private account, yet private schools employing their own teachers and providing tutoring are perfectly legal. We will refer to this situation as an individually illegal activity. The basic problem is not whether such activity is reported, but rather that it is not allowed under an individual contract. In the case of public servants, second employment is prohibited by law.

In Cyprus, there is no official and immutable definition of UDW. Officials from the Ministry of Labour, Welfare, and Social Insurance (MLSI) tend to favour a pragmatic definition that revolves around whether “contributions (to) the Social Insurance Fund are not paid or are paid (for) a lower wage”45 Some of the discussions that have recently taken place have clearly referred to privately illegal activities, and several widely publicised raids on private homes where tutoring was taking place by publicly employed teachers have occurred over the years. Other examples of privately illegal and undeclared activities include those by publicly employed doctors who may work on their own account, and illegal immigrants and refugee claimants who engage in paid legal activities when they are not supposed to (refugee claimants are not allowed to work in the first six months of presence in Cyprus; after six months, they may work legally in certain pre-specified areas of work). Most official concern has been about the employment of workers such as illegal immigrants, refugee claimants who engage in paid legal activities when they should not, and the non-declaration of legal work carried out by Cypriot or other legal workers in a paid or self-employed capacity. Abuses of the terms of employment (e.g. requiring workers to work for longer hours than they should) are, in principle, monitored by officials from the MLSI.


The Issue in Cyprus and the compliance fallout 

During the June campaign, 18 undeclared workers were found and five fines were issued by the Ministry of Labor’s inspection department.

In the context of combating illegal employment and ensuring compliance with basic labor laws, the inspection department conducts targeted inspections throughout the island, especially to check photographers, flower shops, and wedding baptismal services. 

A total of 31 companies were inspected, 17 employers, and 14 self-employed.

Sixty-one employees were identified, 28 of whom were men, 33 were women, 38 were Greek Cypriots, 13 were EU citizens, and 10 were third-country citizens.

Eighteen of them were found to be undeclared workers.

Five infringement notices and five fines totaling € 24,000 have been imposed.

The purpose of the campaign was to raise awareness of the consequences of illegal employment and violations of relevant legal provisions.

According to the provisions of the law for hiring undeclared workers, a fine of € 500 plus seven months will be imposed unless the employer proves that the period of the breach was short. If it is proved, the fine will be multiplied by the actual number of months.

The general public seeking to report illegal employment or breach of employment conditions can contact 77778757



It is always good to act trustworthy and be compliant with the laws of the land. 

Karma Management always advises its clients to be on the good side of the law and to abide by the same.  In this respect, it offers a plethora of excellent services in terms of documentation compliance and the validity of licenses for running the business. 

The legal environment of business is the activities of the respective government towards the trade and commerce of the respective countries. It also includes the current trends of economic controls, policies of taxation, historical development reports of business, and also regulate the competition of the market.

Authentic legalization, freedom of contract, relationships with investors, and providing a healthy surrounding are also part of a legal environment of business. If the government takes a serious step against illegal participants and provides the best facilities for fair participants, a strong economy can easily grow up between the states and countries.

Thus, it is important to understand labour laws and care about its legal environment to secure our economy. Only a strong economy can upraise the position of a healthy lifestyle.


The Legal Environment of Business 

The business environment is based on a set of conditions, and those are social, legal, political, economic, and institutional conditions, and must be followed for the sake of good governance. 


Proprietory blog of Karma Global Tech Management Firm

This blog has been compiled by the internal staff of Karma Management with the knowledge and expertise that they possess, for its monthly newsletter Issue 03 of September 2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the

Marketing Team – /

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