The government seeks to decriminalize the omission of registering workers with Social Security, including in the domestic service sector, but fails to clarify the benefits of the measure or its impact on tax and contribution evasion.
The draft labor law reform, presented by Prime Minister Luís Montenegro’s government to social partners in July and known as “Trabalho XXI,” proposes repealing a provision of the General Tax Offenses Regime (RGIT) that since May 1, 2023, has criminalized the omission of declaring the hiring of workers.
Currently, if employers do not declare a hiring within six months following the legal deadline — generally 15 days prior to the start of employment — they can face imprisonment of up to three years or a fine of up to 360 days (up to 180,000 euros).
When questioned, the office of the Minister of Labor, Solidarity and Social Security, Maria do Rosário Palma Ramalho, did not clarify why they consider it positive to stop criminalizing the non-declaration of domestic work, given its historically associated fiscal and contribution informality.
Additionally, they did not respond to inquiries about the impact that ending the penalty for evasion may have on tax and contribution evasion.
The labor law reform draft does not include alternative measures to encourage employers to declare domestic work. When asked if any measures were considered in this regard and why they were not included, the minister’s office remained silent.
In response to Lusa’s array of questions, the ministerial office stated only that the draft’s goal is to “enhance the competitiveness and productivity of companies, value workers, and strengthen the balance between work, personal, and family life,” and that its discussion will take place “in the appropriate venue,” namely in social concertation with employer and union confederations and in parliament with deputies.
Even if the change proceeds as proposed by the government, employers will still be required to report the hiring of a domestic worker to Social Security. Those who fail to do so remain at risk of fines if reported to the public institute.
However, labor law attorneys contacted by Lusa believe that decriminalization could lead to potential increases in tax and contribution evasion in a sector already marked by informality.
Madalena Caldeira, a lawyer at Gómez-Acebo & Pombo in Lisbon, states that “the absence of a penal consequence could be seen as a weakening of state oversight of these obligations, consequently increasing the risk of heightened vulnerability and lack of protection for workers in this sector, as failing to make the necessary report means they cannot make due contributions to Social Security.”
However, she says, “maintaining a solid and effective administrative fine regime remains a relevant tool in deterring non-compliance.”
Meanwhile, Rita Robalo de Almeida, a lawyer at Antas da Cunha Ecija, notes that criminalization has a preventive role, “from a psychological perspective.”
With the end of criminalization, she believes, some employers may see the change as “a relaxation of the contributive obligations imposed on them, thus encouraging omissive behaviors, particularly in a sector where oversight is less intensive.”
The lawyer predicts a “significant increase in scenarios of tax and contribution evasion” if the end of criminalization is not accompanied by complementary measures, such as “strengthened inspection activities, campaigns to raise awareness among employers, and possibly simplifying declaratory procedures.”
The “Decent Domestic Work White Paper,” published in April 2024 by the Union of Porters, Security, Cleaning, Domestic, and Miscellaneous Services Workers (STAD), identifies informality and job insecurity as central features of this activity.
The problem, the study suggests, is “proportionally greater” among part-time domestic workers (those who have multiple employers or work for a company and do supplementary domestic work).
