How to report undeclared work in Portugal

Do you know someone who works with no contract and no contributions? You can report it to the ACT (Autoridade para as Condições do Trabalho, the labour inspectorate), even if you are not the worker. The complaint is free and can be anonymous. If the person is retired, working may be legal, but it must be declared to Social Security.

Joaquim's example

Joaquim is 68 and retired at the normal age. For a year he has worked every morning in a local garage, from 8:00 to 13:00. The owner pays him in cash at the end of the month. There is no contract and no payslip. His neighbour, Rosa, thinks this is not right and wants to report it.

What is at stake:

1. Joaquim can work. With retirement at the normal age, the pension can be combined with a salary, according to the Social Security old-age pension practical guide.
2. No paperwork does not mean no contract. An employment contract does not need any special form (Art. 110 of the Labour Code). Working at the owner's premises, on hours set by him, for a fixed amount paid every month, makes the law presume an employment contract (Art. 12(1)(a), (c) and (d)).
3. The problem is the missing declaration. The owner had to notify Social Security of the hiring by the first day of work (Art. 29(1) and (2) of the Contributions Code). He has not done it for a year. Once 6 months pass after the deadline, failing to notify is already a crime: up to 3 years in prison or a fine of up to 360 days (Art. 106-A of the RGIT).

Rosa can report it to the ACT anonymously.

How to file the complaint, step by step

1. Pick the channel. Online, on the ACT portal (www.act.gov.pt). You can also call the ACT information line (300 069 300) or go to an ACT office.
2. Say straight away what it is: work with no contract and no Social Security contributions (trabalho não declarado).
3. Identify the employer. Name, tax number if you know it and, above all, the address of the workplace. The ACT uses it to choose the regional office.
4. Describe the facts. Be specific and in date order:
   • Who works there (name, if you know it, or a description).
   • Since when, on which days and at what hours.
   • What you notice: paid in cash, no payslip, regular work.
5. Choose how you identify yourself: anonymous, confidential or identified.
6. Keep proof of the complaint.

[Common interpretation:] you do not need to provide evidence to file the complaint. The ACT has the power to enter the workplace, ask for documents and talk to the people who work there. Do not put yourself at risk gathering evidence. Just describe what you saw.

The full step by step for the form is in the guide how to file an ACT complaint.

Anonymous, confidential or identified?

For someone reporting from outside, anonymous is the simplest. Confidential helps the ACT if you may have more information to give later. [Depends on the case:] if you are a co-worker and fear retaliation, choose at least confidential.

What happens after the report

The ACT can inspect the workplace. If the inspector finds the features of an employment contract, it draws up a report and notifies the employer to regularise the situation or state its position within 10 days. If the situation is not regularised, the ACT sends the case to the Public Prosecutor within 5 days, for a court action to recognise that an employment contract exists (Art. 15-A(1) and (3) of Law 107/2009). Even if the employer regularises, fines can still be imposed (Art. 15-A(2)).

For the employer, the consequences are:

• Fine. Not notifying the hiring on time is a very serious offence. It is only minor if the employer complies within 24 hours after the deadline (Art. 29(7) of the Contributions Code).
• Back contributions. When the failure is detected, the law presumes the person has worked there since the 1st day of the 3rd month before (Art. 29(4)). If an earlier date is proven, the real date counts (Art. 29(6)).
• Crime. More than 6 months past the deadline without notifying the hiring: up to 3 years in prison or a fine of up to 360 days (Art. 106-A of the RGIT).

[Common interpretation:] the law sets no deadline for the ACT to reply to the person who reported. With an anonymous complaint, you will usually not learn the outcome.

And the retiree? What can happen to them

It is worth being honest here, because the complaint also affects their life.

• Retirement at the normal age. Working is allowed. Regularising even helps them: they pay 7.5% of the salary (the employer pays 16.4%) and those contributions give them a Pension Supplement, paid the following year, in March or November (old-age pension practical guide).
• Early retirement. For the 3 years after retiring, they cannot work, paid or unpaid, for the same company or group they retired from. If they do, they lose the pension while they work there, must pay back what they received and pay a fine. An employer that knows about it is also liable for the repayment (old-age pension practical guide). They can work for any other company.
• Their contract. If they retired and stayed with the same employer, the contract becomes a 6-month fixed-term contract, renewable without limit, 30 days after both sides know about the retirement (Art. 348(1) and (2) of the Labour Code). The rules are in the guide working after retirement.

The duty to declare and to pay the contributions belongs to the employer (Art. 42(1) and (2) of the Contributions Code). The fine for not notifying is also the employer's.

Employer or self-employed?

The ACT deals with working relationships: someone who works for a company, at its premises, on its hours. In those cases, even if the person issues green receipts, the law presumes an employment contract (Art. 12(1)). Using someone as falsely self-employed is a very serious offence (Art. 12(2)). See the signs in false self-employment.

[Depends on the case:] if the person is truly self-employed, working for several clients with no boss, there is no employer to report for undeclared work. It is not a labour case.