The Possible Repeal of Article 106-A of the RGIT and its Impact on Domestic Service

This is how, in 2023, the offence of omitting to notify the hiring of workers appeared among the range of offences against Social Security, provided for in article 106-A of the RGIT:

Article 106-A

Failure to notify the hiring of workers

Employers who fail to notify social security of the hiring of workers under the terms of paragraphs 1 to 3 of article 29 of the Code of Contributory Schemes of the Social Security System, approved in annex to Law 110/2009 of 16 September, within six months of the end of the legally prescribed period, shall be punished with the penalties provided for in article 105(1).

The penalties provided for in the aforementioned law are "imprisonment of up to three years or a fine of up to 360 days".

This rule has a general scope of application and is therefore applicable to all legal relationships of a labour nature, including domestic service relationships. Failure to comply with this obligation gives rise to the possibility of misdemeanour sanctions and, in certain circumstances, criminal liability.

However, the current government now intends to decriminalise the failure to notify Social Security of the hiring of workers, including domestic service workers.

It should be noted from the outset that the obligation to notify Social Security of the hiring of workers has always existed, regardless of whether it was criminalised. This legal duty has been - and continues to be - imposed on all employers, including those who hire workers under the domestic service legal regime.

This means that the decriminalisation of this situation does not imply the absence of contingencies for the employer, particularly at the level of administrative offences. In the specific case of work provided under the domestic service regime, since the employer is, as a rule, a natural person, failure to notify Social Security of the worker's admission within the legal period designated for this purpose constitutes an administrative offence punishable by a fine, the amount of which will depend on the time of the notification, the nature of the offending entity and the degree of guilt (negligence or wilful misconduct). It should also be noted that in addition to the financial penalty, this non-compliance will give rise to the initiation of contribution regularisation procedures, with a view to the payment of outstanding contributions, plus the respective interest.

Although the end of criminalisation does not mean that the behaviour itself will not be punished, the truth is that this could have consequences from the point of view of increasing tax and contribution evasion in the domestic service sector.

This is why the criminalisation system provided for in article 106-A of the RGIT plays a significant preventative role, albeit from a psychological perspective, particularly in sectors traditionally characterised by an almost lack of formality, such as domestic work.

However, the reality is that with the end of the penalty, there is the real contingency that some employers may interpret this legislative change as a relaxation of their contributory obligations, thus boosting omissive behaviour, particularly in a sector where the competent authorities are even less incisive, considering the aforementioned informality of this type of employment relationship.

In view of the above, it can be concluded that, although the criminalisation of omitting to notify Social Security of the hiring of workers should not be seen as the only effective means of ensuring compliance with legal obligations, the truth is that its elimination, if not accompanied by appropriate complementary measures - such as strengthening supervisory activity, implementing awareness campaigns among employers and possibly simplifying reporting procedures by the competent authorities - could result in a significant increase in tax and social security evasion scenarios, with a particular focus on the domestic work sector.