Mandatory Identification Verification for Undeclared Labour in the Hairdressing and Cosmetics Industry
In an effort to combat black work, or undeclared work, in the hairdressing, barbershop, and nail studio industries, German authorities and industry associations are pushing for stricter controls. The proposed measures aim to ensure tax and social security compliance, professionalise these sectors, and improve worker protections.
The new regulations, set to be adopted by the federal cabinet next Wednesday, include more frequent and comprehensive site inspections by labor and tax authorities, mandatory registration of workers, and closer monitoring of cash payments to reduce tax evasion. The aim is to close loopholes used to conduct black work and level the playing field for compliant businesses.
Businesses caught engaging in or tolerating black work face significant consequences. These range from hefty fines, repayment of unpaid social security contributions, tax audits, and in severe cases, temporary or permanent market exclusion. Repeat offenders might face criminal investigations under German tax fraud and labor laws.
The new regulations also address the issue of unregistered workers. By requiring mandatory registration of workers, the authorities aim to protect workers from exploitation and ensure they receive their full entitlements.
However, the bill does not address the potential impact on individuals who may be unknowingly involved in black work. Nor does it specify any fines related to the new regulations. The bill also does not discuss any other industries or sectors beyond customs and job centers.
The customs authorities are also involved in the crackdown, with the planned changes to the law requiring the customs unit FKS to report any suspected black work to job centers immediately. This collaboration enables job centers to make subsequent decisions on benefit entitlement.
If black work is done alongside benefit receipt, appropriate action must be taken according to the finance ministry. The bill aims to prevent forgeries of ID documents from going undetected, especially in cases where photos of ID documents on mobile phones are shown or insufficient ID documents such as health insurance cards are used.
However, the bill does not provide details on how job centers will enforce sanctions in case of benefit receipt. Nor does it mention any specific hairdressing salon or salons in its provisions.
This approach aligns with broader German efforts to combat black work across various industries, with particular scrutiny on sectors traditionally vulnerable to such practices. The ongoing priority is clear: increased enforcement combined with industry cooperation and possibly incentive programs to shift the informal work culture toward full compliance.
The new regulations, to be implemented by the federal cabinet next Wednesday, will cover not only stricter controls in the hairdressing, barbershop, and nail studio industries, but also extend to addressing general business practices that may involve tax evasion or lack of social security compliance, given the ongoing fight against black work.
As part of the broader German efforts to combat black work, the customs authorities, in collaboration with job centers, will now report any suspected instances of black work to job centers immediately, with appropriate action to be taken according to the finance ministry in cases where benefit receipt occurs alongside black work.
