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Unregistered employment appears as a central fraud around which other related
but equally important frauds will be grafted, thus amplifying its impact on public
finances.
The tax authorities and the regional network of URSSAF (Union for collection of
social security contributions and family allowances) identify each year during their
relevant controls companies perform unregistered employment. These controls may
be total and therefore might cover all of the remuneration of the employees
concerned or more frequent when unregistered employment affects just a part of
the activity of the employees.
This partial concealment gives to employers an economy due unpaid contributions
to URSSAF, while enabling the employees to still receive health insurance coverage
and subsequently claim compensation in case of unemployment. Correspondingly,
employees concerned by unregistered employment (partial or total) declare a lower
amount than what they have earned. This will reduce their tax burden and allow
them to be eligible for social welfare allowances, which are available for low income
employees.
An employer who conceals a portion of its payroll also needs to hide some of the
revenue generated by his unregistered employees in order to dispose of cash
amounts that do not appear in its accounts. These funds are then used to pay
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