Undeclared work in Romania: when you risk fines, when a criminal file is opened and how a lawyer can help you
Undeclared work continues to be one of the most frequent breaches of labour legislation in Romania. Although many employers consider that hiring a person without an individual employment contract is merely an administrative offence, in certain situations this may attract criminal liability, very large fines and even the suspension of the company's activity.
In recent years, the Labour Inspectorate and other control authorities have intensified checks on undeclared work, and sectors such as construction, HoReCa, agriculture, transport or services are constantly checked. The controls do not only target the existence of individual employment contracts, but also compliance with the working schedule, the declaration of salaries and the payment of social contributions.
For employers, the consequences can far exceed the value of a fine. In addition to the obligation to pay outstanding wages, taxes and related contributions, certain situations can lead to the opening of a criminal file.
At Buju, Stanciu & Asociații, we assist entrepreneurs, directors and companies in investigations concerning business criminal law, commercial disputes and conflicts arising from economic activity. Our experience allows us to analyse each situation both from the perspective of the employer's legal obligations and from the perspective of the impact an investigation can have on a business.
>5
persons without a contract = a criminal offence, not a minor offence
1–2
years of imprisonment or a criminal fine for this offence
×
fine for each person identified without a contract
STOP
the activity may be suspended until legal compliance is restored
What does undeclared work mean?
According to the Labour Code, undeclared work means carrying out an activity without complying with the legal obligations regarding the conclusion and registration of the individual employment contract. The best-known form is taking on a person to work without concluding an individual employment contract prior to the start of the activity.
However, the legislation also sanctions other situations:
Failure to register in Revisal
Taking on an employee without submitting the contract to the General Register of Employee Records (Revisal) within the legal deadline. A signed but unsubmitted contract does not protect you during an inspection.
Exceeding part-time hours
Using an employee beyond the schedule set out in the part-time contract - the classic form of "grey work": a 2-4 hour contract, with actual work of 8 hours.
Contracts that mask the employment relationship
Using contractual forms (sole trader, collaboration, service provision) to conceal an actual employment relationship, with subordination, a fixed schedule and a fixed workplace.
Salary "in an envelope"
Paying part of the salary in cash, without fully declaring income - with an additional risk of tax inspections for tax evasion.
These situations may attract liability for a minor offence, and under certain conditions, criminal liability as well.
When does undeclared work become a criminal offence?
Not every situation of undeclared work automatically constitutes a criminal offence.
Labour Code - criminal liability
The criminal threshold: more than five persons
The Labour Code provides that taking on more than five persons to work without concluding an individual employment contract constitutes a criminal offence, being punishable by imprisonment from one to two years or a criminal fine.
The legislation also criminally sanctions:
• employing minors in breach of the legal conditions;
• employing persons illegally present on the territory of Romania, under certain conditions;
• the repeated refusal to allow access to labour inspectors or to provide the requested documents;
• repeatedly setting salaries below the guaranteed gross minimum wage.
The investigation can extend beyond labour law
Depending on the specific circumstances, the investigation may also involve other offences, such as tax evasion (withheld and unpaid contributions, undeclared income), forgery of documents and use of forged documents (false timesheets or payrolls), money laundering or, in the case of public entities, abuse of office. A file that starts at the Labour Inspectorate can turn into a complex economic case.
Minor offence or criminal offence? The difference that changes everything
Criterion | Minor offence (administrative liability) | Criminal offence (criminal file) |
|---|---|---|
Typical situation | Up to 5 people without a contract, Revisal delays, exceeding part-time working hours | More than 5 people without a contract, minors illegally employed, repeated refusal during inspection |
Who sanctions | Labour inspectors (ITM), by official report | The Prosecutor's Office and the criminal court, following referral by ITM |
Sanction | Fine for each person + mandatory measures | Imprisonment from 1 to 2 years or a criminal fine |
Consequences for the company | Payment of arrears, possible suspension of activity | Criminal record, exclusion from public procurement, loss of funding |
Appeal | Challenging the official report in court | Full criminal defence, from the criminal investigation stage |
Quick test: minor offence or criminal offence?
Four real situations from ITM inspection practice. Choose the correct classification:
Scenario 1: During an ITM inspection at a restaurant, inspectors find 3 people working without an individual employment contract.
Minor offence. Below the threshold of "more than five people", the act remains a minor offence - but the fine applies for each person, and inspectors may order the immediate conclusion of contracts, payment of contributions, and even suspension of activity.
Scenario 2: At a construction site, inspectors identify 7 workers who have been working for two months without any employment contract.
Criminal offence. Employing more than five people without a contract constitutes a criminal offence: imprisonment from 1 to 2 years or a criminal fine. ITM refers the matter to the criminal investigation bodies, and the file may also trigger fiscal checks for unpaid contributions.
Scenario 3: An employee has a part-time contract for 4 hours, but timesheets and cameras show he works 8 hours daily, for months.
Minor offence - using the employee outside the hours set out in the part-time contract amounts to undeclared work, sanctioned as a minor offence. Note, however: salary differences paid "under the table" may also open up a fiscal issue, with recalculation of contributions and the risk of tax evasion.
Scenario 4: An administrator repeatedly refuses to allow labour inspectors access to the premises and does not produce the requested documents.
Criminal offence. Repeated refusal to allow inspectors access or to provide the requested documents is criminally sanctioned. Obstructing the inspection worsens the situation rather than resolving it - the correct strategy is to be assisted by a lawyer during the inspection, not to block it.
Fines for undeclared work
When the act does not meet the elements of a criminal offence, labour inspectors may apply minor-offence sanctions. Under the legislation in force, employers may receive significant fines for each person identified without an individual employment contract, with the total cap on sanctions potentially reaching very high amounts.
In addition to the fine, inspectors may order:
Immediate conclusion of contracts
Individual employment contracts must be concluded on the spot for all identified persons, with registration in Revisal.
Payment of contributions and taxes
All contributions and taxes owed for the period worked, with interest and late-payment penalties.
Remedying deficiencies
Mandatory measures with precise deadlines, subsequently verified by inspectors at a follow-up inspection.
Suspension of activity
In cases provided by law, activity may be halted until compliance is achieved - for a restaurant or a construction site, this means direct daily losses.
For a company, these measures can seriously affect current activity and relationships with business partners.
What does the employer risk besides the fine?
Many entrepreneurs believe that paying the fine resolves the matter. In reality, the consequences can be far more extensive. Depending on the situation, the employer may be required to pay:
- Outstanding wages
For the entire period worked, even if there was no written contract - the court may find the existence of an employment relationship based on evidence. - All social contributions and taxes owed
Retroactively, with interest and late-payment penalties - the amounts grow quickly for long periods and multiple employees. - Compensation awarded to employees
If the conditions provided by law are met, in addition to outstanding salary entitlements. - Additional sanctions
The court may order a ban on participation in public procurement procedures, loss of funding, or even the temporary closure of the workplace.
What rights does a person who worked without a contract have?
Working without legal formalities does not mean the employee loses all protection. The person who carried out the activity may request:
Payment of salary
For the entire period worked, including outstanding salary rights.
Recognition of the employment relationship
The court may find that an employment relationship exists even without a signed contract, based on the evidence produced.
Contributions and damages
Payment of social contributions for the period worked and damages, where the legal conditions are met.
How can undeclared work be proven?
In practice, very few cases rely exclusively on a written contract. Authorities and courts may take into account:
Witness statements and time sheets
Colleagues, clients or suppliers can confirm attendance at work; time sheets and work schedules show the actual working pattern.
Electronic messages and emails
Work instructions, reports and correspondence with the employer demonstrate the subordination specific to an employment relationship.
Photographs, video recordings and bank statements
Presence at the workplace and periodic payments received from the employer or its representatives.
Internal documents and work equipment
Uniforms, badges, access accounts, tools or vehicles provided by the employer - all of these indicate integration into the company's organisation.
The more evidence there is demonstrating the existence of an employment relationship, the greater the chances of clarifying the situation.
How is a complaint filed with the ITM?
Any person who considers that they are carrying out an activity without legal formalities may report this to the competent Territorial Labour Inspectorate. The complaint may be submitted directly at the ITM's premises, by post, by email (if the inspectorate allows this method) or through the electronic platforms made available by the authorities.
It is advisable for the complaint to include:
- The details of the person making the complaint
Surname, first name, contact details - complete complaints are treated as a priority. - The employer's name and the place of work
The company, the workplace and the address where the work is actually carried out. - The period worked and a description of the situation
Schedule, duties, method of payment, what was promised and what was honoured. - Available documents or evidence
Messages, time sheets, photographs, bank statements - anything supporting the description.
The inspection may be unannounced
Labour inspectors may order an inspection without the employer being informed beforehand.
What happens after the ITM inspection?
The course of an ITM inspection concerning undeclared work
Following the checks, inspectors may find that undeclared work exists, impose administrative fines, order mandatory measures to bring the situation into compliance, or refer the matter to the criminal investigation bodies where there are indications that an offence has been committed.
The role of a lawyer
When an investigation is launched, legal assistance is recommended from the earliest stages. A lawyer specialising in business criminal law can:
Analysis and verification
Analyse the company's documents and verify the legality of the measures ordered by the authorities.
Assistance during inspections and hearings
Attend inspections and hearings, formulate defences and challenge the minutes recording the administrative offence.
Full representation
Represent the client before the courts and provide assistance should the investigation develop into a criminal case.
Swift action limits the damage
Swift action can reduce legal risks and help limit the impact on the company's activity. Contact us before signing the minutes or giving statements.
How can companies prevent such situations?
Prevention is the most effective method of protection. Tick the procedures your company has already implemented - the score shows how prepared you are for an ITM inspection:
Checklist: are you prepared for an ITM inspection?
- Individual employment contracts are always signed before the activity begins
- Data is submitted to Revisal within the legal deadline, for each employee
- Working time records are kept up to date and reflect the actual hours worked
- Part-time contracts correspond to the hours actually worked
- Salaries are paid in full through the payroll, with no sums paid "under the table"
- Collaborations with sole traders (PFA)/service providers do not disguise genuine employment relationships
- Personnel documentation is reviewed periodically (contracts, addenda, job descriptions)
- There is an internal procedure for ITM inspections (who is responsible, which documents are to be handed over)
- Periodic legal audits are carried out in the HR area
Every missing box ticked is a fine waiting to happen
These measures significantly reduce the risk of sanctions and demonstrate the employer's good faith in the event of an inspection. We can quickly audit your company's HR documentation: schedule a discussion.
The experience of Buju, Stanciu & Asociații
At Buju, Stanciu & Asociații we provide legal assistance to entrepreneurs and companies in complex disputes, investigations of business criminal law and disputes concerning economic activity.
Our experience in corporate law, structuring contractual relationships and advising companies across various industries allows us to approach each situation from a broad perspective. We analyse not only the employment law aspects, but also the impact that a Labour Inspectorate (ITM) check or a criminal investigation can have on a business's operations, on the company's reputation and on its commercial relationships.
"A Labour Inspectorate (ITM) check is never just about employment contracts. It is about contributions, taxation, commercial contracts and, sometimes, criminal liability. Whoever treats the issue in isolation discovers too late how far a case file can branch out."
- Marius Stanciu, Partner, Buju, Stanciu & Asociații
Frequently asked questions about undeclared work
Is undeclared work a criminal offence or a contravention?
It depends on the number of people involved and the circumstances. Employing more than five people without an individual employment contract constitutes a criminal offence, punishable by imprisonment from one to two years or by a criminal fine. Below this threshold, the act is generally a contravention, punishable by a fine for each person identified without a contract.
From how many people does undeclared work become a criminal offence?
The Labour Code provides that employing more than five people without concluding an individual employment contract constitutes a criminal offence. The law also criminally sanctions the unlawful employment of minors, the employment of persons illegally present on Romanian territory in certain conditions, the repeated refusal to allow access to labour inspectors, as well as the repeated setting of wages below the gross minimum wage.
What risks does the employer face besides the fine?
Payment of outstanding wages, social contributions and taxes owed, with interest and penalties, plus any compensation owed to employees. There may also be supplementary sanctions: suspension of activity, prohibition from participating in public procurement, or loss of certain funding. The investigation may also involve other offences, such as tax evasion or forgery of documents.
What rights does a person who worked without a contract have?
They may request payment of the salary for the period worked, recognition of the employment relationship, payment of social contributions, outstanding salary rights and compensation, provided the legal conditions are met. The court may find that an employment relationship existed even if no contract was signed.
How can undeclared work be proven?
Through witness statements, timesheets, electronic messages, emails, photographs or video recordings, bank statements, internal company documents and work equipment provided by the employer. Very few case files rely exclusively on a written contract.
How is a complaint filed with the ITM?
Directly at the ITM headquarters, by post, by email or through the authorities' electronic platforms. The complaint should include the complainant's details, the employer's name, the place of work, the period worked, a description of the situation and the available evidence. The inspection may be carried out without prior notice to the employer.
Is paying part of the salary "in an envelope" considered undeclared work?
Yes, paying part of the salary in an envelope, without fully declaring the income, is a form of undeclared work ("grey work"). It may give rise to contravention liability and, depending on the circumstances, tax audits or criminal investigations for tax evasion.
Conclusion
Undeclared work is not merely a matter of compliance with employment legislation. Depending on the specific circumstances, it can give rise to significant fines, additional tax liabilities, suspension of activity and even criminal liability.
Both employers and persons working without legal documentation have rights and obligations that need to be understood. Acting quickly, keeping relevant documents and consulting a lawyer can make the difference between a situation resolved administratively and a complex dispute.
At Buju, Stanciu & Asociații, we provide legal assistance tailored to the current challenges of the business environment, helping companies prevent legal risks, manage authority inspections and protect their interests when facing investigations into undeclared work or other economic offences.
Labour Inspectorate (ITM) check or case file for undeclared work?
Whether you have received a report, the investigation is heading towards criminal proceedings, or you simply want to put your company in order before an inspection - you will receive a confidential assessment of your situation.