Illegal work and the shvarcsystem under scrutiny

Last year, the State Labour Inspection Office carried out 18,969 inspections and imposed 5,595 fines totalling CZK 468.99 million. It focused mainly on detecting illegal employment, finding 1,934 cases - mostly of foreigners from Ukraine, Moldova and Vietnam. It also recorded 295 cases of the shvarcsystem and detected 263 entities mediating work illegally.

The MoLSA is strengthening prevention and legislation - from October 2025 it will be compulsory to register all foreign workers at the latest when they start work. Inspections will continue this year with a focus on grey agencies, working conditions of foreigners and fair remuneration.

There are significant fines associated with illegal employment and the shvarcsystem:

• The employer (legal entity) can be fined up to CZK 10,000,000, but at least CZK 50,000, and the employee up to CZK 100,000.
• In addition to the financial penalty, the employer may also be banned for a maximum of 2 years for allowing illegal work.

We recommend that you pay close attention to this area, as the tax administrator may also assess the tax due during an inspection. It is possible to prepare for this. If you are not sure whether your set-up is not in breach of the law, please do not hesitate to contact us. We will review the entire situation and eliminate any potential risks.