Proposal for a Directive of the European Parliament and of the Council providing for sanctions against employers of illegally staying third-country nationals {SEC(2007) 596} {SEC(2007) 603} {SEC(2007) 604}
Date: 2007-05-16
Institutions: European Commission
Subjects: EU employment policy, EU migration policy, foreign national, illegal migration, penalty

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.5.2007 
COM(2007) 249 final 

2007/0094 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

providing for sanctions against employers of illegally staying third-country nationals 

(presented by the Commission) 

{SEC(2007) 596} 
{SEC(2007) 603} 
{SEC(2007) 604} 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

110 

•  Grounds for and objectives of the proposal 

This  proposal  forms  part  of  the  EU's  efforts  to  develop  a  comprehensive  migration 
policy. In September 2007, the Commission plans to present a first proposal on legal 
migration in accordance with its December 2005 Policy Plan1. 

One  of  the  factors  encouraging  illegal  immigration  into  the  EU  is  the  possibility  of 
finding  work.  This  proposal  aims  to  reduce  that  pull  factor  by  targeting  the 
employment of third-country nationals who are illegally staying in the EU. Building on 
existing  measures  in  the  Member  States,  the  aim  is  to  ensure  that  all  Member  States 
introduce  similar  penalties  for  employers  of  such  third-country  nationals  and  enforce 
them effectively. 

The Commission suggested these measures in its July 2006 Communication on Policy 
priorities  in  the  fight  against  illegal  immigration  of  third-country  nationals2.  The 
the 
European  Council  endorsed 
Commission to present proposals. 

in  December  2006, 

this  suggestion 

inviting 

120 

•  General context 

The  employment  of  third-country  nationals  who  are  illegally  staying  (hereinafter 
"illegal employment") is the result of migrants seeking a better a life and meeting the 
demand from employers willing to take advantage of workers who will undertake what 
are usually low-skilled, low-paid jobs. The scale of the phenomenon is necessarily hard 
to quantify: estimates of the number of third-country nationals illegally staying in the 
EU  vary  between  4,5  to  8  million.  Illegal  employment  is  concentrated  in  certain 
sectors: construction, agriculture, cleaning, and hotel/catering. 

On  the  one  hand,  acting  as  a  pull  factor  for  illegal  immigration,  illegal  employment, 
like  undeclared  work  by  EU  citizens,  leads  to  losses  to  public  finances,  can  depress 
wages and working conditions, may distort competition between businesses and means 
that the undeclared workers will not benefit from health insurance and pension rights 
that  depend  on  contributions.  On  the  other  hand,  illegally  employed  third-country 
nationals  are  in  an  additionally  vulnerable  position  because  if  apprehended  they  are 
likely to be returned to their country of origin. 

This proposal is concerned with immigration policy, not with labour or social policy. 
Under  this  proposal,  it  is  the  employer  who  will  be  sanctioned,  not  the  illegally 
employed  third-country  nationals  (but  the  Commission's  2005  proposal  for  a  Return 
Directive would, as a general rule, require Member States to issue a return decision to 
third-country nationals staying illegally). 

1 
2 

COM(2005) 669. 
COM(2006) 402. 

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130 

•  Existing provisions in the area of the proposal 

Council Recommendation of 22 December 1995 on harmonising means of combating 
illegal immigration and illegal employment3 provided that employers wanting to recruit 
foreign  nationals  should  be  encouraged  to  verify  their  residence  or  employment 
situations  and  that  an  employer  of  a  foreign  national  without  authorisation  should  be 
made  subject  to  penalties.  Council  Recommendation  of  27  September  1996  on 
combating  the  illegal  employment  of  third-country  nationals4  provided  in  particular 
that  employment  of  third-country  nationals  who  do  not  possess  the  necessary 
authorisation  should  be  prohibited  and  should  give  rise 
to  criminal  and/or 
administrative penalties. This proposal builds on those Recommendations by requiring 
Member States to prohibit illegal employment, to provide for sanctions, and to require 
employers to undertake preventive measures and other controls. 

EU  policy  against  illegal  immigration  includes  provisions  against  human  trafficking 
and against smuggling people across borders. The Framework Decision on combating 
trafficking in human beings5 criminalises the trafficking of a person for the purpose of 
labour  or  sexual  exploitation  and  approximates  penalties.  Illegal  employment  under 
this  proposal  could  also  constitute  the  more  serious  criminal  offence  of  trafficking  if 
the  conditions  of  the  Framework  Decision  are  met,  including  the  use  of  coercion  or 
deceit  for  the  purpose  of  labour  exploitation.  However,  this  proposal  covers  the 
situation where there is no coercion or deceit. 

A  2002  Directive6  and  accompanying  Framework  Decision7  deal  with  people 
smuggling  by  defining  offences  of  facilitation  of  unauthorised  entry,  movement  and 
residence and approximating penalties. It cannot be excluded that illegal employment 
might  be  coupled  with  facilitation  of  entry  and/or  residence,  but  this  proposal  also 
covers  employers  having  no  involvement  with  the  entry  or  residence  of  illegally 
employed third-county nationals. 

140 

•  Consistency with the other policies and objectives of the Union 

The  employment  of  illegally  staying  third-country  nationals  is  part  of  the  wider 
problem of undeclared work, i.e. paid activities that are lawful as regards their nature 
but not declared to the public authorities8. Undeclared work and other related aspects 
involves  EU  citizens  no  less  than  third-country  nationals,  and  the  Commission  will 
present a Communication on this topic in autumn 2007. 

The measures envisaged under this proposal are consistent with and supportive of the 
policy and actions at Community level to prevent and combat tax fraud. 

This  proposal  complies  with  fundamental  rights.  It  does  not  affect  third-country 
nationals' rights as workers, such as the rights to join a trade union, to participate in and 

3 
4 
5 
6 
7 
8 

OJ C 5, 10.1.1996, p. 1. 
OJ C 304, 14.10.1996, p. 1. 
OJ L 203, 1.8.2002, p. 1. 
OJ L 328, 5.12.2002, p. 17. 
OJ L 328, 5.12.2002, p. 1. 
COM(98) 219. 

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benefit  from  collective  bargaining  and  to  enjoy  working  conditions  that  come  up  to 
health and safety standards. As regards the infringement for which employers may be 
held liable, it should be noted that, under this proposal, an employer who controls the 
documents  of  prospective  employees  will  not  be  held  liable,  for  example,  if  those 
documents prove in fact to be forgeries. Criminal sanctions are limited to serious cases 
where  a  criminal  penalty  is  proportionate  to  the  scale  or  seriousness  of  the 
infringement. Personal data that employers and authorities are required to handle when 
implementing  this  proposal  will  need  to  be  processed  in  accordance  with  Directive 
95/46/EC  on  the  protection  of  individuals  with  regard  to  the  processing  of  personal 
data9. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

211 

Consultation methods, main sectors targeted and general profile of respondents 

Meetings were held with the ETUC and UNICE/Business Europe. Member States were 
consulted  within  the framework of the Commission's Committee on Immigration  and 
Asylum. 

Preparation  of  the  proposal  also  benefited  from  seminars  and  workshops  bringing 
together  representatives  of  the  social  partners  and  other  NGOs.  Through  the  external 
study  ordered  by  the  Commission  to  support  the  impact  assessment,  further 
consultation of Member States (including their enforcement bodies), trade unions and 
employer  organisations,  and  NGOs  was  undertaken  using  questionnaires  and 
interviews.  

212 

Summary of responses and how they have been taken into account 

The  Commission  took  account  of  comments  made  in  reaction  to  its  July  2006 
Communication. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

229 

230 

The following options were considered in the impact assessment: 

Option 1: Status quo. Although most (if not all) Member States already have employer 
sanctions and preventive measures in place, these have not been shown to be effective. 
This  option  would  not  create  a  level  playing  field,  and  the  situation  may  even 
deteriorate  since  differences  between  Member  States  could  increase.  The  level  of 
existing  sanctions  may  be  so  low  as  not  to  offset  the  economic  advantage  of  illegal 
employment. No clear message would go out to employers, third countries and third-
country nationals that loopholes to escape sanctions were being reduced. 

9 

OJ L 281, 23.11.1995, p. 31. 

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Option  2:  Harmonised  sanctions  for  employers  of  illegally  staying  third-country 
nationals across the EU with an enforcement obligation on Member States (obligation 
to undertake a certain number of workplace inspections). This option would reduce the 
variation  in  legislation  and  its  enforcement,  and  foster  a  level  playing  field.  The 
minimum level of employer sanctions would be raised in several Member States, which 
would increase deterrence. Illegal employment would possibly be reduced as a result of 
improved enforcement. 

Option 3: Harmonised preventive measures: common requirements across the EU for 
employers  to  copy  the  relevant  documentation  (residence  permit)  and  to  notify  the 
competent  national  bodies.  This  option  would  reduce  illegal  employment,  since  the 
employer could determine at an early stage if a potential employee is allowed to work. 
A minimum additional burden would be placed on employers; several Member States 
already  require  employers  to  check  documents.  A  level  playing  field  would  be 
promoted  because  the  same  procedures  would  be  followed  across  the  EU.  However, 
identity fraud and document forgery might increase. Data protection would need to be 
ensured. 

Option 4: Harmonised employer sanctions and preventive measures (i.e. Options 2 and 
3).  Under  this  option,  the  positive  impacts  of  Options  2  and  3  would  be  mutually 
reinforced, and a clearer message sent out of the EU’s commitment to fighting illegal 
employment. 

Option  5:  EU  awareness  raising  campaign  on  consequences  of  hiring  an  illegally 
staying third-country national. This option would require low resources to implement 
and  could  have  a  small,  temporary,  but  positive  impact  on  compliance.  However,  it 
would  not  lead  to  any  medium  or  long-term  reduction  in  illegal  employment. 
Employers are already aware of the negative consequences of illegal employment. 

Option 6: Identification and exchange of good practices between Member States on the 
implementation of employer sanctions. Better enforcement is deemed necessary by all 
stakeholders,  and  this  option  would  increase  the  capacity  and  thus  effectiveness  of 
enforcement  bodies.  However,  resources  for  inspections  would  still  be  dependent  on 
Member  States.  The  contribution  to  the  creation  of  a  level  playing  field  would  be 
limited,  because  variations  in  sanctions  and  preventive  measures  would  remain  and 
may even increase. 

Comparing  the  options  and  their  impacts,  and  in  the  light  of  Member  State  and 
stakeholder  views,  the  preferred  option  is  a  combination  of  Options  4  and  6.  As  a 
supporting measure the proposed new measures should be accompanied by awareness-
raising  campaigns  targeted  at  employers  (in  particular  individuals  and  small  and 
medium-sized enterprises). Option 4 is reflected in this  proposal, while  Option 6 and 
the  supporting  awareness-raising  campaigns  are  reflected  in  the  accompanying 
Commission Staff Working Paper. 

3)  LEGAL ASPECTS OF THE PROPOSAL 

305 

•  Summary of the proposed action 

The  proposal  contains  a  general  prohibition  on  the  employment  of  third-country 
nationals  who  are  illegally  staying.  Infringements  would  be  sanctioned  by  penalties 

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(which  may  be  administrative  in  nature)  consisting  of  fines  and,  in  the  case  of 
businesses, the possibility of other measures, including exclusion from and recovery of 
public subsidies. Criminal penalties would be available in serious cases. 

To  ensure  the  effectiveness  of  the  prohibition,  employers  would  be  required  to 
undertake  certain  checks  before  recruiting  a  third-country  national,  the  procedure  for 
making  complaints  would  be  facilitated  and  Member  States  would  be  required  to 
undertake a certain number of inspections. 

The stronger sanctions and higher enforcement obligations that this Directive applies in 
relation  to  illegally  staying  third-country  nationals  as  compared  to  those  applicable 
under existing Community instruments in particular in the context of the provision of 
services  in  relation  to  EU  citizens  and  legally  staying  third-country  nationals  are 
justified in the light of the objective of this Directive and non-discriminatory in view of 
the different status of illegally staying third-country nationals. 

310 

•  Legal basis 

The provisions of this Directive are designed to reduce illegal immigration into the EU. 
Consequently, the appropriate legal basis is Article 63(3)(b) of the EC Treaty. 

That  legal  base  does  not  cover  measures  relating  to  third-country  nationals  who  are 
legally staying in the EU but who are working in violation of their residence status, for 
example students from third countries who work more hours than permitted. Therefore 
tackling  such  situations,  although  also  important  for  reducing  the  employment  pull 
factor, is not covered by this proposal. 

320 

•  Principle of subsidiarity 

321 

324 

The  principle  of  subsidiarity  applies  insofar  as  the  proposal  does  not  fall  under  the 
exclusive competence of the Community. 

The  objectives  of  the  proposal  cannot  be sufficiently  achieved  by  the  Member  States 
for the following reason(s). 

If Member States act alone there is a risk of significantly different levels of sanctions 
and  enforcement  in  different  Member  States.  This  could  lead  to  distortions  of 
competition within the single market and to secondary movements of illegally staying 
third-country  nationals  to  Member  States  with  lower  levels  of  sanction  and 
enforcement. 

Community action will better achieve the objectives of the proposal for the following 
reason(s). 

In  an  area  without  internal  borders,  action  against  illegal  immigration  needs  to  be 
undertaken on a common basis.  This is the case not only at the common borders but 
also  with  regard  to  action  to  reduce  pull  factors.  Community  action  will  be  more 
effective  in  reducing  the  employment  pull  factor.  A  common  minimum  level  of 
sanctions  on  employers  will  ensure  (1)  that  all  Member  States  have  sufficiently  high 
sanctions to have deterrent value, (2) that sanctions are not so different as to give rise 
to secondary movements of illegally staying third-country nationals, and (3) that there 

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325 

327 

331 

332 

342 

is a level-playing field for businesses across the EU. 

The proposal provides for only a minimum level of harmonisation.  

The proposal therefore complies with the principle of subsidiarity. 

•  Principle of proportionality 

The proposal complies with the principle of proportionality for the following reason(s). 

The  instrument  chosen  is  a  directive,  which  gives  Member  States  a  high  degree  of 
flexibility in terms of implementation. Under Article 63, penultimate subparagraph, of 
the  EC  Treaty,  Member  States  are  free  to  maintain  or  introduce  measures  other  than 
those  set  out  in  the  Directive  provided  they  are  compatible  with  the  Treaty  and  with 
international agreements. 

The  implementation  of  the  Directive  may  entail  some  additional  financial  and 
administrative burden on Member States' national and regional governments in order to 
develop the required enforcement strategy and to meet the required minimum number 
of  inspections.  Moreover,  some  additional  burden  on  those  governments  could  result 
from a potential increase in administrative and criminal proceedings. Those increased 
burdens  are  however  limited  to  what  is  required  to  ensure  the  effectiveness  of  the 
proposal. 

For  economic  operators,  the  burdens  are  limited  to  carrying  out  checks  before 
employing  third-country  nationals,  notifying  the  competent  authorities  and  keeping 
records. These burdens are proportionate to the objective of the proposal. 

•  Choice of instruments 

Proposed instruments: directive. 

Other means would not be adequate for the following reason(s). 

A  directive  is  the  appropriate  instrument  for  this  action:  it  sets  binding  minimum 
standards  but  gives  Member  States  flexibility  when  incorporating  it  into  national 
legislation and enforcement practice. 

4)  BUDGETARY IMPLICATION 

409 

The proposal has no implication for the EU budget. 

5)  ADDITIONAL INFORMATION 

•  Review/revision/sunset clause 

The proposal includes a review clause. 

531 

•  Correlation table 

Member  States  are  required  to  communicate  to  the  Commission  the  text  of  national 
provisions  transposing  the  Directive  as  well  as  a  correlation  table  between  those 

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provisions and this Directive. 

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550 

•  Detailed explanation of the proposal 

Articles 1 and 2 

The  proposal  does  not  cover  EU  citizens,  including  those  whose  eligibility  for 
employment in a particular Member State is restricted by transitional arrangements. 

The definition of "employer" covers not only natural or legal persons employing others 
in  the  course  of  business  activities,  but  also  private  individuals  in  their  capacity  as 
employers  of  for  example  house  cleaners.  From  the  perspective  of  reducing  the  pull 
factor of illegal employment, it makes no sense to exclude individual employers. 

Article 3 

The  central  provision  of  the  proposal  is  a  general  prohibition  on  the  employment  of 
third-country nationals who do not have the right to be resident in the EU. 

Articles 4 and 5 

Employers would, before recruitment of third-country nationals, be required to check 
that they have a residence permit or another authorisation for stay. Employers who are 
a business or a legal person (such as a registered non-profit association) would further 
be obliged to notify the competent national authorities. Employers who can show that 
they had carried out those obligations would not be liable to sanctions. 

As  regards  dealing  with  forged  documents,  it  is  clearly  unreasonable  to  require 
employers  to  detect  these.  The  Commission’s  July  2006  Communication  stated  that 
common  guidelines  be  developed  on  minimum  security  standards,  in  particular  with 
respect to issue procedures, for documents including residence permits. But employers 
should  not  escape  liability  when  documents  are  manifestly  incorrect  (for  example,  a 
document with a photograph that is manifestly not that of the prospective employee or 
a document that has clearly been tampered with).  

Article 6 

Infringements  by  employers  would  be  punishable  by  effective,  proportionate  and 
dissuasive  sanctions,  which  may  be  administrative  sanctions.  In  respect  of  each 
infringement, these sanctions should include fines and the costs of returning the third-
country national.  

The third-country nationals in question would not be subjected to sanctions by virtue of 
this proposal. The Commission has made a separate proposal for a Directive10 which, 
as a general rule, would require Member States to issue a return decision to any third-
country national staying illegally. 

Article 7 

Employers  would  be  required  to  pay  any  outstanding  remuneration  to  illegally 
employed  third-country  nationals  and  Member  States  to  put  in  place  mechanisms  to 

10 

COM(2005) 391. 

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ensure  that  third-country  nationals,  even  if  they  have  left  the  Member  State,  receive 
any back payment of wages. 

Article 8 

For business employers, other measures would be available including disqualification 
from public benefits, subsidies (including EU funding managed by Member States) and 
public procurement procedures. It would also be possible to recover public subsidies, 
including EU funding managed by Member States, granted to the employer during the 
preceding  12  months.  The  same  possibility  exists  under  the  Financial  Regulation  in 
respect of EU funding directly managed by the Commission. 

Article 9 

To  the  extent  that  a  financial  penalty  cannot  be  recovered  from  a  subcontractor  it 
should be recoverable from other contractors in the chain of subcontracting, up to and 
including the main contractor. 

Articles 10 and 11 

Administrative fines and other measures may not be enough to deter certain employers. 
Member States would therefore be required to provide for criminal penalties for four 
types of serious cases: repeated infringements, the employment of a significant number 
of third-country nationals, particularly exploitative working conditions, and where the 
employer  knows  that  the  worker  is  a  victim  of  human  trafficking.  To  ensure  in 
particular  that  individual  employers  are  liable  to  criminal  sanctions  only  in  serious 
cases,  a  repeated  infringement  is  criminalised  only  where  it  is  the  third  infringement 
within a two-year period. 

Article 12 and 13 

Member  States  should  ensure  that  legal  persons  can  be  held  liable  for  criminal 
offences.  It  is  not  specified  whether  the  liability  of  legal  persons  should  be  criminal 
liability.  Thus,  Member  States  that  do  not  recognise  the  criminal  liability  of  legal 
persons are not obliged to change their systems. 

Article 14 

To make enforcement more effective, mechanisms need to be in place through which 
third-country  nationals  can  lodge  complaints  directly  or  through  designated  third 
parties.  Such  third  parties  should  be  protected  against  possible  sanctions  under  rules 
prohibiting  the  facilitation  of  unauthorised  entry  and  residence.  Trade  unions  and 
NGOs have stressed the need for such a provision. 

Additional  measures  are  proposed  to  protect  the  third-country  nationals  in  cases  of 
particularly  exploitative  working  conditions  leading  to  criminal  liability.  First,  those 
who  cooperate  in  proceedings  should  benefit  from  the  same  possibility  of  being 
granted  a  temporary  residence  permit  as  already  exists  under  EC  law  for  victims  of 
human trafficking who cooperate with the authorities. Secondly, their return should be 
postponed until they have actually received back payment of their remuneration. 

Article 15 

Member  States  would  be  required  to  undertake  a  certain  number  of  controls  on  the 
basis of a risk assessment.  

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2007/0094 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

providing for sanctions against employers of illegally staying third-country nationals 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
63(3)(b) thereof, 

Having regard to the proposal from the Commission11, 

Having regard to the opinion of the European Economic and Social Committee12, 

Having regard to the opinion of the Committee of the Regions13, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty14, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  European  Council  meeting  of  14  and  15  December  2006  agreed  to  increase 
cooperation  among  Member  States  in  the  fight  against  illegal  immigration  and  in 
particular  that  measures  against  illegal  employment  should be  intensified  at  Member 
State and EU level. 

A  key  pull  factor  for  illegal  immigration  into  the  EU  is  the  possibility  of  obtaining 
work  in  the  EU  without  the  required  legal  status.  Action  against  illegal  immigration 
and illegal residence should therefore include measures against that pull factor. 

The centrepiece of such measures should be a general prohibition on the employment 
of  third-country  nationals  who  do  not  have  the  right  to  be  resident  in  the  EU, 
accompanied by sanctions against employers who infringe that prohibition. 

The provisions should not cover third-country nationals who are not illegally staying. 
This excludes third-country nationals who are family members of citizens of the Union 
exercising their right to free movement within the Community, and those who, under 
agreements between the Community and its Member States, on the one hand, and the 
countries  of  which  they  are  nationals,  on  the  other,  enjoy  rights  of  free  movement 

11 
12 
13 
14 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

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equivalent  to  those  of  citizens  of  the  Union.  It  also  excludes  third-country  nationals 
who  are  in  a  situation  covered  by  Community  law,  such  as  those  who  are  lawfully 
employed  in  another  Member  State  and  who  are  posted  by  a  service  provider  to 
another Member State in the context of the provision of services. 

To  prevent  the  employment  of  illegally  staying  third-country  nationals,  employers 
should be required before recruiting a third-country national, including in cases where 
the  third  country  national  is  being  recruited  for  the  purpose  of  posting  to  another 
Member  State  in  the  context  of  the  provision  of  services,  to  check  that  they  have  a 
residence permit or another authorisation for stay valid for the period of employment. 
The  burden  on  employers  should  be  limited  to  checking  that  the  document  is  not 
manifestly  incorrect,  such  as  bearing  a  manifestly  wrong  photograph.  To  enable 
Member  States  in  particular  to  check  for  forged  documents,  businesses  and  legal 
persons should also be required to notify the competent authorities of the employment 
of a third-country national. 

Employers  that  have  fulfilled  the  obligations  set  out  in  this  Directive  should  not  be 
held liable for having employed illegally-staying third-country nationals, in particular 
if the competent authority later finds that the document presented by an employee had 
in fact been forged or misused. 

To enforce the general prohibition and to deter infringements, Member States should 
provide  for  appropriate  sanctions.  These  should  include  financial  penalties  and 
contributions to the costs of returning illegally staying third-country nationals. 

The employer should in any case be required to pay to the third-country nationals any 
outstanding  remuneration  for  the  work  they  have  undertaken  and  any  outstanding 
taxes and social security contributions. 

(5) 

(6) 

(7) 

(8) 

(9)  Member  States  should  ensure  that  claims  are  lodged  and  mechanisms  created  to 
guarantee  that  recovered  amounts  of  outstanding  remuneration  are  received  by  the 
third-country nationals to whom they are due. 

(10)  Member States should further provide for a presumption of a work relationship of at 
least six months duration so that the burden of proof is put on the employer in respect 
of at least a certain period. 

(11)  Member States should provide for the possibility of further sanctions against business 
employers, including exclusions from entitlement to public benefits, aids or subsidies, 
including agricultural subsidies; exclusions from public procurement procedures; and 
recovery  of  public  benefits,  aids  or  subsidies,  including  EU  funding  managed  by 
Member States, that have already been granted. 

(12)  This Directive, and in particular its Articles 8, 11 and 13, should be without prejudice 
to the provisions of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 
on the Financial Regulation applicable to the general budget of the European Union15. 

15 

OJ  L  248,  19.9.2002,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  1995/2006  of  13 
December 2006 (OJ L 390, 30.12.2006, p. 1). 

EN 

12 

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(13) 

In view of the prevalence of subcontracting in certain affected sectors, it is necessary 
to  ensure  that  all  the  undertakings  in  a  chain  of  subcontracting  are  held  jointly  and 
severally liable to pay financial sanctions against an employer at the end of the chain 
who employs illegally staying third-country nationals. 

(14)  Experience has shown that the existing systems of sanctions have not been sufficient 
to achieve complete compliance with prohibitions against the employment of illegally 
staying  third-country  nationals.  One  of  the  reasons  is  that  administrative  sanctions 
alone are likely not to be enough to deter certain unscrupulous employers. Compliance 
can and should be strengthened by the application of criminal sanctions. 

(15)  To  guarantee  the  full  effectiveness  of  the  general  prohibition,  there  is  therefore  a 
particular  need  for  more  dissuasive  sanctions  in  serious  cases,  such  as:  repeated 
infringements, illegal employment of a significant number of third-country nationals, 
particularly  exploitative  working  conditions  and  where  the  employer  knows  that  the 
worker  is  a  victim  of  human  trafficking.  Working  conditions  should  be  considered 
particularly  exploitative  where  there  is  a  significant  difference  in  pay  or  in  working 
conditions, particularly those affecting workers’ health and safety, from those enjoyed 
by legally employed workers. 

(16) 

In all cases deemed to be serious according to the present Directive the infringement 
should  therefore  be  considered  a  criminal  offence  throughout  the  Community  when 
committed  intentionally.  The  criminal  offence  should  be  without  prejudice  to 
application of the Framework Decision 2002/629/JHA of 19 July 2002 on combating 
trafficking in human beings16. 

(17)  The criminal offence should be punishable by effective, proportionate and dissuasive 
criminal  sanctions,  which  should  also  apply  to  legal  persons  throughout  the 
Community, because many employers are legal persons. 

(18)  To  facilitate  enforcement,  there  should  be  effective  complaint  mechanisms  by  which 
relevant  third-country  nationals  can  lodge  complaints  directly  or  through  designated 
third  parties  such  as  trade  unions  or  other  associations.  The  designated  third  parties 
should be protected, when providing assistance to lodge complaints, against possible 
sanctions under rules prohibiting the facilitation of unauthorised residence. 

(19)  To  supplement  the  complaint  mechanisms,  Member  States  should  grant  residence 
permits of limited duration, linked to the length of the relevant national proceedings, 
to  third-country  nationals  who  have  been  subjected  to  particularly  exploitative 
working conditions and who cooperate in criminal proceedings against the employer. 
Such  permits  should  be  granted  under  the  same  conditions  as  those  granted  under 
Directive 2004/81/EC of 29 April 2004 on the residence permit issued to third-country 
nationals who are victims of trafficking in human beings or who have been the subject 
of  an  action  to  facilitate  illegal  immigration  who  cooperate  with  the  competent 
authorities17. 

16 
17 

OJ L 203, 1.8.2002, p. 1. 
OJ L 261, 6.8.2004, p. 19. 

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13 

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(20)  To ensure a sufficient level of enforcement and to avoid significant differences in the 
level  of  enforcement  in  the  Member  States,  a  certain  proportion  of  companies 
established in each Member State should be inspected. 

(21)  Any  processing  of  personal  data  undertaken  in  the  implementation  of  this  Directive 
must be in compliance with Directive 95/46/EC of the European Parliament and of the 
Council  of  24  October  1995  on  the  protection  of  individuals  with  regard  to  the 
processing of personal data and on the free movement of such data18. 

(22)  Since  the  objective  of  this  Directive,  namely  to  counteract  illegal  immigration  by 
acting  against  the  employment  pull  factor,  cannot  be  sufficiently  achieved  by  the 
Member  States  alone  and  can  therefore,  by  reason  of  the  scale  and  effects  be  better 
achieved  at  Community  level,  the  Community  may  adopt  measures,  in  accordance 
with the principle  of subsidiarity  as set out in Article 5 of  the Treaty. In  accordance 
with the principle of proportionality, as set out in that Article, this Directive does not 
go beyond what is necessary to achieve that objective. 

(23)  This  Directive  respects  fundamental  rights  and  observes  the  principles  recognised  in 
particular  by  the  European  Convention  for  the  Protection  of  Human  Rights  and 
Fundamental  Freedoms  and  the  Charter  of  Fundamental  Rights  of  the  European 
Union. Specifically, it has to be applied with due respect for the freedom to conduct a 
business, equality before the law and the principle of non-discrimination, the right to 
an effective remedy and to a fair trail and the principles of legality and proportionality 
of criminal offences and penalties, in accordance with Articles 16, 20, 21, 47 and 49 of 
the Charter. 

(24) 

In  accordance  with  Articles  1  and  2  of  the  Protocol  on  the  position  of  Denmark 
annexed to the Treaty on European Union and the to Treaty establishing the European 
Community,  Denmark  is  not  taking  part  in  the  adoption  of  this  Directive  and  is  not 
bound by it or subject to its application, 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Subject matter and scope 

1. 

This  Directive  lays  down  common  sanctions  and  measures  to  be  applied  in  the 
Member States against employers of third-country nationals who are illegally staying 
on  the  territory  of  the  Member  States,  in  order  to  take  action  against  illegal 
immigration. 

For the purposes of this Directive, the following definitions shall apply: 

Article 2 
Definitions 

18 

OJ L 281, 23.11.1995, p. 31. 

EN 

14 

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(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

"third-country national" means any person who is not a citizen of the Union within 
the meaning of Article 17(1) of the Treaty; 

"employment" means exercise  of  remunerated activities for and under the direction 
of another person; 

"illegally staying" means the presence on the territory of a Member State of a third-
country national  who does not  fulfil, or  no longer fulfils, the conditions  for stay or 
residence in that Member State; 

"illegal employment" means employment of a third-country national who is illegally 
staying on the territory of a Member State; 

"employer" means any person, including legal persons, for and under the direction of 
whom a third-country national exercises remunerated activities; 

"subcontractor" means a natural or legal person to whom the execution of all or part 
of the obligations of a prior contract is assigned. 

Article 3 
Prohibition of illegal employment 

Member States shall prohibit the employment of illegally staying third-country nationals. 

Infringements of this prohibition shall be subject to the sanctions and measures laid down in 
this Directive. 

Article 4 
Employers’ obligations 

1. 

Member States shall oblige employers to: 

(a) 

(b) 

(c) 

require  the  production  by  third-country  nationals  of  a  residence  permit  or 
another  authorisation  for  stay  valid  for  the  period  of  the  employment  in 
question; 

copy  or  record  the  content  of  the  residence  permit  or  other  authorisation  for 
stay before employment begins; 

keep for at least the duration of the employment the copies or records available 
for inspection by the competent authorities of the Member States. 

Member  States  shall oblige employers acting in the course of business activities or 
who  are  legal  persons  to  notify  the  competent  authorities  designated  by  Member 
States of both the start and the termination of employment of third-country nationals 
at the latest within one week. 

Member  States  shall  ensure  that  employers  are  considered  to  have  fulfilled  their 
obligation under paragraph 1(a) unless the document presented as a residence permit 
or another authorisation for stay is manifestly incorrect. 

2. 

3. 

EN 

15 

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Article 5 
Consequence of fulfilling the employers’ obligations 

Member States shall ensure that employers are not liable for infringing Article 3 where they 
can show that they fulfilled the obligations set out in Article 4.  

Article 6 
Financial sanctions 

1. 

Member States shall take the necessary measures to ensure that any infringement of 
Article  3  is  subject  to  effective,  proportionate  and  dissuasive  sanctions  against  the 
employer. 

2. 

Sanctions in respect of each infringement of Article 3 shall include: 

(a) 

financial penalties in relation to each illegally employed third-country national; 

(b)  payments  of  the  costs  of  return  of  each  illegally  employed  third-country 

national in those cases where return procedures are carried out. 

Article 7 
Back payments to be made by employers 

1. 

In  respect  of  each  infringement  of  Article  3  Member  States  shall  ensure  that  the 
employer pays: 

(a) 

any outstanding remuneration to the illegally employed third-country national; 

(b) 

any  outstanding  taxes  and  social  security  contributions,  including  relevant 
administrative fines. 

2. 

In order to apply paragraph 1(a), Member States shall: 

(a) 

enact  mechanisms  to  ensure  that  the  necessary  procedures  to  claim  back 
outstanding remuneration are triggered automatically without the need for the 
third-country national to introduce a claim; 

(b)  provide  that  a  work  relationship  of  at  least  6  months  duration  be  presumed 

unless the employer can prove differently. 

3. 

4. 

Member  States  shall  take  the  necessary  measures  to  ensure  that  illegally  employed 
third-country  nationals  receive  any  back  payment  of  remuneration  recovered  under 
paragraph 1(a), including in cases in which they have or have been returned. 

In respect of criminal offences covered by Article 10(1)(c), Member States shall take 
the  necessary  measures  to  ensure  that  the  execution  of  any  return  decision  is 
postponed  until  the  third-country  national  has  received  any  back  payment  of  their 
remuneration recovered under paragraph 1(a). 

EN 

16 

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Article 8 
Other measures 

Member  States  shall  take  the  necessary  measures  to  ensure  that  an  employer  acting  in  the 
course of business activities may also, if appropriate, be subject to the following measures: 

EN 

17 

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1. 

2. 

1. 

(a) 

exclusion  from  entitlement  to  public  benefits,  aid  or  subsidies  for  up  to  five 
years; 

(b) 

exclusion from participation in a public contract for up to five years; 

(c) 

recovery  of  public  benefits,  aid,  or  subsidies,  including  EU  funding  managed 
by Member States, granted to the employer during the 12 months preceding the 
detection of illegal employment; 

(d) 

temporary  or  permanent  closure  of  the  establishments  that  have  been  used  to 
commit the infringement. 

Article 9 
Subcontracting 

Where  the  employer  is  a  subcontractor,  Member  States  shall  ensure  that  the  main 
contractor and any intermediate subcontractor are liable to pay: 

(a) 

any sanction imposed under Article 6, and 

(b) 

any back payments due under Article 7. 

The main contractor and any intermediate subcontractor shall under paragraph 1 be 
liable  jointly  and  severally,  without  prejudice  to  the  provisions  of  national  law 
concerning the rights of contribution or recourse. 

Article 10 
Criminal offence  

Each  Member  State  shall  ensure  that  the  infringement  referred  to  in  Article  3 
constitutes  a  criminal  offence  when  committed  intentionally,  in  the  following 
circumstances: 

(a) 

(b) 

(c) 

(d) 

the infringement continues or is repeated after competent national authorities or 
courts have within a period of two years made two previous findings that the 
employer has infringed Article 3; 

the  infringement  is  in  respect  of  a  significant  number  of  illegally  employed 
third-country  nationals.  This  shall  be  the  case  if  at  least  four  third-country 
nationals are illegally employed; 

infringement 

the 
is  accompanied  by  particularly  exploitative  working 
conditions,  such  as  a  significant  difference  in  working  conditions  from  those 
enjoyed by legally employed workers; or 

the  infringement  is  committed  by  an  employer  who  uses  work  or  services 
exacted  from  a  person,  with  the  knowledge  that  that  person  is  a  victim  of 
trafficking in human beings. 

EN 

18 

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2. 

Member  States  shall  ensure  that  participation  in  or  instigation  of  the  conducts 
referred to in paragraph 1 constitutes a criminal offences. 

1. 

2. 

1. 

2. 

3. 

Article 11 
Sanctions for the criminal offence 

Member States shall ensure that the commission of the criminal offence referred to in 
Article  10  is  punishable  by  effective,  proportionate  and  dissuasive  criminal 
sanctions. 

The  criminal  sanctions  provided  for  in  this  article  may  be  accompanied  by  other 
sanctions or measures, in particular those provided for in Articles 6, 7 and 8, and by 
the publication of the judicial decision relating to the conviction or any sanctions or 
measures applied. 

Article 12 
Liability of legal persons 

Member  States  shall  ensure  that  legal  persons  can  be  held  liable  for  the  criminal 
offence  referred  to  in  Article  10  where  such  offence  has  been  committed  for  their 
benefit  by  any  person,  acting  either  individually  or  as  part  of  an  organ  of  the  legal 
person, who has a leading position within the legal person, based on 

(a) 

a power of representation of the legal person, or 

(b) 

an authority to take decisions on behalf of the legal person, or 

(c) 

an authority to exercise control within the legal person. 

Member States shall also ensure that a legal person may be held liable where the lack 
of supervision or control, by a person referred to in paragraph 1, has made possible 
the commission of the criminal offence referred to in Article 10 for the benefit of that 
legal person by a person under its authority. 

Liability  of  a  legal  person  under  paragraphs  1  and  2  shall  not  exclude  criminal 
proceedings against natural persons who are perpetrators, instigators or accessories in 
the offence referred to in Article 10. 

Article 13 
Sanctions against legal persons 

Member States shall ensure that a legal person held liable for a criminal offence pursuant to 
Article  10  is  punishable  by  effective,  proportionate  and  dissuasive  sanctions,  which  shall 
include criminal or non-criminal fines and may include other sanctions such as: 

(a) 

(b) 

EN 

exclusion from entitlement to public benefits or aid; 

exclusion from participation in a public contract for up to five years; 

19 

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(c) 

(d) 

(e) 

1. 

2. 

3. 

1. 

2. 

temporary or permanent disqualification from the practice of agricultural, industrial 
or commercial activities; 

placing under judicial supervision; 

a judicial winding-up order. 

Article 14 
Facilitation of complaints 

Member States shall provide for effective mechanisms through which third-country 
nationals  in  illegal  employment  can  lodge  complaints  against  their  employers, 
directly or through designated third parties. 

Member States shall not impose sanctions against designated third parties providing 
assistance  to  the  third-country  national  to  lodge  complaints,  on  the  grounds  of 
facilitation of unauthorised residence. 

In  respect  of  criminal  offences  covered  by  Article  10(1)(c),  Member  States  shall 
under  the  conditions  of  Articles  4  to  15  of  Directive  2004/81/EC  grant  residence 
permits of limited duration, linked to the length of the relevant national proceedings, 
to  third-country  nationals  who  are  or  have  been  subjected  to  exploitative  working 
conditions and cooperate in proceedings against the employer. 

Article 15 
Inspections 

Member  States  shall  ensure  that  at  least  10%  of  companies  established  on  their 
territory per year are subject to inspections to control employment of illegally staying 
third-country nationals. 

The selection of companies to be inspected shall be based on a risk assessment to be 
drawn  up  by  the  competent  authorities  in  the  Member  States  taking  into  account 
factors  such  as  the  sector  in  which  a  company  operates  and  any  past  record  of 
infringement. 

Article 16 
Reporting 

By  [Three  years  after  the  date  referred  to  in  Article  17]  at  the  latest,  and  every  three  years 
thereafter,  Member  States  shall 
the 
implementation of this Directive in the form of a report which shall include the numbers and 
results of inspections carried out pursuant to Article 15 and details of measures applied under 
Article 8. 

the  Commission  on 

information 

transmit 

to 

On  the  basis  of  those  reports,  the  Commission  shall  submit  a  report  to  the  European 
Parliament and the Council. 

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Article 17 
Transposition 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  by  [24  months  from  the  date  of 
publication in the Official Journal of the European Union] at the latest. They shall 
forthwith  communicate  to  the  Commission  the  text  of  those  provisions  and  a 
correlation table between those provisions and this Directive. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 18 
Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 19 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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