The argument always sounds reasonable: it’s a one-off, there’s no paperwork, the money comes in undeclared and no one will find out. In Switzerland, this has an official name, “travail au noir”, and the 2005 Act on Undeclared Work provides for consequences that go far beyond an administrative fine. The most common mistake is to think that the risk lies solely with the employer. The reality is that the worker also puts specific things at risk, some of which are difficult to recover.
The first and most immediate issue is insurance. In Switzerland, if you have an accident at work whilst working illegally, you are not covered by the LAA, the compulsory accident insurance scheme. This means that any hospitalisation resulting from that accident is at your own expense, as the LAMal does not cover it. Nor are you entitled to unemployment benefit if you lose that job: the RAV does not recognise undeclared employment, and the weeks worked illegally do not count towards your contribution periods. The system makes no exceptions simply because the situation may seem temporary or harmless to you.
For foreign nationals with a residence permit, the consequences are more severe. A conviction or penalty for undeclared work, or for carrying out an activity without the necessary authorisation, may affect the renewal of a B permit and, in the case of repeat offences, may be viewed as a negative factor in a naturalisation process. It is not an automatic or immediate consequence, but it does remain on one’s record. The Immigration Act allows for permits not to be renewed where a person has repeatedly breached labour market regulations, and cases of undeclared work are recorded.
The third factor that almost nobody takes into account is the AVS. Every month of undeclared work is a month for which you haven’t paid contributions. In Switzerland, your pension is built up year by year, and gaps in your contributions reduce your retirement income. If you have been working partly off the books for years and reach retirement age with gaps in your record, the system doesn’t ask why: it simply calculates what you have contributed and pays you that amount. There is no way to make up for missed contribution years once they have passed. For someone who has been in Switzerland for 20 or 30 years, the difference could amount to several hundred francs a month for the rest of their life.