Combating Illegal Employment in 2026: What Will Change for Employers
Illegal employment in Germany results in billions of euros in lost tax revenue and social security contributions each year, distorts competition, and is often associated with poor working conditions. With the Act on the Modernization and Digitalization of the Fight Against Illegal Employment (SchwarzArbMoDiG), the legislature significantly expanded the investigative powers of the Financial Control of Illegal Employment (FKS) as of December 30, 2025, and imposed stricter obligations on employers in certain industries.
Which sectors are targeted?
The statutory list of sectors has been updated. It continues to include, among others, the construction industry, the restaurant and hotel sectors, passenger transportation, the freight forwarding and transportation industry, building cleaning, the meat industry, the security and guarding industry, and the sex industry.
New additions include platform-based delivery services—that is, companies that organize the delivery of goods such as food, including their subcontractors—as well as the hairdressing and beauty industry. The latter includes not only hair salons and barbershops but also nail salons and comparable services. The forestry industry has been removed, as no increased risk has been identified there recently.
Key obligations for employers
Identification requirement and instruction
Employees in the aforementioned sectors must carry valid identification documents at the workplace. Employers are required to inform their employees of this in writing prior to their first assignment and to retain this documentation. A new provision is that even a delayed or incomplete notification can result in a fine of up to 1,000 euros. Employees who fail to present identification face fines of up to 5,000 euros.
Immediate Reporting
New employment relationships must be reported to the pension insurance agency no later than the start of employment.
Employment Contracts
The option to document contract terms electronically explicitly does not apply to designated industries. In these cases, the written form with a handwritten signature remains mandatory.
Time tracking
The start, end, and duration of the daily working hours must be recorded within seven calendar days and retained for at least two years. The maximum fine for violations has been increased from 30,000 to 50,000 euros.
Digital access by regulatory authorities
In the future, the FKS may require employers to grant electronic access to time tracking systems, accounting software, or cloud storage. Documents and data must also be transmitted digitally upon request.
What should affected employers do now?
Companies in the aforementioned industries should review their internal processes promptly: written instructions, timely immediate reports, complete documentation of working hours, and technical preparation for digital audit access. Those who get their affairs in order early on will avoid hefty fines and demonstrate a willingness to cooperate during inspections.
About Trimborn . Partner
Trimborn . Partner is an award-winning tax consulting and auditing firm with offices in Düsseldorf and Oberhausen. As tax consultants specializing in small and medium-sized businesses, we support companies in the skilled trades, hospitality, construction, and numerous other industries in complying with labor and tax law requirements. Please feel free to contact our tax consulting experts in Düsseldorf and Oberhausen.
