Under-declared employment

When formal employers pursue the illegal practice of reducing their tax and social security payments, and therefore labour costs, by under-declaring the remuneration of employees. This occurs when employers pay their formal employees two salaries: an official declared salary and an additional undeclared (‘envelope’) wage which is hidden from the authorities for tax and social security purposes. Alternatively, an employer can under-declare the number of hours an employee works, such as to evade paying the minimum wage. 

[Williams, C.C. and Horodnic, I.A. (2017) Evaluating the illegal employer practice of under-reporting employees’ salaries”, British Journal of Industrial Relations, Vol. 55, No. 1, pp. 83-111]