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Švarcsystém

Fake sole-trader licence instead of hiring (illegal scheme)

What does “Švarcsystém” mean in Slovakia?

Švarcsystém is an illegal scheme where an employee who actually works full-time (schedule, instructions, one workplace) is registered as self-employed with a živnosť (sole-trader licence) "on invoice". This way, the company avoids social security contributions and labor guarantees.

From 2026, such cases will be easier to prove, and fines for the employer can reach €200,000. The risk for the employee is that without an employment contract, there is no paid vacation, sick leave, severance pay, or protection upon dismissal. Explanations of employment forms are on [podnikajte.sk](https://www.podnikajte.sk).

Important. If you are offered to work as a "regular" full-time employee with a fixed schedule only on a živnosť (sole-trader licence) — this is a red flag: demand an employment contract or contact the Labour Inspectorate (ip.gov.sk).

Examples of use

They offered me a živnosť (sole-trader licence) instead of an employment contract — this could be a "Schwarz system" (illegal employment arrangement).

I was offered a "živnosť" (sole-trader licence) instead of an employment contract — this could be a "švarcsystém" (illegal employment scheme).

The "Švarcsystém" (a way of working that avoids taxes and social security payments) is illegal.

Švarcsystém — illegal.

High fines threaten for the "švarcsystém" (undeclared work system).

High fines threaten for the "švarcsystém" (illegal employment scheme).

Frequently asked questions

What is the difference between a živnosť (sole-trader licence) and the "Švarc systém"?

Legal živnosť (sole-trader licence) — real independent work (several clients, your own schedule). Švarcsystém (grey economy scheme) — when a regular employment is hidden "on invoice".

And if I agree to the živnosť (sole-trader licence) myself?

The employee's agreement does not make the scheme legal; the actual nature of the work is assessed, not the signature in the contract.