Where I am from (Slovenia) it is completely illegal. In fact it is illegal for businesses to have cash expenses higher than a hundred euro or so. Very low by European standards, but all countries in EU have some sort of cash payment limit.

This is specifically to curb shadow economies and the grey market.

And the reason it's illegal to pay employees in cash is that the government needs a way of tracking "automatic" social security and tax payments. Where automatic means the employer pays them as the part of the paycheck that doesn't go to the employee.

In the UK it's not illegal. You can pay them in cash in hand. Most builders and workmen that do work in your homes are paid cash in hand when they come round, this is common. They just need to declare it with the correct authorities themself.

Yes, we do that here too. But you aren't their employee, you are their client.

Important difference.

Sorry, you can still be paid cash in hand from most employers. Although most wont offer it. Pubs, bars, nightclubs lots of places you can be paid cash in hand. Just a lot of places choose not to do it as it's easier to manager there cash flows.

That's not off the books then.