West Midlands MEP Anthea McIntyre is backing new measures to crack down on the black economy after securing a number of key changes to the proposals.
The European Parliament has approved proposals aimed at improving collaboration between Europe's national enforcement agencies and the sharing of best practice to tackle undeclared work.
As Conservative employment spokesman, Miss McIntyre helped ensure that member states were not forced into a regulatory straightjacket will be free to choose which initiatives they participate in.
She said: "Undeclared work is a very serious subject. It is linked to tax evasion, benefit fraud and illegal immigration. It undercuts legitimate business and entrepreneurship and undermines workers' rights
"This initiative is a good example of how the EU should operate. It concentrates on the importance of sharing advice and assistance among countries that need it. It recognises sovereignty while adding value by sharing experience and improving cross border co-operation.
Miss McIntyre criticised UKIP MEPs who voted against the proposals, saying: "I was horrified to hear them defending tax avoidance and in effect condoning breaking the law," she said.