As a UK employer you are under a duty to prevent illegal working by carrying out right to work document checks confirming all of your employees are lawfully allowed to work in the UK and undertake the work on offer.
Failure to carry out these checks correctly or failing to carry them out at all can result in Home Office enforcement action, including a substantial fine of up to £20,000 per illegal worker – known as a civil penalty – and potentially criminal prosecution.
Home Office enforcement of illegal employment
If the Home Offices alleges a breach of your right to work duties, your business will be issued with a notice informing you that your case is being referred to the Civil Penalty Compliance Team for consideration of your liability.
Depending on how your case proceeds with the Civil Penalty Compliance Team, you could be issued with one of the following:
- Civil penalty notice
In the event that you are found to be liable you will be issued with a civil penalty notice. This will set out the total amount that you are required to pay and the date by which payment must be made.
A civil penalty is calculated on the basis of a sliding scale, taking into account any compliance record, the severity of the breach and any mitigating factors. In so doing reference will be made to the ‘Code of Practice on preventing illegal working: civil penalty scheme for employers’. The maximum level of fine is £20,000 per illegal worker.
- Warning notice
In the event that you have no ‘statutory excuse’ but have met all of the mitigating factors, and you have not been issued with either a civil penalty notice or warning notice within the last three years, you may receive a formal warning notice.
A statutory excuse applies where you can prove you correctly carried out prescribed document checks on all potential employees as well as existing employees holding temporary permission to work.
- No action notice
In the event that you have established a statutory excuse by showing that you have correctly carried out prescribed document checks, you will be issued with a no action notice. Further, if you are able to satisfy officials during an enforcement visit that you have correctly carried out the prescribed document checks, you will be issued with a no action notice rather than a referral notice.
Challenging a civil penalty
How you engage with the Home Office in response to enforcement action will be critical in mitigating the penalties.
Taking professional legal advice as soon as you become aware of Home Office action will help you to understand your options and consider which option – i.e. whether to challenge the fine, or to settle – would make the most financial sense for your business, and to take the required action within the limited timescales.
You have 28 days from the date given in your notice to object and – except where a civil penalty has been increased following an unsuccessful objection when you may raise a new objection or proceed directly to an appeal – you must exercise your objection against a penalty before you appeal to a civil court.
Challenging a civil penalty by way of objection
You have a right to object to any civil penalty notice issued against you on the following grounds:
- you are not liable to pay the penalty, e.g., you are not the employer of the illegal worker(s) identified.
- you have a statutory excuse, i.e.; you correctly carried out the prescribed document checks.
- the level of penalty is too high, e.g., the penalty has been miscalculated or there are mitigating factors which have not been taken into account.
Any one mitigating factor, if applied, can reduce a penalty by £5,000. Mitigating factors include:
- evidence of reporting suspected illegal workers
- evidence of active cooperation
- evidence of effective document checking practices.
Your liability may be reduced to the minimum level of a warning notice. However, there is a risk that you could be issued with a new civil penalty notice increasing your liability. The Home Office may also issue an objection outcome notice maintaining, reducing or cancelling the penalty.
Challenging a civil penalty by way of appeal
You may appeal to a civil court against any objection outcome or, alternatively, if you have not been informed of a decision on your objection within 28 days. You must lodge your appeal within 28 days from the date given in your notice to do so, unless a longer period has been agreed. Your grounds for appeal are identical to those for objecting to any civil penalty notice.
If the appeal is successful the court may either cancel or reduce the civil penalty. The court may also order that the Home Office pay your legal costs. Equally, however, in the event that your appeal is dismissed, you may be liable to pay any costs incurred by the Home Office in defending your appeal.
Fast payment option or payment by instalments
In the event that a challenge is unlikely to be effective, it may make financial sense to settle the fine within 21 days of the specified due date, as this will reduce your liability by 30%.
This discounted option does not apply if, within the previous three years, you have been found to be employing illegal workers for whom you did not have a statutory excuse.
It may also be possible to negotiate with the Home Office to make payments by instalments, although no discount will apply.
Enforcement and other consequences of a civil penalty
If you do not pay your civil penalty in full, or by instalments, the Home Office may commence enforcement action against you. This includes action in the civil court to recover the unpaid penalty.
Any enforcement action taken against you or your business may have an adverse impact on your ability to obtain credit in the future and to act in the capacity of a director in a company. A civil penalty can also affect your ability to sponsor migrants who come to the UK or to hold a licence to employ overseas workers.
Your business may be at risk from serious reputational damage, particularly as the Home Office annually publishes the identity of employers of illegal workers and the total amount of the fine issued.
Should I seek legal advice when challenging a civil penalty?
If the Home Office alleges your business has been employing someone who does not hold the right to work in the UK, and proceeds to issue a fine under the Immigration, Asylum and Nationality Act 2006, it may be possible to challenge the civil penalty to have the fine either reduced or cancelled.
Seek legal advice immediately to understand your options and ensure you are following the required Home Office protocol.
Your legal adviser can also help you to put in place effective document checking practices to prevent any future breaches under the civil penalty immigration regime.
The matters contained in this article are intended to be for information purposes only. This article does not constitute legal advice and should not be treated as such. Before acting on any of the information contained herein, expert legal advice should be sought.