Civil Penalty for Illegal Employment

Q: What is a Civil Penalty?

A civil penalty is a fine that can be imposed under the prevention of illegal working legislation. Civil penalties are issued by the Home Office once they have discovered that an employer is employing a person who does not have permission to work in the UK.

Q: What is the impact of a Civil Penalty?

As well as being liable for a large civil penalty,an employer who knew,or had reasonable cause to believe,that the employee did not have permission to work can face criminal sanctions under section 21 of the Immigration,Asylum and Nationality Act 2006.

Q: Can employers appeal a Civil Penalty?

In order to object to a civil penalty,the employer will need to complete an Objection Form and file this with the Home Office within 28 days of receiving the Civil Penalty Notice.

Employers found to be employing individuals who do not have the right to work in the UK risk receiving a civil penalty for each worker. If they are found to have known that the individual in question did not have the right to work, they can face prosecution.

What is a Civil Penalty?

A civil penalty is a fine that can be imposed under the prevention of illegal working legislation. Civil penalties are issued by the Home Office once they have discovered that an employer is employing a person who does not have permission to work in the UK.

Employers can avoid liability for a civil penalty if the correct right to work checks were carried out before the individual commenced employment.

If Home Office officials determine that the correct right to work checks were not carried out, the employer may be issued with a ‘Referral Notice’ which means their case will be sent to the Home Office for further consideration. As a result of this process the employer may receive one of the following notices:

a Civil Penalty Notice;
a Warning Notice; or
a No Action Notice.

A Civil Penalty Notice will be issued when the Home Office believes an employer is liable for a civil penalty for employing one or more individuals who do not have the right to work in the UK or who are working in breach of their conditions of stay. The Civil Penalty Notice will outline how much the employer must pay and the date by which it must be paid along with how they can object to the Civil Penalty Notice.

The amount payable

The amount of civil penalty due will depend on a number of factors such as whether the employer has been found to be employing workers illegally in the past and whether the employer generally complies with their duties to prevent illegal working.

The Home Office applies a sliding scale that takes into account the employer’s compliance record as well as any mitigating factors. This ranges from £45,000 for a first breach to £60,000 for repeat breaches. It may then be reduced if any mitigating factors apply.

Mitigating factors

If the employer has not carried out a right to work check in accordance with the Home Office’s guidance, and is therefore liable for a civil penalty, the Home Office will assess whether any of the following mitigating factors apply to the case before determining the amount of the penalty:

Reports – the Home Office will consider whether the employer has reported to the Home Office their suspicions about the right to work of one or more of their employees. If so, the amount of the civil penalty due will be reduced by £5,000;
Co-operation – if the employer has actively co-operated with the Home Office throughout the entirety of their investigations this mitigating factor could reduce the amount due by a further £5,000; and
Effective right to work processes – if the employer can demonstrate that they have effective document checking practices in place and that they have reported any suspicions to the Home Office and subsequently co-operated this mitigating factor will reduce the Civil Penalty Notice to a Warning Notice, meaning no payment will be due.

What is the impact of a Civil Penalty?

An employer and its employees could both face a number of significant consequences if issued with a Civil Penalty Notice. For example, as well as being liable for a large civil penalty, an employer who knew, or had reasonable cause to believe, that the employee did not have permission to work can face criminal sanctions under section 21 of the Immigration, Asylum and Nationality Act 2006. Company directors can be disqualified.

Those organisations that hold a sponsor licence should also be aware that the Home Office may revoke a sponsor licence and impose a 12 month cooling off period on a new application if they have encountered breaches of illegal working legislation. This means that the employer would no longer be able to sponsor any non-EEA nationals and would have to wait at least 12 months before they could reapply for a sponsor licence.

Can employers appeal?

Employers that have received a civil penalty can object to the Home Office or appeal to a County Court.

In order to object to a civil penalty, the employer will need to complete an Objection Form and file this with the Home Office within 28 days of receiving the Civil Penalty Notice. An Objection can only be made on certain grounds and additional supporting evidence should be submitted alongside the form.

In response to a civil penalty objection an employer may receive:

a Warning Notice;
an increase in the amount of penalty due;
a notification explaining that the civil penalty has been maintained;
a penalty reduction; or
notification that the penalty has been cancelled.

Once the objection has been determined, if the civil penalty is maintained an employer has the option to bring an appeal to the County Court within 28 days of the decision.

How our Immigration Solicitors can help

If you have been issued with a Referral Notice or a Civil Penalty Notice our immigration experts can offer advice and assistance with submitting the necessary information to the Home Office in response to an Information Request or as part of an objection. We can also offer advice as to whether the company is able to establish a statutory excuse.

We have helped numerous employers to defend themselves against civil penalties or reduce the amount of penalty imposed.

If you would like to object to a civil penalty or if you would just like to discuss your situation with a member of our team on a no-obligation basis, please contact us or complete the enquiry form below.