January’s Employment Law Digest – How to protect the business from a £60,000 Civil Penalty for illegal working

The new legislation would see the fines increase from:

• £15,000 to £45,000 per illegal worker for a first breach
• £20,000 to £60,000 per illegal worker for repeat breaches (within 3 years)

And, since November 2023, we expected that the increase would be effective from 22 January 2024.  However, on 23 January 2024 the implementation date was pushed back to 13 February 2024, when the updated Code of Practice on preventing illegal working (“the Code”) used for calculating the penalty amount and determining liability for all initial and follow up right to work checks undertaken from 13 February 2024 will come in to force.

The Code can be accessed here.

In this article we aim to provide:

• A reminder of how to carry out a compliant right to work check and protect the business; and
• A summary of the civil penalty scheme and what employers can do to reduce and/or challenge a civil penalty notice.

Preventing illegal working fines

All employers have a responsibility to prevent those without lawful immigration status from working in the UK. This duty extends to making checks on employees regarding their immigration status prior to the start of their employment.

Pursuant to Section 15 of the Immigration Asylum and Nationality Act 2006 (the “Act”) the Secretary of State has the power to serve an employer with a notice requiring the payment of a penalty of a specified amount where they employ a person who is:

• Subject to immigration control
• Aged over 16
• Not allowed to carry out the work in question because either they have not been granted leave to enter or remain in the UK, or because their leave to enter or remain in the UK:
  • Is invalid
  • Has ceased to have effect
  • Or it is subject to a condition preventing them from accepting the employment.

What is a compliant right to work check?

In order to establish a defence against a civil penalty (referred to as the statutory excuse) an employer must carry out one of the following:

• A manual right to work check (all citizens)
• A right to work check via the services of an Identity Service Provider (“IDSP”) (British or Irish citizens only)
• A Home Office online right to work check (non-British and non-Irish citizens with evisas, biometric residence cards (“BRCs”), biometric residence permits (“BRPs”) and frontier worker permits (“FWPs”)

Both before their employment starts and, if an individual’s right to work is time-limited, shortly before the time limited right to work comes to an end.

Generally speaking, the three types of right to work checks are:

• The 3 step manual document based right to work check (obtain, check, copy) using either List A or List B of the acceptable documents. This is still relevant where online right to work checks are not required;
• Using an IDSP to complete the digital identity verification element of right to work checks for British and Irish citizens who hold a valid passport (including Irish passport cards), but employers remain responsible for obtaining and retaining evidence from the IDSP;
• The Employer’s side of the Home Office’s online right to work check service  (as of 6 April) must be used for those with BRCs, BRPs and FWPs. This requires a share code from the individual and employers need to check the results of the online right to work check (which includes a photograph) against the individual presenting themselves for work.

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Take Me There

There is also the Employer Checking Service. (“ECS”) Which is very different to the online right to work check.  This needs to be used in certain circumstances, including when the prospective or current employee presents information, indicating that they have an outstanding application for permission to stay in the UK with the Home Office, which was made before their previous permission expired.  Where a Positive Verification Notice (“PVN”) is received the individual with a time limited right to work for 6 months to the expiry date of the PVN check and the employer must conduct a follow up right to work check.

The civil penalty scheme

There is deemed to be a breach of the Act if the employer is found to be employing a person who is either; disqualified from working by virtue of their immigration status or, without the requisite permission to work in their particular role attached to their immigration permission.

Should an employer be suspected of breaching the Act, they may be served with a ‘Civil Penalty Referral Notice’ and the employer will be contacted directly by the Home Office with an Information Request which should be responded to within 10 days or within the period set out.

For a first breach, mitigating factors apply if the employer:

1. Can evidence that it has already reported the suspected illegal worker to the Home Office, in which case the £45,000 penalty is decreased by £5,000 per worker; and
2. “Actively cooperates” with the Home Office, which triggers a further reduction of £5,000.

If both 1 and 2 apply, and there is also evidence that the employer has effective right to work checking practices, the Home Office will issue a warning notice.

For a repeat breach where the employer has done 1 and 2 above, the same deductions will be applied to the £60,000 penalty and a civil penalty notice will be issued.

The Home Office will then consider whether:

• The employer has a statutory excuse;
• Whether they have been found to be employing an illegal worker before; and
• Whether any mitigating factors apply.

Of course, in the event that an employer receives a Civil Penalty Notice, there are options open to it.  They can:

• Pay the penalty without objection by the date specified or using the faster payment option (within 21 days of the notice) in full to secure a 30% reduction;
• Object on the ground(s) that they are not liable to pay the penalty, have a statutory excuse or consider the level of the penalty to be too high, in writing within 28 days of the due date specified in the notice; or
• (Following an unsuccessful objection) Appeal to the County Court or the Sheriff Court (Scotland only) within 28 days of either the date specified on the objection outcome notice, or the date specified on the new Civil Penalty Notice.

Employers should note though that any failure to pay after this may result in enforcement action.

Practical tips

If the ball is not already rolling, to protect themselves against the significant costs of potential civil penalties (potential criminal sanctions and reputational damage) employers are well advised to, as soon as possible:

• Review their right to work check practices and policies;
• Ensure that the correct right to work check is being carried out on each occasion (manual/IDSP/online);
• Consider right to work training / refresher training for recruiting staff and managers; and
• Consider an audit of its right to work records and consider any remedial steps that might need to be taken.

How can we help?

We have a webinar next month covering this topic in detail. Flora Mewies, Partner and Head of Immigration, and Gillian Burns, Managing Associate in the Immigration team, will be sharing hints and tips on how businesses can avoid being on the receiving end of a civil penalty for employing an illegal worker.

Home Office visits and requests for information are increasing and with the financial risk for employers increasing to £60,000 per illegal worker, there’s no better time for employers to turn their attention to the important matter of compliance.

Ward Hadaway regularly provide bespoke right to work training to clients (remotely or in person) and support employers with the more complex right to work check queries.  We also have extensive experience in assisting employers with responding to Requests for Information, objections and appeals of civil penalty notices so, if you would like the benefit of expert guidance, please do reach out to one of our Specialist Immigration Lawyers.