Section A: What is a Civil Penalty under the Immigration, Asylum and Nationality Act 2006?
If your business has received a Civil Penalty for immigration under the 2006 Act, it is important to seek legal advice early on the options open to you. Depending on the circumstances, it may be possible to secure a reduction where mitigation applies or the calculation is shown to be wrong, or you may have grounds to mount a successful appeal to cancel the fine.
The Home Office also has the power to increase the level of the original penalty at the objection stage, so it is important to proceed with an objection only where you are confident in the merit of your challenge following professional advice.
All UK employers are required by law under Section 15 of the Immigration, Asylum and Nationality Act 2006 to ensure every individual working for them has permission to work in the UK. This obligation is met through effective Right to Work checks carried out before employment begins and, where relevant, repeated during employment. Through the civil penalty regime, the Home Office can impose financial sanctions on employers that are found to have employed a person who is working in breach of immigration conditions.
Where employers are found to be in breach, a civil penalty for illegal working may be issued. Civil penalty fines for illegal working now start from £45,000 per illegal worker for a first breach and up to £60,000 per worker for repeat breaches. These figures apply per worker, which means exposure escalates quickly where multiple individuals are involved.
To reach a penalty decision, the Home Office first assesses whether illegal working has taken place and whether the employer has a statutory excuse. Enforcement action can begin in several ways. Intelligence may come from routine data-sharing with other government bodies, anonymous reports or inconsistencies flagged during sponsor licence assessments. Enforcement officers can then carry out unannounced visits, request identity documents, interview staff and inspect HR, payroll and scheduling records. Any gaps in document retention or inconsistent explanations often shape how the Home Office views overall compliance.
Following a visit, the Home Office may seek additional information. If concerns remain, a penalty consideration process begins. The Home Office assesses the evidence against three core questions: whether the individual was working illegally, whether the employer carried out compliant right to work checks and whether any mitigating factors should be applied. Where liability is established and no statutory excuse exists, a civil penalty notice is issued.
A civil penalty is not only a financial sanction. It becomes a formal record of immigration non-compliance that is held on Home Office systems and can affect future assessments, including sponsor licensing, renewal applications and compliance audits. Because the implications reach far beyond the fine itself, early analysis of the notice and the evidence behind it is important.
| Stage | What the Home Office does | What the employer should expect |
|---|---|---|
| 1. Intelligence and risk flag | Receives information from data sharing, whistleblowers or other agencies and identifies potential illegal working. | No direct contact at this point, but the business may already be on a risk list for future action. |
| 2. Compliance or enforcement visit | Attends business premises, checks who is working, inspects documents and conducts staff interviews. | Short notice or unannounced visit, pressure on managers to answer questions and produce right to work records. |
| 3. Evidence review | Analyses documents, interview notes and HR data to decide whether illegal working has occurred. | Requests for further information or copies of records, often under tight deadlines. |
| 4. Penalty consideration | Applies the civil penalty framework, assesses statutory excuse and decides whether to issue a notice. | No direct engagement unless further clarification is sought before the decision is finalised. |
| 5. Civil penalty notice issued | Serves a formal notice setting out liability, fine, deadlines and objection rights. | Receipt of the notice, internal escalation and a 28-day window to decide whether to pay, object or prepare for appeal. |
DavidsonMorris Strategic Insight
The provisions of the Immigration, Asylum and Nationality Act 2006 apply to every organisation that employs someone in the UK. Regardless of your size, and whether you have one employee or one thousand or more, the same obligations apply. Even if you do not employ foreign nationals, you still need to verify the right to work status of everyone you employ, including British citizens. You also need records to show that checks were carried out at the correct time and in the correct way. A consistent, process-led approach helps ensure you remain ready for Home Office scrutiny, whether the audit is digital or on site.
Section B: Fine Levels
The civil penalty regime is designed to deter illegal working by imposing significant financial consequences on employers that fail to meet their right to work obligations. The current penalty levels are substantially higher than in previous years, which means the financial risk for businesses has increased. The Home Office applies a structured calculation model that looks at the number of workers involved, the employer’s compliance history and any mitigation claimed.
The starting point is the maximum penalty. For a first breach, the fine is up to £45,000 per illegal worker. For a repeat breach, the fine can rise to £60,000 per worker. The distinction between first and repeat liability rests on whether the employer has previously been issued with a penalty or warning within the past three years for illegal working. If so, the higher repeat rate applies automatically.
The total amount is then calculated on a per-worker basis. This means that liability rises quickly where multiple workers are involved. A case involving three workers would lead to a starting figure of £135,000 for a first breach or £180,000 for a repeat breach before any reductions are applied. Employers often underestimate how steep these totals become once several workers are cited in the notice.
he Home Office then considers whether any mitigation applies. Under the Code, a £5,000 reduction per illegal worker is available for employers who self-report suspected illegal working before discovery and obtain a Home Office reference, and a further £5,000 reduction per worker is available where the employer actively cooperates during the investigation, for example by providing complete records within the requested timeframe. For a first breach only, if the employer can also demonstrate effective right to work systems, the Home Office may issue a Warning Notice instead of a financial penalty. Outside these defined criteria, mitigation is rarely applied.
| Breach type / scenario | Maximum penalty per worker | Example total (workers) | Indicative total penalty |
|---|---|---|---|
| First breach – 1 illegal worker | Up to £45,000 | 1 worker | Up to £45,000 |
| First breach – 3 illegal workers | Up to £45,000 per worker | 3 workers | Up to £135,000 |
| Repeat breach – 1 illegal worker | Up to £60,000 | 1 worker | Up to £60,000 |
| Repeat breach – 3 illegal workers | Up to £60,000 per worker | 3 workers | Up to £180,000 |
| Fast Payment Option (first penalty only) | 30% reduction if paid in full within 21 days | Example: single worker first breach | Up to £31,500 instead of £45,000 |
For a first civil penalty, employers can access a 30% Fast Payment Option if the penalty is paid in full within 21 days of the date on the Civil Penalty Notice. The Fast Payment Option cannot be paid in instalments. If an employer objects in time and still remains liable for a penalty, a fresh 21-day Fast Payment window is given from the date specified on the Objection Outcome Notice. It is therefore important to make the early payment decision with full clarity on whether a challenge has realistic prospects of success.
The calculation model leaves limited room for negotiation at the civil penalty stage, so the accuracy of right to work evidence is the main factor that influences the final figure. Employers that cannot produce clear records or that rely on inconsistent explanations are unlikely to secure meaningful reductions.
DavidsonMorris Strategic Insight
The headline fine levels are eye-watering, but in specific cases they’re not always fixed. Depending on how you respond to a civil penalty notice, it may be possible to secure a reduction. The Home Office calculation can sometimes be incorrect or incomplete, or you may be able to argue for mitigation if you have strong evidence. The key is to act quickly and make the most of the limited time you have before the Home Office deadline if you want to improve the outcome.
Section C: Options & Next Steps
Once a civil penalty notice has been issued, the next step is to decide how your organisation will respond. The notice sets out the alleged breach, the proposed fine and the deadline for action. The Home Office gives employers 28 days, calculated by reference to the due date specified in the Civil Penalty Notice, to either pay in full or submit a written objection. There is no flexibility around this timeline, so the choice needs to be considered quickly and supported by evidence.
The first option is to accept the penalty and pay in full. This approach is usually taken when the employer accepts liability and does not wish to challenge the calculation or the findings. Payment closes the matter from a penalty enforcement perspective, although the Home Office may still undertake compliance follow up, especially where sponsorship is involved. Employers that choose this route should keep evidence of payment on file, as the penalty remains on record and may be reviewed during future audits.
The second option is to accept liability but request a payment plan. The Home Office may agree to instalments where the employer can show that immediate payment would create financial difficulty. Payment plans do not reduce the fine and interest can accrue if deadlines within the plan are missed. This option is mainly used by smaller organisations or those facing cash flow constraints.
The third option is to object to the penalty. An objection invites the Home Office to reconsider the decision on the basis of the evidence supplied. Grounds include challenging liability, identifying calculation errors or highlighting procedural issues. Objections need supporting evidence such as right to work documentation, HR records or payroll data. The Home Office will review the materials and issue an objection decision which may confirm the fine, reduce the amount or cancel the penalty entirely. It can also increase the fine if new information suggests the original calculation was too low, so objections should only be pursued where the organisation has a strong factual basis.
If the objection is unsuccessful, there is a further right of appeal to the County Court. The court reviews the case afresh and can consider both factual and legal arguments. Appeals require detailed preparation, clear evidential bundles and compliance with strict court deadlines. This route is generally taken where the financial impact is significant or where the sponsor licence position creates wider risks for the business.
Choosing between these options depends on the scale of the penalty, the strength of the organisation’s right to work evidence and the consequences for sponsorship and future immigration compliance. Most employers take initial advice before deciding, given the speed of the process and the potential for the Home Office to escalate matters if deadlines are missed.
| Option | When it is usually considered | Pros | Risks / downsides |
|---|---|---|---|
| Pay penalty in full | Liability is accepted and there are no clear grounds to dispute the findings or calculation. | Closes the penalty quickly, avoids further dispute with the Home Office and can reduce internal time spent on the case. | No chance to reduce or cancel the penalty and the full amount becomes a recorded illegal working breach. |
| Pay under a payment plan | The business accepts liability but cannot meet the full amount in a single payment due to cash flow constraints. | Spreads the cost over time, can ease immediate financial pressure and avoids enforcement action for non-payment. | No reduction in the total fine, missed instalments can trigger further action and interest may accrue. |
| Object to the penalty | There is evidence of a statutory excuse, calculation error or procedural unfairness in the Home Office decision. | Creates an opportunity for the Home Office to cancel or reduce the penalty and to correct errors. | Objection needs strong evidence and careful drafting, the Home Office can increase the fine if new concerns arise, early payment discount is usually lost. |
| Appeal to the County Court | The objection has failed and the financial or sponsor impact is significant enough to justify litigation. | Independent review of the case, potential to cancel or reduce the penalty and clarify disputed points. | Legal costs, time demands on management, cost risk if unsuccessful and public hearing with possible adverse publicity. |
DavidsonMorris Strategic Insight
The initial 28-day deadline can cause panic and force quick decisions, which is very much by design on the Home Office’s part. What happens in those first few days sets the potential for you to improve the outcome. That means understanding your position in light of the evidence and circumstances, and being clear on the options open to you and the risk profile of each of these. Whatever you do, avoid delaying action. Delay usually narrows your choices and can lead to harsher penalties as the case progresses without engagement. Silence is also often treated as indifference to compliance, which can worsen the outcome.
Section D: Wider Impact of a Civil Penalty
A civil penalty rarely sits in isolation. Once the Home Office records an illegal working breach, the consequences tend to spread across several areas of the business. The most immediate impact is the financial cost, but the wider effects on sponsorship, reputation and operational stability often prove more disruptive over time. Employers that rely on sponsored workers or operate in regulated sectors usually feel these pressures most.
For sponsors, the Home Office treats a civil penalty as a clear indicator of weak compliance. The organisation may be classed as high risk, triggering further enquiries or a full compliance audit. The Home Office can suspend the licence while it investigates, which affects the ability to assign Certificates of Sponsorship and can delay ongoing recruitment. If issues are widespread or evidence suggests systemic failings, revocation becomes a real risk. A revoked licence leads to sponsored workers losing their permission to work for the organisation, which can result in significant loss of staff and disruption to operations.
The reputational impact can also be damaging. The Home Office publishes the names of employers that receive civil penalties, and this list is used by journalists, competitors and regulators. Publicity around illegal working can reduce client confidence and raise questions during tenders or contract renewals. For businesses in sectors that require ongoing regulatory approval, any indication of poor governance can prompt further scrutiny from oversight bodies.
There are also practical and financial consequences. Responding to a civil penalty notice requires substantial management time spent gathering evidence, reviewing right to work processes and preparing submissions. Businesses often need to invest in training, audits or new systems to close gaps identified during the case. These costs can exceed the penalty amount, particularly for organisations with multiple sites or complex staffing structures.
Future immigration or licensing applications can be affected. A history of illegal working enforcement usually features in Home Office risk assessments and can slow down decisions or prompt additional checks. Where a business later seeks a new sponsor licence or renewal, the civil penalty will be taken into account when assessing trustworthiness and capacity to meet sponsor duties.
Because the wider impact can persist long after the fine is paid, most employers treat a civil penalty as a signal to strengthen their compliance framework rather than a one-off enforcement outcome.
DavidsonMorris Strategic Insight
The penalty is only the start of the Home Office’s interest. Once an organisation appears on the system as having employed an illegal worker, sponsor caseworkers and compliance teams usually take a deeper look. Many employers underestimate how quickly this can escalate. A civil penalty can lead to urgent compliance audits or trigger a licence downgrade if the Home Office considers that processes are weak. You may also attract the attention of regulators or clients that run checks when your name appears on the public penalty list, which can affect tenders, renewals and ongoing commercial relationships.
Section E: Received a Civil Penalty Notice?
A civil penalty notice triggers a short period in which your business needs to understand the findings, gather evidence and decide how to respond. The Home Office expects employers to act promptly. Any delay can reduce the options available and can create further risk where sponsorship is involved. The first step is to identify the deadline. The 28-day timeframe starts from the date on the notice, not the date it was opened or passed to HR, so it is important to confirm this immediately.
The next step is to secure all relevant right to work evidence. Copies of identity documents, share code printouts, emails, onboarding forms and diary entries should be preserved. If checks were carried out on an IDVT provider’s platform, the audit trail needs to be retrieved. Payroll data, rotas and employment contracts may also be relevant. Collecting this material early gives the organisation a clearer sense of whether a statutory excuse exists or whether there are gaps that need explaining.
The organisation should then carry out a fact-finding exercise. This involves checking that the individuals named in the notice are accurately identified, confirming their roles and verifying the dates the Home Office has used. In some cases, the Home Office may have misunderstood the working arrangement or misinterpreted a visa condition. Establishing the correct timeline is essential for assessing liability and preparing any later objection.
Once the evidence has been reviewed, the organisation can assess its position. If the right to work checks were carried out correctly and can be evidenced, there may be grounds to seek cancellation. If mistakes were made but mitigation exists, a reduction may be possible. If there is no viable defence, the business may prefer early payment to limit the financial impact. Where sponsorship is involved, the wider risks may influence the decision, especially if the Home Office has highlighted systemic concerns.
The final step is to decide the response route. This could be early payment, an objection supported by evidence or preparation for a possible appeal. Most employers take advice at this stage to avoid errors that could weaken their case. Because the Home Office has the power to increase the fine at the objection stage if new concerns emerge, the decision should be made carefully and only after the full evidence has been reviewed.
DavidsonMorris Strategic Insight
The first 48 hours after receiving a civil penalty notice will shape everything that follows. A professional, forensic response in the first week signals to the Home Office that you are engaged with the process, so if handled well, this early phase can be the best opportunity to secure as favourable an outcome as possible in the circumstances.
Section F: Summary
A civil penalty notice is more than a demand for payment. It signals that the Home Office has identified concerns about your organisation’s compliance with its right to work duties and will treat those findings as an indicator of wider risk. The direct financial impact can be significant, but the operational and reputational effects often carry greater long-term consequences, particularly for sponsors and employers with ongoing recruitment needs.
Dealing with a penalty requires a structured approach. Understanding the Home Office’s findings, gathering all relevant evidence and assessing whether a statutory excuse exists will help inform whether the business should pay early, object or prepare for an appeal. Each option carries implications for future audits and sponsor oversight, so the decision needs to be made with clarity on both the immediate and longer-term risks.
For most employers, the experience highlights the importance of consistent right to work checks and clear internal processes. Regular auditing, accurate record keeping and effective oversight across all locations reduce the likelihood of future enforcement action and provide a stronger basis for defending any allegation of illegal working.
Section G: Need Assistance?
Civil penalty cases move quickly and the consequences can escalate if the response is incomplete or poorly evidenced. Many employers only discover the gaps in their right to work procedures once the Home Office has already taken enforcement action, which is why early advice is worthwhile. A review of the notice, the underlying evidence and the organisation’s compliance position can clarify whether a challenge has realistic prospects or whether early settlement will limit financial and operational risk.
Our team advises employers on the full range of civil penalty and illegal working matters. We prepare objections, manage appeals, review right to work records and support businesses facing sponsor licence scrutiny as a result of a penalty. Our experience includes acting for organisations across multiple sectors, including those with complex staffing arrangements or multi-site operations where consistency of checks is harder to maintain. We also support employers that have received a penalty during a period of restructuring or rapid growth where controls have not kept pace with recruitment activity.
If you have received a civil penalty or are unsure how the notice affects your sponsor licence, we can assess your situation and explain the options available. For specialist guidance, contact us.
Section H: FAQs
Can a civil penalty be reduced?
A penalty can be reduced where the employer can show a statutory excuse, partial compliance or relevant mitigation. Early payment can also lead to a discount. Any reduction depends on clear evidence, and the Home Office takes a strict approach when assessing eligibility for adjustments.
What if the worker presented false documents?
If the documents would have satisfied a compliant right to work check and there were no obvious signs that they were false, the employer may still hold a statutory excuse. The Home Office will assess whether a reasonable person would have detected the issue during a standard check supported by the guidance in place at the time.
Does paying the penalty end the matter?
Payment closes the enforcement action for that penalty, but the record of non-compliance remains on Home Office systems. This can lead to future scrutiny, especially if the organisation is a sponsor or later applies for a licence. Payment therefore resolves the fine but not the wider compliance concerns.
Will the penalty be published?
The Home Office publishes the names of employers that have been issued with a civil penalty. The list is accessible to the public and is often used by journalists, regulators and procurement teams when assessing governance standards.
Can directors or managers be held personally liable?
Personal liability can arise where the Home Office considers that a director or manager knew, or had reasonable cause to believe, that a person was working illegally. In serious or repeated cases the Home Office can pursue criminal charges or refer the individual for disqualification proceedings.
What counts as a repeat breach?
A repeat breach arises where the employer has received a previous penalty or formal warning for illegal working within the past three years. Once this applies, the higher penalty band is used for all workers identified in the new notice.
Can you apply for or renew a sponsor licence if you have received a civil penalty?
A civil penalty does not automatically prevent a business from applying for or renewing a sponsor licence, but it is treated as a significant risk indicator. The Home Office may carry out additional checks and can refuse or delay the application if it is not satisfied that compliance standards are now in place.
Is it worth appealing to the County Court?
An appeal may be viable where there is strong evidence that the Home Office reached the wrong conclusion or misapplied the guidance. Appeals require detailed preparation and carry cost risks, so organisations usually proceed only when the penalty is substantial or when sponsor implications are significant.
Section I: Glossary
| Term | Definition |
|---|---|
| Civil penalty | A financial sanction issued by the Home Office to an employer that has been found to have employed a person who is working in breach of UK immigration law. |
| Illegal working | Work carried out by an individual who does not have permission to work in the UK or who is working in breach of the conditions attached to their visa. |
| Statutory excuse | A defence available to employers that have carried out compliant right to work checks. When the statutory excuse applies the employer is not liable for a civil penalty even if the worker is later found to be working illegally. |
| Reasonable cause to believe | A legal threshold used by the Home Office to assess whether an employer knew, or should have known, that a person was not permitted to work in the UK based on the information available at the time. |
| Right to work check | A check carried out by an employer to confirm that a prospective or existing employee has permission to work in the UK. Checks can be manual, online or carried out using an approved identity verification provider. |
| Sponsor licence | Authorisation granted by the Home Office that enables an organisation to sponsor overseas workers under routes such as Skilled Worker or Global Business Mobility. |
| Objection | A request asking the Home Office to reconsider its decision to issue a civil penalty. The objection must be submitted within the deadline stated in the notice and supported by evidence. |
| County Court appeal | The route of appeal available after an objection has been refused. The court reviews the case and can confirm, reduce or cancel the penalty depending on the evidence and arguments. |
| IDVT | Identity Document Verification Technology used by certified providers to support remote right to work checks for British and Irish citizens with valid passports. |
Section J: Additional Resources & Links
| Resource | Description | URL |
|---|---|---|
| GOV.UK – Penalties for illegal working | Official guidance on civil penalties for employers that employ workers without the right to work in the UK. | https://www.gov.uk/penalties-illegal-working |
| GOV.UK – Employer right to work checks guide | Home Office guidance explaining how to conduct compliant right to work checks and maintain a statutory excuse. | https://www.gov.uk/government/publications/employers-right-to-work-checks-employers-guide |
| GOV.UK – Sponsorship guidance for employers | Collection of sponsor guidance for organisations holding or applying for a worker sponsor licence. | https://www.gov.uk/government/collections/sponsorship-information-for-employers-and-educators |
| GOV.UK – Code of practice on preventing illegal working | Code of practice used to assess whether employers have carried out right to work checks correctly. | https://www.gov.uk/government/publications/code-of-practice-on-preventing-illegal-working |
