Civil Penalty

Have you received a Civil Penalty for Employing Illegal Workers?

We can help you decide your next steps.

Civil Penalty

Civil penalties damage businesses and reputations. It only takes one illegal worker being employed for any amount of time for the Home Office to impose a £20,000 penalty on the owner of the business.

Civil penalties remain a substantial source of revenue for the Home Office, with both small and large businesses at risk of allegations of illegal working.

As well as the obligation to pay a substantial fine, a civil penalty may result in criminal prosecution against the owner, enforced debt action, a County Court judgment, Sponsor Licence revocation, adverse impact on the ability to obtain future credit, disqualification of company directors or the business being forced to cease trading.

The Home Office also publishes an annual list of all the names of UK businesses that have been issued with civil penalties. This can attract negative press coverage, impacting profit, credibility and reputation.

We can help

As a team of immigration lawyers and former Home Office employees, DavidsonMorris has an established reputation for leading successful appeals against civil penalties on behalf of UK employers, helping to mitigate the financial, operational and reputational damage of being fined for employing workers illegally.

We offer a fixed fee assessment at the initial stage of the civil penalty process, enabling you to understand your options and determine which course of action will result in minimal financial loss for your business.

We are also highly experienced in identifying grounds for challenge where the Home Office has acted unlawfully in issuing the fine, for example when conducting an immigration investigation or site inspection (‘raid’) or when taking enforcement action.

What is a Civil Penalty?

Civil penalty notices are issued by the Home Office to employers found to have failed in their duties under the prevention of illegal working regime.

All UK employers are required by law to ensure that all workers are eligible to work in the UK and to undertake the job they are being employed to do. Employers meet this requirement by conducting Right to Work document checks before each worker starts employment, and carrying out follow-up checks if the individual has time-limited permission to work, for example under a points-based work visa. The employer also has to retain certain records of the document checks for inspection on request.

If you are found by the Home Office to be employing a migrant worker illegally, and are unable to establish a statutory excuse by having previously carried out a prescribed right to work check, you may be issued with a Civil Penalty Notice. Under section 15(2) of the Immigration, Asylum and Nationality Act (IANA) 2006, this notice will set out the total amount that you are liable to pay and the date by which that payment must be made.

If you employ someone without the right to undertake work in the UK or to do the job role on offer, you may incur a civil penalty of as much as £20,000 per illegal worker. You may be liable to pay a civil penalty for illegal working if you have failed to conduct a right to work check, either correctly or at all. It could also be either where you have carried out a check but you knew, or it was reasonably apparent, that the documentation was not genuine, this did not rightfully belong to the employee or the work on offer was not permitted.

In addition to the significant financial penalty, employers found to be in breach of their duties could also face criminal prosecution, among many other negative ramifications.

Taking preventative compliance measures is the most effective way to avoid falling foul of immigration breaches, but if you are facing immigration enforcement action and a possible civil penalty notice for illegal working, it can be helpful to understand what the Home Office process is before you decide your next steps.

How is a civil penalty for illegal working calculated?

The Home Office is responsible for determining the amount of any civil penalty for illegal working for which you may be liable to pay. Assessed on a case-by-case basis, this will be calculated using a sliding scale, taking into account your history of compliance as an employer in respect of right to work checks and whether you qualify for a penalty reduction by providing evidence that you have met any or all of the following 3 mitigating factors:

  • evidence of reporting suspected illegal workers: where there is proof that you have already reported the suspected illegal worker(s) to the Home Office
  • evidence of active cooperation: where there is proof that you have actively co-operated with the Home Office throughout the investigation
  • evidence of effective document checking practices: where there is proof that you have effective practices in place when it comes to checking employees’ right to work.

 

For a first breach in a 3-year period, the starting penalty will be £15,000 per illegal worker, before any reductions are applied, whilst for a second or subsequent breach, the starting point is £20,000. If any one of the first 2 mitigating factors apply, these will reduce any potential penalty by £5,000. If you are able to show that you have reported your suspicions about the illegal worker(s), actively co-operated with the Home Office ‘and’ have effective practices in place — and provided you have not been penalised for employing illegal workers within the last 3 years — the civil penalty will be reduced to a Warning Notice.

 

What do I do if I have received a Civil Penalty?

If you are found to be employing an illegal worker, and have been issued with a notice of a potential civil penalty, known as a Referral Notice, the details of your case will be referred for consideration under the civil penalty scheme in the context of any breach of the IANA.

The Referral Notice will explain how your case will be considered and the possible outcomes. It will also set out the date(s) on which the alleged breach was encountered. If you receive a Referral Notice, you are advised to consult “The employer’s guide to the administration of the civil penalty scheme”. Issued by the Home Office, this guidance sets out in detail how the civil penalty scheme is administered, including the different documents that you may receive and the deadlines relevant to each stage of the process.

If you have been issued a civil penalty, you have three options: you can object to the fine; or you can submit a request to the Home Office for a payment plan; or you can pay the penalty in full.

Whichever option you proceed with, you have only 28 days to respond to the Home Office. This deadline is fixed and cannot be extended.

It is crucial at this stage to obtain early, specialised legal advice to understand the next steps available to you and which option is the best course of action for your situation.

Our UK immigration solicitors have extensive experience advising employers on the merits of their case and whether, on consideration of all the facts, there are grounds to challenge the fine or whether it makes better financial and commercial sense to pay the penalty.

There are a number of factors at play and employers should also be aware that should they decide to appeal a civil penalty, the Home Office has the right to issue an increased fine if the employer loses their appeal.

Stage 1 - Civil Penalty

The Home Office may conduct an unannounced site visit of your business premises after receiving an anonymous tip-off that illegal workers are employed on the premises. This tip-off could originate from a disgruntled employee or unhappy customer, and the Home Office is entitled to conduct a site visit without holding concrete evidence of illegal working taking place.

At the site visit, the Home Office will gather evidence of illegal working and then make a referral to the civil penalty compliance team.

On receipt of the referral and assessing the information, the civil penalty compliance team will issue an information request requesting the following information:

  • Confirmation as to whether you are the employer of the workers identified. If this is not so, details will be requested of the business employing the identified workers.
  • Confirmation as to whether right to work document checks have been carried out and when they were carried out.
  • Confirmation as to whether reports were made of suspected illegal workers.
  • Confirmation as to whether you employed the identified workers and when.

You will be given 10 days to return the completed information request response form and supporting documents.

The response to the information request plays a decisive role in the level of civil penalty issued and therefore instructing expert legal representation to prepare a detailed response is crucial at this stage.

The civil penalty compliance team will expect you to complete only the required information in the response form, and does not give you the opportunity to argue against the allegations.
We advise that representations providing a detailed defence against each allegation be submitted alongside the response form.

Stage 2 - Civil Penalty

On receipt of the response to the information request, the civil penalty compliance team consider four criteria when determining the level of civil penalty to issue.

The civil penalty compliance team may decide to issue a formal warning notice (with no penalty) or a reduced civil penalty if they are satisfied that successful mitigation has taken place as a result of the information provided in the response.

Civil penalties are issued by the civil penalty compliance team. You will have 28 days to make full payment, set up an instalment plan, or object to the penalty.

If you have not been found to be employing illegal workers within the last three years, you may be provided with the fast payment option in your civil penalty notice which entitles you to a 30% reduction in the penalty if payment is made in full within 21 days of the civil penalty notice issue date.

As the owner of a business, you will need to decide whether it is worth outlaying the costs on instructing legal representation to object to the civil penalty or whether you should pay the penalty.

This decision will depend on whether there are strong grounds to object to the allegations in the civil penalty notice, which will result in the penalty being reduced.

Challenging a Civil Penalty

Employers facing a civil penalty for illegal employment may be able to pursue an appeal. This can be to either lower the level of the original penalty, or to remove the penalty altogether. The level of the original penalty can however also be increased at the appeal stage.

The appeals process is complex and time sensitive. It takes careful and experienced assessment of the full circumstances, from the nature of the alleged breaches, the evidence being relied on and the conduct of Home Office enforcement officials during the investigation.

The Home Office guidance sets out how and when you may exercise the right to object to the imposition of a civil penalty for illegal working and also appeal to a court of law. You can object and appeal on the following grounds:

  • you are not liable to pay the civil penalty, for example, because you are not actually the employer of the illegal worker(s) in question
  • you have a statutory excuse, where you conducted a prescribed right to work check, or
  • the amount of the penalty is too high, where this has been miscalculated or you can show that you have met certain mitigating criteria which has not been taken into account.

 

An objection must be raised within 28 days by filing an Objection Form and any additional evidence. This can result in a Warning Notice, the upholding of the civil penalty, a penalty reduction, an increased penalty or the cancellation of the penalty. In cases where an objection is denied, you can appeal to the County Court within 28 days.

If the Home Office visits your business premises and you are able to establish a statutory excuse in respect of the illegal workers identified, no further action will be taken. You will not be issued with a Referral Notice, but will instead be served with a No Action Notice. A No Action Notice will not have an adverse impact in the event of any subsequent penalty. Equally, if a Civil Penalty Notice is cancelled following an objection or appeal, and not replaced by a Warning Notice, this will not be taken into account for any future breaches.

How to appeal a Civil Penalty

If you receive a civil penalty for illegal working, you have 28 days to pay the fine or submit an appeal. The appeal can either be to lower the level of the original penalty, or to remove the penalty altogether.

Challenges have to be made on specific grounds, within specific timeframes, and be supported by relevant documentary evidence. The approach you take should be dependent on your organisation’s circumstances and the level of the civil penalty notice you have received.

One important consideration is that the Home Office has the power to increase the level of the original penalty at the appeal stage, so you should only generally proceed with an appeal only where you are confident in the merit of your challenge following professional advice.

As an outline, the appeals process is generally made up of two key stages: first, taking professional advice on the merit of making an appeal, or whether in the circumstances (such as the nature of the breach), it would be advisable to pay the fine.  Our business immigration specialists are experienced in challenging civil penalty fines, and will assess your case before making a recommendation. If you decide to appeal, we will work with you to compile the objections and submit a response to the notice on your behalf within the 28 day period.

Grounds for objection  fall within the following:

  • The penalty relates to worker(s) who are not with your employment and you are therefore not liable for the penalty, or 
  • You are relying on a statutory excuse as you can evidence that you took appropriate actions to check for illegal workers and as such had no reason to suspect illegal working, or
  • The level of fine is unreasonable given your conduct through the investigation and your overall immigration compliance methods, as such the fine should be lowered. 

 

If the initial appeal is not successful, you can register an appeal with the County Court to have the penalty adjusted or repealed. This will involve a hearing where the evidence will be considered.

 

How and when must a civil penalty for illegal working be paid?

The amount you must pay and the final date for making payment will be set out in your Civil Penalty Notice. However, if you can pay the amount quickly, this may result in a discount. Equally, if you are struggling to pay, you may be able to pay by instalments.

Importantly, if you fail to pay your civil penalty in full, or object or appeal, by the specified due date, the penalty will be registered with the court, after which enforcement action may be immediately commenced. Equally, if you do not pay any instalment(s) on the agreed date(s), debt recovery enforcement action will again be taken.

The fast payment option

If you are able to make payment within 21 days of the date of your Civil Penalty Notice, the fast payment option will reduce the amount of your penalty by 30%. The reduced penalty amount and final date for making payment will be clearly shown in your notice.

If you object to the penalty before the deadline set out in your Civil Penalty Notice, you will still be eligible for the fast payment option. If, following your objection, you are required to pay a penalty, you will be issued with a fresh notice setting out a new date to pay your penalty at the lower amount. However, if you have previously been found to have employed illegal workers in the last 3 years, you will not be eligible to make a reduced payment.

Payment by instalments

If you cannot pay the civil penalty in a single lump sum, the Home Office may agree for you to pay your penalty by instalments instead, usually up to 24 months, although exceptionally as much as 36 months. However, in these circumstances, the penalty amount will not be reduced, where a fast payment option cannot be paid by instalments.

In order for any application to be considered, you must submit details of your ability to make payments over the instalment plan period, together with reasons as to why you cannot pay the full penalty within 28 days of the Civil Penalty Notice. Your request to pay by instalments will not affect the time limits for bringing an objection or an appeal.

 

Wider implications of civil penalties

Employing illegal workers can have very serious consequences for both you and your business, including but not limited to sizeable immigration civil penalties. Your business and employer-brand will be at serious risk from reputational damage, where the government publishes a quarterly report, listing the penalties given to employers in different geographical areas across the country. The report sets out the name and address of each business, together with the final value of each civil penalty for illegal working.

The imposition of a civil penalty for illegal working can also lead to any sponsor licence that you may have being downgraded or revoked. It could also impact your ability to obtain a sponsor licence in the future and result in disqualification for any company directors. Equally, if enforcement action is taken in the county court for non-payment of a penalty, this could have an adverse impact on your ability to act as a director.

Most importantly, however, you may be liable to criminal prosecution if you knew, or had reasonable cause to believe, that an employee did not have permission to undertake work in the UK or to do the job on offer. The offence of knowingly employing an illegal migrant worker is punishable by up to 5 years’ imprisonment, an unlimited fine, or even both.

If you have found yourself facing a possible civil penalty for illegal working, you should immediately seek expert advice from an immigration specialist. Your legal advisor can also help you to put in place compliant working practices when it comes to right to work checks, in this way helping to reduce the risk of another civil penalty in the future.

 

How to avoid civil penalties

All employers have a responsibility to prevent illegal working by carrying out prescribed right to work checks on all prospective employees, prior to their employment commencing, as well as follow-up checks on any existing employees with a time-limited right to work in the UK. By conducting a right to work check, and doing so in the correct way, this will minimise the risk of employing an illegal worker. Equally, where you can show that you have carried out a right to work check correctly, you will establish a statutory excuse against civil liability if you are subsequently found to be employing someone illegally.

There are various different ways in which you can conduct a right to work check, although much will depend on the nationality of the employee in question. For example, for all British and Irish nationals with valid passports, you can conduct a digital identity check using the services of an Identity Service Provider (IDSP) that offers Identity Document Validation Technology (IDVT). However, for EEA and Swiss nationals, and various other migrant workers, you will typically need a share code from the employee to access and view their right to work record using the online Right to Work Checking Service.

If an IDVT or online check are not possible for the employee in question, perhaps because their immigration status is not within scope of either of these two types of right to work checks, you will instead need to conduct an in-person manual document check. In instances where the employee cannot show either their documents or online immigration status, you must ask the Home Office to check a prospective or existing employee’s immigration status using the Employer Checking Service. This could be because the employee has either an outstanding application, review or appeal with the Home Office, where you will be sent a Positive Verification Notice if that person has an ongoing right to work in the UK.

It is absolutely vital that any employer, especially one who has already been penalised for illegal working, complies with the prescribed procedures as set out in “The code of practice on preventing illegal working”. This is constantly updated, with the latest version dated 6 April 2022. This is a statutory code which provides detailed guidance on how you may establish and retain a statutory excuse against liability for a civil penalty.

Need assistance?

DavidsonMorris provides a fixed fee assessment at Stage 1 and Stage 2 of the Civil Penalty process, enabling you to determine which option will result in minimal financial loss for your business. If you have received an information request or civil penalty, contact us.

Civil penalty FAQs

What is a civil penalty issued under UK immigration law?

Civil penalties are fines issued by the Home Office where an employer is found to be employing people illegally.

What happens if you get caught employing someone illegally in UK?

If you are found to have knowingly employed someone illegally, you face an unlimited fine and up to 5 years in prison.

How long do you go to jail for employing illegal workers?

You can be sentenced to up to 5 years in prison if you are found guilty of knowingly employing illegal workers.

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Thanks to the team at DavidsonMorris, we can move on with our name cleared and without the crippling financial hit of a civil penalty fine.”

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