13 May 2016

Immigration – the civil penalty scheme

If employers are caught employing illegal workers, they may get a civil penalty of up to £20,000 for each illegal worker or, if convicted of the criminal offence of knowingly employing an individual without the appropriate permission, an unlimited fine and/or imprisonment for up to two years. While these punishments might seem stringent enough to make any employer vigilant, the civil penalty scheme under current immigration rules stretches far beyond fines and imprisonment.

This article aims to highlight the consequences of civil penalties for immigration offences, underscore the need for businesses to be vigilant and to share tips on how to challenge civil penalties.

Major consequences of a civil penalty for illegal employment

Financial penalty – in 2014, the maximum fine was increased from £10,000 to £20,000 for every illegal worker. Although the fines can be mitigated by certain factors, where an employer has employed several illegal workers, the resulting fines can be financially crippling.

Immigration applications – a civil penalty will be recorded on the Home Office systems. Where the employer is subject to immigration control, civil penalties can be taken into account when considering whether any future immigration applications should be refused on the basis of poor character, conduct, and associations.

Points-based system licence – a civil penalty will impact on an employer’s ability to apply for a sponsor licence under the PBS, and depending on whether the penalty was set at the maximum amount and when it was paid, it can lead to a mandatory refusal of a sponsor licence for a period of six to 12 months. It will also lead to the revocation of an employer’s sponsor licence if the amount payable for at least one worker stands at the maximum amount.

Publication of breaches – the Home Office publishes the details of civil penalties on its website each quarter. This could potentially damage the reputation and brand image built by a business over many years.

Revocation of business licences – although employing illegal workers was not the only offence in the case of East Lindsey District Council v Abu Hanif (t/a Zara’s Restaurant and Takeaway), employers should bear in mind that, even in the absence of a criminal conviction, breaches of immigration rules could lead to the loss of their business. In this case, the High Court ordered that the restaurant’s alcohol and late hours licence be revoked following the receipt of a civil penalty for employing illegal workers.

Disqualification of company directors – if a civil penalty becomes overdue and the Home Office is forced to commence enforcement action to recover the debt, this will adversely affect an individual’s ability to obtain credit in the future or to act in the capacity of a director in a company.

Practical tips for challenging the civil penalty:

Actively cooperate with the Home Office – attending interviews where requested, providing access to business premises and employment records and promptly giving full disclosure of any evidence to assist with investigations should ensure that the employer’s penalty is reduced by £5,000.

Check the worker’s right to work – at the outset, verify whether the allegations made by the Home Office are correct and that the employee has no right to work. Clearly, if the worker does have the right to work, then there should be no liability on the part of the employer.

Check the existence of an employment relationship – the Home Office operates a wide definition of employment in practice. For instance, if the Home Office catches a person who does not have the right to work at a business premises, that person would typically be treated as an employee and a civil penalty may follow. Always check whether the illegal worker was actually employed by the employer who was issued with a civil penalty.

Check whether interpreters were used in accordance with Home Office guidance – where the Home Office discovers a person at a business premises who does not have the necessary immigration paperwork, that person’s first language might not be English. Check whether an official interpreter attended the enforcement operation by the Home Office. It may also be possible to challenge any evidence relied on by the Home Office as being inadmissible and contrary to its own guidance on preventing illegal working.

Consider whether to appeal – an appeal is always worth pursuing because an appeal court has the power to reduce the size of the civil penalty. On appeal, the employer’s liability to pay based on its business profits and the owner’s personal expenditure could be considered. In addition, a lower penalty and instalment payments can be negotiated as part of the appeal process.

Most employers only have a general awareness of their duties in respect of their employees’ right to work. Employers can be caught out if they are unaware of the specific checks that must be carried out in respect of their employees’ rights to work – checks that can potentially provide a full defence against a civil penalty. Auditing your records can avoid costly penalties and potentially disastrous consequences for your business.

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