Fines for Illegal Working to Triple From 13 February 2024
Ch-ch-ch-changes! The Home Secretary’s announcement of its intention to increase maximum fines for employers caught employing individuals without lawful immigration status (‘illegal workers’), back in August 2023 was covered in our blog post here. The implementation of the new civil penalties regime is now almost upon us.
This post will cover when the new civil penalties regime will come into force, how it will apply, the steps that will be taken by the Home Office where an employer is considered liable for a civil penalty and the steps an employer can take in such a situation.
A Reminder of the New Civil Penalty Changes
Currently, the civil penalty for employing an illegal worker is a maximum of £15,000 per illegal worker, where this is the employer’s first offence. If the employer is a repeat offender, the maximum fine increases to £20,000 per illegal worker. It has been around 10 years since an increase in fines, with the current amounts having been brought in in 2014.
The Home Secretary on 07 August 2023 explained that there would be an increase to the civil penalty regime with the fine, for first time offenders, being a maximum of £45,000 per illegal worker. Repeat offenders will be subject to a maximum fine of £60,000 per illegal worker.
When Does the New Civil Penalty Regime Come into Effect?
The statutory instrument, The Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2024 was made on 23 January 2024. It explains that the amendments it makes to the civil penalties identified in the Order of 2008 will come into force either on “22nd January 2024 or, if later, on the twenty-first day after the day on which it [the Order] is made”. Given that the Order was made on 23 January 2024, the amendments to the civil penalty regime are therefore due to come into force 21 days after this date, on 13 February 2024. A new Code of Practice on preventing illegal working: Right to Work Scheme (‘Draft Code”) for employers, will also come into effect on that date and will be replacing the current Code of Practice issued in March 2022 (in force from 06 April 2022). The Draft Code can be found here, for employers who would like to understand the new regime in advance of it coming into effect.
Which Right to Work Checks Will the New Civil Penalty Regime Apply To?
The Draft Code explains that right to work checks carried out in the required manner before the implementation of the Code will be looked at by the Secretary of State in accordance with whichever version of the Code was in force at the time the right to work check was made. The Draft Code will be applicable to all right to work checks carried out from 13 February 2024 onwards. Importantly, this includes any follow up check which is required to maintain a statutory excuse, and this is the case even if the initial right to work check was conducted using a previous version of the Code which was current at the time of the check.
The Draft Code provides a list of the versions of the Code that have been in place so far and the dates which they cover on page 3. For example, it explains that the Code will not apply if the breach occurred on or after 06 April 2022 and before 13 February 2024, instead the Code published in March 2022 will apply. This would result in the fine applicable being the one listed in that code and not the new maximum fines. The new Code will therefore apply when looking at the civil penalty amount to be imposed where an employer has committed a breach on or after 13 February 2024 and in deciding the liability “where an initial check on a potential employee or repeat check on an existing employee is required on or after 13 February 2024 in order for [an employer] to establish or retain a statutory excuse.”
It is important to note that the Draft Code only covers civil penalties and does not cover any criminal sanctions that apply against employers who employ individuals they know or have a reasonable cause to believe are working illegally.
What Will Happen if the Home Office Thinks an Employer Is Employing Workers Illegally?
The Draft Code sets out the steps that will be taken when an employer is found employing an individual or individuals who are disqualified from working due to their immigration status.
- Civil Penalty Referral Notice – the employer may be served with this notice which tells them that their case is being referred to Home Office officials for liability for a civil penalty to be determined.
- Information Request – the Home Office will contact the employer, providing them with an opportunity to present further information and evidence of a statutory excuse which can be used to determine the employer’s liability. If an employer responds to the Information Request within 10 days this will be considered as “active co-operation with the process” and could importantly result in the level of the civil penalty being reduced.
- Decision – the Home Office will review all the available evidence and come to a conclusion as to the employer’s liability.
Where an employer is found liable, they will be issued with a Civil Penalty Notice. This will detail the reasons as to liability, the amount payable, the ways to pay such an amount and the information on how an employer may object to the penalty. The Civil Penalty Notice will be accompanied by a Statement of Case setting out the evidence and reasons for the Home Office’s decision.
A Warning Notice may be issued instead of a Civil Penalty Notice. This is a step down from a Civil Penalty Notice and it will state the reasons as to why the employer escaped a penalty being issued on this occasion. It is a formal warning and will be taken into account if an employer breaches the Scheme again.
If an employer is not found liable for a civil penalty, they will be issued with a No Action Notice. This will clarify that there will be no further action taken on this occasion and their case will be closed. This type of Notice will not be considered in the future for the purposes of calculating penalty amounts in the event of any future breach of the Right to Work Scheme.
What Happens if an Employer Accepts the Penalty?
Where an employer does not contest the penalty, they will be required to pay the specified amount by the date stated in the Civil Penalty Notice. There is the opportunity to have the amount reduced by 30% if full payment is made within 21 days. This is called the Faster Payment Option (“FPO”) and it is likely to make a significant difference given the steep increase in the penalties applicable from 13 February 2024. It is important to note that this option is only available to employers who are in receipt of their first penalty and it also cannot be paid in instalments.
Employers can request permission to pay the amount in instalments from the Home Office’s Shared Service Centre, where the FPO is not being used. This will mean the amount can be paid over a determined period, usually up to 24 months. Employers will, however, likely need to provide the reasons as to why they are unable to pay the full penalty amount in one go. It is likely that many employers might see themselves asking to pay in instalments, given the new regime.
Is It Possible for an Employer to Not Accept the Penalty?
Employers are able to object to the issuing of a Civil Penalty Notice. They will need to do so in writing within 28 days of the due date specified in the Notice. It is important to note that if an employer objects before the deadline, they will continue to be eligible for the FPO, where it is their first breach. Reasons as to the objection and evidence will need to be provided and will also need to be in line with one or more of the acceptable grounds for objection which are set out on the Objection Form. Such grounds are:
- the employer is not liable to pay the penalty (for example, due to not being the employer of the illegal worker or workers identified);
- the employer has a statutory excuse (they have undertaken the necessary right to work checks as prescribed);
- the level of the penalty is too high (owing to the Home Office having calculated the penalty incorrectly or the employer having evidence that they have met specified mitigating criteria which has not been accounted for by the Home Office).
The Home Office will consider the objection and will send an Objection Outcome Notice which will set out whether the penalty is to be cancelled, reduced or maintained. An employer that is required to still pay the amount, will have 21 days to pay in full from the date specified in the Objection Outcome Notice. The Draft Code does mention that a penalty can also be increased and in those circumstances, a new Civil Penalty Notice will be issued. An employer should expect a Statement of Case with each of the notices issued by the Home Office.
It is possible for an employer to appeal the Home Office’s decision in relation to their objection. In England, Wales and Northern Ireland an appeal can be made to the County Court and it must happen within 28 days of either the date specified on the Objection Outcome Notice or the date specified on the new Civil Penalty Notice. An appeal may only be made on the same grounds on which an employer could have objected to the penalty. It is important to note that if the appeal does not succeed, a court may order that the employer also pay the reasonable costs/expenses incurred by the Home Office in defending the appeal.
It is increasingly important that employers undertake the appropriate right to work checks and continue to do so as required throughout an employee’s employment. If you would like any general or specific support in ensuring that you are conducting your right to work checks appropriately, then please get in touch with one of our immigration barristers and/or seek expert employment advice.
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