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Update on the Civil Penalty Scheme

In December 2014, the Home Office produced ‘An employer’s guide to right to work checks’ which applies, where an initial check on a potential employee or a repeat check on an existing employee is required on or after 16 May 2014. The Home Office will consider compliance with this guide when considering whether a statutory excuse has been established or retained in relation to employees for the purposes of the law on preventing illegal working.

As recommended in the ‘Code of Practice for employers: avoiding unlawful discrimination while preventing illegal working’, May 2014, conducting right to work checks on all prospective employees enables employers to not only protect themselves from liability for a civil penalty if the person is an ‘illegal worker’, but to also demonstrate non-discriminatory recruitment practices which safeguards against a potentially unlimited compensation claim if a discrimination complaint under the Equality Act 2010 is upheld in an Employment Tribunal.

The December 2014 amended guidance:

  • Confirms that while Residence Cards held by non-EEA national family members need to be current, if endorsed on a passport, that passport need not be current;
  • Clarifies work placement rules for international students and permitted employment for students;
  • Updates guidance for TUPE transfers and changes to the constitution of corporate employers; and
  • Gives details of the new arrangements for making an enquiry of the Employer Checking Service (ECS)- a new online tool ‘Employer Checking Service Enquiries’ has been designed for employers to find out if a verification check is needed from the ECS and to make that check (with a target response time of 5 working days).

This followed changes made as a result of the Immigration Act 2014, on 28 July 2014, which:

  • Requires employers to object before they appeal to a civil court, save for where a civil penalty has been increased following an unsuccessful objection; and
  • In cases in which proceedings for the enforcement of a penalty are commenced on or after 28 July 2014, enable the Secretary of State to register the debt rather than issuing a claim, so that enforcement proceedings can be issued immediately.

The Home Office issued ‘An employer’s guide to the administration of the civil penalty scheme’ (28 July 2014), which describes the process of the scheme from visits by officials to business premises and decisions by them to issue a ‘No Action Notice’ (if statutory excuse established) or a ‘Referral Notice’ for the evidence gathered to be sent (within 14 days of visit) to the Civil Penalty Compliance Team for consideration of liability, who will then send an ‘Information Request’ with a ‘Response Form’ to be completed and returned together with any supporting documentary evidence.  The case is then allocated to a caseworker to consider liability, penalty level and amount.

As part of a Civil Penalty, Warning or No Action Notice a Statement of Case will set out the evidence and explain the decision in respect of each ‘illegal worker’ with regard to how the penalty has been calculated and a response to any points raised.

In the event of a ‘Civil Penalty Notice’, employers have 28 days to object on an ‘Objection Form’ on one of more of the following grounds: (a) you are not liable, (b) you have a statutory excuse, and/or (c) the level of penalty is too high.  The fast payment option will remain an option if the Form is returned before the deadline and liability is maintained.

Within 28 days of receipt of the Objection Form, the civil penalty will either be cancelled and replaced by a ‘Formal Warning Notice’; an ‘Objection Outcome Notice’ will either cancel, reduce or maintain the penalty, or if the penalty is increased, a new ‘Civil Penalty Notice’ will be issued.  Each notice will include a Statement of case. When the objection is determined or there has been no response within 28 days, an appeal may be brought to a County Court in England and Wales and Northern Ireland and to the Sheriff Court in Scotland.

Substantial changes to the civil penalty scheme since its introduction, initially took place on 16 May 2014, which included:

  • An increase in the maximum civil penalty and revised method for calculating penalty amounts;
  • A new ‘Consideration Framework’ for assessing liability for a civil penalty and a ‘Civil Penalty Calculator’;
  • An extension of and increased reduction for fast payment of a civil penalty and inclusion of the payment by instalment option;
  • New notices to administer the scheme;
  • A reduction in the list of acceptable documents for right to work checks and separation of list of documents into two groups to distinguish the frequency of repeat checks required;
  • Abolishing annual follow-up checks for migrants with time-limited stay with frequency dependent upon the employee’s leave;
  • An extension of the grace period to 60 days for right to work checks on employees affected by TUPE regulations;
  • An evidential requirement for students to provide employers with evidence of term and vacation times for duration of studies.

A ‘Code of Practice on preventing illegal working: civil penalty scheme for employers’ was issued in May 2014 (updating that issued in February 2008) under s. 19 of Immigration, Asylum and Nationality Act 2006, with application: (i) when calculating the penalty amount; for employment commenced on or after 29 February 2008 where the breach of s. 15 of the 2006 Act occurred on or after 16 May 2014; or (ii) when determining liability; where an initial check on a potential employee, or a repeat check on an existing employee, is required on or after 16 May 2014 in order to establish or retain a statutory excuse.  In May 2014, the Home Office also published ‘Frequently asked questions about the illegal working civil penalty scheme’.

For separate restrictions on Croatian nationals’ access to the labour market and how to avoid a contravention of the Accession of Croatia (Immigration and Worker Authorisation) Regulations 2013, employers are still referred to the July 2013 ‘Code of Practice for employer civil penalties: illegal employment of a Croatian national’ and ‘Guidance for employers on preventing illegal working in the UK: Croatian nationals’.

The illegal working civil penalty regime sits alongside a criminal offence set out in s. 21 of the Immigration, Asylum and Nationality Act 2006 which renders employers who knowingly employ an illegal worker liable to prosecution and following conviction on indictment, liable to imprisonment, an unlimited fine or both. On summary conviction, an employer may be liable to imprisonment, a maximum fine of £5000 or to both.

The Home Office publish on its website, on a quarterly basis, details of employers who have been found liable for a civil penalty which it considers to be in the public interest, proportionate and necessary to achieve public policy objectives set out in its policy ‘Illegal working civil penalties: policy for publishing details of non-compliant employers’.  Apart from adverse consequences of the Home Office having a judgment entered on the County Court Register of Judgments which Banks and other financial institution may check when deciding whether to offer credit or other services; for employers who hold sponsor licences under Tiers 2 & 5 of the Points Based System, it can result in the downgrading and/or revocation of their sponsor licence.  For employers who are themselves subject to immigration control, the recording of a civil penalty will be on Home Office systems and may be taken into account when considering any future immigration application.

An inspection has been recently commenced into ‘the efficiency and effectiveness of the Home Office action against illegal working’ by the Office of the Independent Chief Inspector of Borders and Immigration.  The report of the Lead Inspector, Carol-Ann Sweeney, is expected soon.  Meanwhile, concerns continue to be expressed by practitioners in relation to difficulties third country national family members of EEA nationals who are exercising EU Treaty rights but who are not able to provide List B documents.  In the absence of documentation providing employers with a statutory excuse, many employers unwilling to employ such individuals, even though they are unlikely to have protection to a claim in employment law for non-recruitment, suspension or dismissal on those grounds alone.

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