The new penalty

The intention to increase the maximum civil penalty was announced last year. It doubles the amount an employer may be required to pay if an employee is found to be working illegally. With the doubling of the penalty comes a new system for deciding how much the Home Office will actually charge if it discovers that individuals have been employed illegally. The starting point for a first penalty will be £15,000; reductions may be made if:

  • the employer has reported suspicions of illegal working;
  • the employer co-operates with the Home Office; and
  • the employer has effective document checking practices (provided it is a first infringement and the above requirements are satisfied).

Previously, checks on an employee's documents, even if these were insufficient for providing a defence against a civil penalty, also reduced the amount of the penalty.

Documents to check

The overall scheme of the system remains unchanged, ie an employer will be liable for a civil penalty if:

  • one, or more, of its employees is doing work which the employee is not entitled to do; and
  • the employer has not undertaken specified checks on the employee's documents.

These checks require specific documents to have been checked and copies to have been taken and retained. However, the list of acceptable documents and the requirements for how copies must be retained have changed. In summary, the changes to document checks are that:

  • some expired passports and all expired biometric residence permits (BRP) will no longer be acceptable documents;
  • other documents, including letters from the Home Office, non-passport travel documents, and Work Permits, which are not in a passport or on a BRP, are no longer acceptable;
  • it is no longer necessary to make a copy of the front cover of a passport; and
  • the date on which a copy of a document is made must be recorded.

The Home Office's updated guidance on the prevention of illegal working can be found here.

New document check for students

A new type of document check is now required for employers of migrant students. Tier 4 (General) Students are typically permitted only either 10 or 20 hours of work during term time. To know how this applies, employers need to know when term time is for that student. Up until now, there was no specific requirement for employers to check this. The Penningtons Manches immigration team has always advised employers to ensure that they made themselves aware of migrant students' term dates in order to ensure that work was only offered in accordance with migrant students' permitted hours of work.

The new rules require that employers obtain and retain details of the term and vacation dates of the course which the (prospective) employee is undertaking. Such evidence will need to come from the academic institution at which the migrant student studies.

How this will work in practice is not yet clear as the form of such evidence is not specified in the Order. Educational institutions are likely to approach the issue in different ways. The Home Office's guidance suggests that the following documents would be considered to be acceptable:

  • a printout from the student’s education institution’s website or other material published by the institution setting out its timetable for the student’s course of study;
  • a copy of a letter or e-mail addressed to the student from his or her education institution confirming term time dates for the student’s course; or
  • a letter addressed to the employer from the education institution confirming term time dates for the student’s course.

When to check

The requirement that the first document check takes place before employment commences remains. However, compliance with this requirement will now be evident as the date of any check will have to be recorded.

Under the old system, where a document check produced a document, which showed a time-limited right to work, the defence against a civil penalty existed for 12 months from the date of the check. The practical effect was that the right to work of such individuals had to be checked at least annually. This has now changed so that employers have a defence against a civil penalty for as long as the checked document shows that the employment is permitted, ie until the migrant's leave expires.

The removal of the need for annual checks is a welcome relief for employers. However, employers must now take care to record the expiry dates of the right to work of their employees. At the end of this period, the employer must check its employees' right to work again.

Where an employer acquires employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the new employer must undertake checks on the right to work of its new employees within 60 days. Previously the time limit was 28 days.

Pending applications

Expiry of visas often caused problems under the old system where a migrant had submitted an application to the Home Office before the expiry of his or her visa. This is because a migrant's right to be in the UK continues while his or her application or appeal process is ongoing. In such a situation, an employee may not have any documents showing his or her right to work, as these may be with the Home Office.

An employer now has a defence against a civil penalty for 28 days if the employer is reasonably satisfied that its employee has a pending application or appeal. The employer will then be able to contact the Employer Checking Service within this period to get confirmation that the appeal or application is pending. Such confirmation will give the employer a defence against a civil penalty for a further six months. However, where the Employer Checking Service confirms that the employee does not have the right to undertake the work in question, the defence will cease immediately.

In our response to the consultation on changes to the prevention of illegal working system last year, Penningtons Manches suggested creating a defence against a civil penalty where an employer believed an application to be pending. We are pleased that the Home Office has taken this on board and improved the system in this way.

The system still however relies on the Employer Checking Service, which is only as good as the Home Office’s records. Applications can be incorrectly logged, meaning that the Home Office could fail to tell employers correctly that an application is pending. In such a situation, an employee may still have the right to work but be unable to prove it. Where employers remain uncertain about an individual's right to work they should seek legal advice immediately. Our immigration team works closely with our employment team to ensure that employers are protected against both a civil penalty and any unfair dismissal claim from a migrant worker.

Final thoughts

The increase in the civil penalty raises the stakes in the prevention of illegal working system. Employers will immediately need to update their policies and procedures to reflect the new requirements, particularly the new lists of acceptable documents and the need for checks on the expiry of visas.