The ramifications of a civil penalty for immigration can extend far beyond a £20,000 fine.
When considering whether to object or appeal a civil penalty decision for employing illegal workers, businesses should be aware of the possible consequences.
A study by SterlingBackcheck in February revealed that 38% of employers fail to check whether their employees have the right to work in the UK.
The Government’s response to this widespread contravention has been to increase penalties and raise enforcement efforts. From 1 April 2015 to 30 June 2015, the Home Office issued 539 civil penalties across the UK, with fines amounting to £10,585,000.
While these fines can be significant, legislation proposals and recent cases show the cost of a civil penalty can be much higher than that.
Consequences of a civil penalty for illegal employment
- Financial penalties
The most obvious effect of a civil penalty for immigration is a fine of up to £20,000 per illegal worker. In 2014, the Government doubled the previous maximum fine of £10,000. Where a business has employed several illegal workers, these fines can be very significant.
If the employer has not received an official warning or civil penalty in the previous the years, the maximum penalty is reduced to £15,000.
If a business can provide evidence that other mitigating factors apply, this amount can be reduced, or wiped entirely.
- Immigration breaches are published
The Home Office names and shames offending businesses by publishing the details of the civil penalty on their website. This can damage the reputation of a business.
- Impact on future Home Office applications and sponsor licence
Civil penalties for immigration breaches are taken into account by the Home Office when considering any future applications a business might make.
It may also have an effect on an employer’s ability to sponsor Tier 2 migrants or hold a Gangmaster licence.
- Business licences may be revoked
Civil penalties have the potential to impact livelihoods and the ability to conduct business.
In a recent landmark case, East Lindsey District Council v Abu Hanif, the High Court ordered that a restaurant owner’s alcohol and late hours licence be revoked, after he received a civil penalty for employing illegal workers.
This ruling is now applicable to future licencing decisions.
- Disqualification of company directors
In several insolvency cases, directors have been disqualified because they have employed illegal workers.
In November 2014, a Birmingham foods-wholesaler went into liquidation. Subsequent investigations into the company revealed that on two occasions, illegal workers had been hired.
As a result, the sole director of the business was disqualified from acting as a director for seven years.
- No national insurance allowance
The 2016 Budget announced that from April 2017, employers who receive a civil penalty for immigration will not be eligible for the national insurance employment allowance for the following 12 months.
- Criminal Prosecution
Criminal prosecutions under the Immigration, Asylum and Nationality Act 2006 are currently limited to those cases where it can be proven beyond a reasonable doubt that an employer knew the migrant did not have permission to work.
If enacted, the Immigration Bill 2015-2016, will extend criminal prosecution to any employers who knew or had reasonable cause to believe that an employee was working illegally.
The new legislation also extends the maximum term of imprisonment for committing the offence from two to five years.
Immigration officers will be given the power to arrest a person without a warrant where there is suspicion of an immigration offence.
- Temporary closure of businesses
If passed, the Immigration Bill will also grant the Chief Immigration Officer the power to issue a notice closing a business premises for 48 hours, if he or she is reasonably satisfied that the business has committed an immigration offence.
This power is limited to situations where an employer has previously been convicted of an illegal worker offence, or has received a civil penalty within the past three years, or has an unpaid civil penalty that was issued at any time.
Challenging a civil penalty notice for illegal employment
An employer who receives a civil penalty for immigration has the opportunity to object to the notice and provide further evidence that:
- They are not liable because they did not employ an illegal worker;
- They performed the required document checks on the illegal employee and therefore have a statutory excuse; or
- The penalty is too high because mitigating factors were not properly taken into account.
If the result of the objection is unfavourable, there are further opportunities to appeal the decision in the County Court on similar grounds.
Given what is at stake, all civil penalties should be taken seriously. If a business determines to object or appeal a decision, these applications must be well prepared, with detailed submissions and supporting evidence.