Civil penalties imposed for employing illegal workers

Defences and questions of reasonableness

The civil penalty regime was introduced with the inception of the Immigration, Asylum and Nationality Act 2006 (IANA 2006).

The Act grants the Home Office the power to issue penalty notices against employers of foreign nationals who are working in the UK illegally.

1270 employers across the UK have been subject to civil penalties for retaining illegal migrant workers for a total value of £10,843,750. (Statistics from the Home Office management information system)

The IANA 2006 has been described as providing a three-stage process:

  1. The Home Office first issues notice of potential liability (allowing the employer to respond to the allegation) and thereafter a formal civil penalty.
  2. The penalised employer is entitled to object to the penalty through an internal review.
  3. Failing this, the employer can appeal to the county court against the penalty. An appeal can be on the grounds that the employer has not breached section 15, the employer has breached section 15 but the statutory excuse applies, or the level of penalty imposed is too high.

Section 15 of the act allows the UKBA (Uk Border Agency) to impose a penalty notice on an employer who employs a foreign worker who is not entitled to work in the UK. Before serving a penalty notice the Home Office must satisfy itself that the worker is not entitled to work in the UK and that the work is carried out under a contract of employment or apprenticeship.

In some cases this is very tricky to prove as it is not always clear whether or not there is a contract of employment in place. Practitioners representing penalised employers will often turn to legal definitions of employment (such as the one set out within the IANA 2006 itself) to dispute the fact that employment exists.

Once the Home Office has conducted its checks and satisfied itself the employer is liable, a civil penalty is then served upon an employer. The onus then shifts to the employer prove that they were not employing an illegal worker or that they took sufficient and reasonable step to check that the worker’s ability to work, thereby discharging their liability.
There are two main types of defences which an employer may seek to rely upon: complete and partial defences.

Complete Defences

The act provides a ‘statutory excuse’ also known as a ‘due diligence’ defence whereby the employer will be excused from paying the penalty levied if he/she can show full compliance with the requirement to check the employee’s documentation as set out in the code of practice prior to the foreign worker starting his employment.

The documentation of foreign workers with limited leave to remain in the UK must be checked every 12 months. This applies only to employees who joined after the law came into effect at the end of February 2008. An employer who knowingly employs a foreign worker illegally commits a criminal offence. In these circumstances the statutory excuse cannot be relied upon and the employer could face a custodial sentence.

The burden placed upon employers is arguably rather onerous.For instance, in the case of a foreign national who is in the UK on a student visa with permission to work for up to 20 hours per week during term time, an employer will be unaware that his employee, having taken on additional work elsewhere with another employer, is in fact working a 40 hour week in breach of the terms of his/her visa conditions. The employer has no knowledge of the illegalitybut failing to take reasonable steps will be liable for a civil penalty nonetheless.

Partial Defences

Partial defences will operate to reduce the fine levied against the employer.

Examples of partial defences (or mitigating factors) include the following:

  • The employer took reasonable steps to check the status of his/her employee.
  • The number of offences previously committed by the employer.
  • If the employer reported the suspected illegal worker(s) to the UKBA.
  • Whether the employer co-operated with the Home Office’s investigation.If one or a combination of the above can be shown, fines can be reduced by up to £5,000 per illegal worker.

Quantification of Fines

When assessing the breach and the level of fine to be imposed, the Home Office takes into account a number of factors, mainly the mitigating factors as set out above.
Unfortunately, issues or reasonableness and proportionality are predominantly overlooked by the Home Office, thereby having an often detrimental impact upon smaller organisations.

The fine should arguably be subject to a reasonableness test which considers the following factors:

  1. The size of the organisation.
  2. The resources available to the organisation to cover the fine imposed.
  3. The effects upon the organisation in question – will imposition of an exorbitant fine risk closure of the organisation and what are the associated consequences of this?
  4. The type of organisation i.e. a ‘not for profit’ organisation and the organisation’s function or purpose. Does the organisation serve the interests of the local community and provide a public benefit?

A blanket fine such as the one imposed by the Home Office at present can very often produce unfair results, with little or no distinction made between a large multi-national corporation and a small village convenience store.