Civil Penalties & Consequences for Employers

What are Civil Penalties for Employers?

Civil penalties are fines the Home Office imposes on employers for hiring individuals who do not have the legal right to work in the UK. These penalties act as a deterrent to non-compliance with UK immigration laws.

The employer is responsible for ensuring compliance. Employers will be fined if they knew, or had ‘reasonable cause to believe,’ that the employee did not have the right to work in the UK.

UK Legislation

The legislation for civil penalties is outlined in the Immigration, Asylum and Nationality Act 2006, Section 15, which was last updated on 22 October 2024. In summary, the legislation states:

Employing an adult subject to immigration control is illegal if they do not have valid permission to enter or remain in the UK or if their permission has expired or restricts their ability to work.

The Secretary of State can fine employers violating this up to a prescribed maximum amount. Employers can avoid the penalty by proving they followed prescribed right-to-work checks unless they knew the employment was illegal.

Civil Penalty Amounts in 2024

On 23 January 2024, the Home Office brought into force a significant increase to the maximum fines for employing illegal workers. The increase reflects the government’s increasing efforts to crack down on illegal working and create a more robust deterrent against illegal employment practices. The last adjustment to these fines was in 2014.

The maximum civil penalty has tripled, rising from £20,000 to £60,000 per illegal worker. Although the charge for first-time offenders is reduced, the fine has increased substantially—from £15,000 to £45,000 per illegal worker.

The Home Office may issue penalties based on reports, evidence, observations or interviews conducted by Immigration Officers during visits or raids at workplaces or police stations. By late 2024, Home Office visits to check for illegal working has risen by 34% with arrests increased by 25% compared to this time the previous year.

The potential for significant financial penalties creates a strong incentive for employers to take their compliance responsibilities seriously. This includes conducting thorough Right to Work checks and establishing proper verification processes to ensure ongoing compliance.

Additional Consequences

If there is evidence of intentional wrongdoing or gross negligence, where you knew or had 'reasonable cause to believe' that the worker was "disqualified", i.e. they did not have the right to work, you could face a jail sentence of up to 5 years.

An employee is disqualified if they are an adult subject to immigration control and either have not been granted permission to enter or stay in the UK or their leave is invalid, expired, or restricted.

Penalties for this offence depend on the severity:

• For severe cases, up to 5 years in prison, a fine, or both.
• Less severe cases: imprisonment up to 6 months, a fine, or both.

Besides Penalties, the Home Office also 'names and shames' by updating a public list of offenders. With the name and address published on the government website, businesses would suffer reputational damage while individuals who wrongly hire a home staff may also have their privacy compromised.

How the Home Office Calculates Fines

The Home Office has a framework for determining the civil penalties for illegal work on a case-by-case basis. The amount is influenced by your history of compliance with Right to Work checks, financial circumstances and whether you qualify for a penalty reduction up to £5,000 per factor, based on three mitigating factors:

1. Reporting suspected illegal workers: Proof that you reported the alleged illegal worker(s) to the Home Office.
2. Active cooperation: Evidence that you fully cooperated with the Home Office during their investigation.
3. Effective document checking practices: Provided that both the above criteria are met, further demonstrating robust processes for verifying employees' right to work.

For a first breach within three years, the starting penalty is £45,000 per illegal worker before any reductions. For subsequent breaches, the starting point is £60,000.

If you meet one or more of the first two mitigating factors, your penalty may be reduced. If you can prove that you reported suspicions, cooperated fully, have effective verification processes in place—and have not been penalized in the past three years—the penalty can be reduced to a Warning Notice.

Employer's Duty to Prevent Illegal Working

Employers are responsible for preventing illegal work in the UK by conducting right-to-work checks before hiring to ensure candidates are legally allowed to work.

The Home Office's "Right to Work Code of Practice," effective from February 13, 2024, outlines employer obligations to comply with these checks. The latest version specifies the steps employers must follow to avoid civil penalties if illegal working is discovered and explains the factors the Home Office considers when determining the level of any penalty.

The Code is an essential reference for employers to use alongside guidance provided by the Home Office to understand how to conduct right-to-work checks and how the civil penalty scheme is administered. It is also a helpful resource for training staff to ensure compliance with legal obligations related to hiring practices.

Right to Work Checks Under the New Regime

Under the new civil penalty regime, conducting a thorough Right to Work check is a legal requirement for all UK employers to verify that each employee is legally allowed to work in the UK. This applies to all businesses, regardless of size or industry, and is crucial for complying with UK immigration laws.

There are three ways to conduct a right-to-work check:

• manually
• via an IDSP
• through an online Home Office service

Employers must be familiar with the process and requirements for whichever method they use and know the list of acceptable documents that can be used to verify an employee’s right to work in the UK.

Manual Right-to-Work Check Process

Manual right-to-work checks operate under the framework of Obtain, Check & Copy.

Employers must first obtain original documents from the employee, which will differ depending on whether they have a permanent or temporary right to work. They must then check the documents to ensure they are genuine, belong to the individual, and confirm they are permitted to do the work being offered. Once verified, employers must make a copy of the documents and securely retain them for the duration of the person’s employment and two years after their employment ends.

Digital Identity Verification Technology (IDVT)

Identity Document Validation Technology (IDVT) is a digital check used to verify the identities of British and Irish passport holders or Irish passport cards. This technology allows employers to confirm identity digitally, providing a more efficient and reliable process. To ensure compliance, the Home Office requires a minimum Medium Level of Confidence via an Identity Service Provider (IDSP).

Home Office Online Right-to-Work Checks

The online right-to-work check is a service available to individuals issued a Biometric Residence Card (BRC), Biometric Residence Permit (BRP), or Frontier Worker Permit (FWP). It involves the prospective employee providing the employer with a share code, which allows the employer to verify the employee's right to work and identity.

The Home Office's online right-to-work check provides employers with a statutory excuse against civil penalties for illegal working, provided it is conducted before employment and at prescribed intervals.

How Civil Penalties Happen

Typically, action begins either from a tip-off, which can be reported anonymously or not via the Immigration Enforcement hotline, or as a result of a Home Office investigation.

The Home Office will then conduct an unannounced site visit, even if there is no solid evidence at this point. During the visit, it gathers information and refers the case to the civil penalty compliance team.

The compliance team will then send you an information request asking for:

• Confirmation of whether you employ the identified workers or details of the actual employer.
• Proof of right-to-work checks and when they were done.
• Any reports made of suspected illegal workers.
• Employment details of the identified workers.

You will have 10 days to submit the completed form and supporting documents. The accuracy and timeliness of your response will significantly impact the penalty issued.

Upon receiving your response to the information request, the civil penalty compliance team evaluates four critical criteria to determine the penalty amount. Based on the information provided, they may issue either a formal warning (with no penalty) or a reduced civil penalty if sufficient mitigation is shown.

Receiving a Civil Penalty Notice

If you are found employing an illegal worker, the Home Office will issue a Referral Notice. This notice outlines how your case will be assessed and the potential outcomes. It will specify the alleged breach, the proposed penalty amount, and the deadline for response, typically 28 days. You will also be advised to consult The Employer’s Guide to the Administration of the Civil Penalty Scheme for further guidance.

As an employer, you have three options:

1. Accept the penalty
2. Request a payment plan
3. Object the penalty

Paying the Civil Penalty

If you accept the penalty, you have 28 days to pay. For first-time offences within the last three years, you may qualify for a 30% reduction by paying in full within 21 days of the notice date under the Fast Payment Option (FPO).

Request a payment plan

If you are unable to pay the civil penalty in full, the Home Office may allow you to pay in instalments via direct debit. Typically, they offer a 24-month instalment plan or up to 36 months in exceptional cases. However, no discount is available for instalments. To request a plan, you must provide details of your financial situation and explain why you cannot pay the total amount within 28 days.

Objecting to a Civil Penalty

Employers issued with a Civil Penalty Notice can object to the penalty by responding in writing within 28 days of the specified due date. Objections must include evidence supporting one of the following grounds:

1. The employer is not liable (e.g., they are not the actual employer).
2. A statutory excuse applies (they followed the correct right-to-work check procedures).
3. The penalty amount is incorrect, or mitigating factors were not considered.

The Home Office will respond with an Objection Outcome Notice, stating whether the penalty is cancelled, reduced, or maintained. Employers can still qualify for the Faster Payment Option (FPO) if they object before the deadline.

If the penalty remains after an objection, employers must pay within 21 days. The penalty may increase, and a new Civil Penalty Notice will be issued.

Appealing a Civil Penalty

If the objection is rejected, employers have the right to appeal under section 17 of the Immigration, Asylum and Nationality Act 2006. You can appeal to the County Court (England, Wales, Northern Ireland) or the Sheriff Court (Scotland) within 28 days. Appeals must be based on the same grounds as the objection. If unsuccessful, the employer may be required to cover the Home Office’s legal costs.

Employers must weigh the cost of hiring legal advice and representation to challenge or appeal a penalty. This decision depends on whether you have substantial grounds to dispute the allegations, which could lead to a reduced penalty. Employers may find greater opportunities to state your case, as you may present evidence and witnesses.

Fail to Pay Civil Penalty

If an employer fails to pay a civil penalty by the specified due date, it will be registered with the court, and enforcement action will follow immediately. It is crucial to avoid penalties reaching this stage as it can have serious consequences, including:

• Being recorded on Home Office systems affects future immigration applications.
• Impacting the ability to sponsor migrants in the UK.
• This adversely affects the employer’s eligibility to serve as a company director.

Additionally, if there are reasonable grounds to believe the employer knowingly employed an illegal worker, this may lead to more severe penalties, including higher fines or imprisonment.

Preventing Civil Penalties

As the burden of proof is on the Employer, you can avoid civil penalties by conducting proper right-to-work checks as prescribed by the Home Office. Regular audits of right-to-work records help ensure compliance with sponsor licence requirements and minimize penalty risks. Training staff involved in these checks is crucial to updating them on the latest regulations and ensuring accuracy. Employers should also familiarize themselves with the Code of Practice on Preventing Illegal Working and use the Home Office Employer Checking Service when in doubt to maintain compliance.

Get Help With a Civil Penalty Notice

Receiving a civil penalty notice can be overwhelming for any employer. It is essential to address it promptly, as ignoring the notice may lead to court referral and more severe consequences.

Beyond the immediate legal implications, a breach can cause significant operational, financial, and reputational damage. The Home Office publicly records these penalties, further impacting the company's image.

The best way to avoid a civil penalty is to ensure robust compliance measures, including obtaining a sponsor licence, conducting proper right-to-work checks, and issuing certificates of sponsorship for both temporary and skilled worker visas. Employers must stay proactive and diligent in their compliance obligations.

Compliance is a legal necessity. Failure to meet these requirements can result in severe financial penalties and long-lasting reputational harm. If you receive a civil penalty, it is highly recommended that you consult an immigration lawyer to navigate the complexities of the law and determine the best course of action.

QC Immigration provides comprehensive support for business immigration and sponsor licence management. Contact us to speak with an immigration expert and discuss your case.