5 Ways to Challenge a Civil Penalty UK Immigration Fine

It’s a distressing experience for an organisation when, without warning, it receives a civil penalty UK immigration notice from the Home Office.

A civil penalty notice informs an organisation it has employed someone who did not or does not have permission to work in the UK, in breach of the prevention of illegal working regime.

It is in every organisation’s best interests to avoid being found liable and ‘named and shamed’ for employing illegal workers.

The civil penalty regime applies equally to all employers of migrant workers, catching out both employers who choose to ignore their obligations as well as more diligent employers who ‘unknowingly’ hire illegal personnel, for example because of a flaw in their onboarding processes.

Either way, if you are found liable for a civil penalty, you face a fine of up to £20,000 per illegal worker. The level of fines is set to increase to £45,000 per illegal worker for a first breach, and up to £60,000 for repeat breaches, from the start of 2024.

Which means if the civil penalty notice relates to several workers, the sums involved can quickly mount and become detrimental to your organisation’s operations.

If the Home Office establishes that you knowingly hired illegal workers or workers subject to immigration controls, you could face criminal prosecution as well as an unlimited fine.

You are also likely to be downgraded on the register of sponsors, or have your licence revoked altogether. This becomes business-critical when your organisation can no longer bring non-European personnel to the UK.

Given the potential financial, operational and reputational impact of a civil penalty notice, employers that are found liable for a breach of their immigration obligations should give serious consideration to their options for appealing the civil penalty.

 

What is a Civil Penalty for Illegal Working?

A civil penalty notice is effectively a fine imposed by the Home Office in the event of a breach of the applicable law.

The level of the penalty will be determined by the Home Office based on a sliding scale outlined in the statutory code of practice, known as the civil penalty scheme for employers. In certain instances, the ‘fast payment’ option allows for a 30% reduction in the total amount of the penalty. It is also possible to request instalment payments for a civil penalty.

The recipient of a civil penalty notice may submit a written objection within a specified timeframe. The recipient of the notice of civil penalty may file a timely appeal with a county court or magistrate against the imposition of a civil penalty. Only after the objection procedure has been completed may an appeal be filed.

In addition to civil sanctions, the Home Office also has powers to pursue a criminal prosecution against an employer for illegal working. When the Home Office suspects the commission of a relevant criminal offence, an investigation can be conducted. During this process, the Home Office may seize relevant evidence.

 

When can the Home Office issue a civil penalty for illegal working?

The Home Office will evaluate civil penalty liability in accordance with the Code of Practice on the prevention of illegal working. Every case is subject to a three-stage evaluation procedure:

 

Stage 1—Determining liability

When an employer is visited by the Home Office and an illegal worker is discovered, a No Action Notice will be issued and the case will be closed if the employer produces the requisite evidence to establish the statutory excuse against liability to pay a civil penalty.

If the employer continues to employ the illegal worker, they may be prosecuted for employing an illegal worker knowingly. However, prior to terminating the employment, they should ensure that an impartial investigation procedure is followed and give the employee an opportunity to provide any evidence that they are authorised to work in the United Kingdom. Refer to Practice Note: Illegal labour: coping with employees for additional guidance on how to interact with employees in these situations.

If the employer cannot establish a legal excuse, a referral notice will be issued. This notice confirms that the matter has been referred to the Civil Penalty Compliance Team (CPCT) of the Home Office for consideration of civil penalty liability. Additionally, whether to prosecute the employer for knowingly employing an illegal worker will be considered.

Additionally, the visiting officer will complete additional worker supplements (AWS) for each illicit worker encountered.

Copies of the referral notice, the AWS, and any evidence garnered during the visit must be sent to the CPCT within fourteen days of the visit.

Once the CPCT has received the referral, the employer will receive a request for information requesting confirmation of the employer’s business details, if the referral has been made to the actual employer of the illegal worker; the business details of the actual employer (if known), if the referral has not been made to the actual employer; whether right to work checks have been carried out in relation to the illegal worker; whether suspicions about the right to work of the illegal worker have been reported to the Home Office; and whether there are any supporting documents.

The employer must submit this information on a response form supplied by the Home Office, along with any supporting documentation, by the date specified in the information request in order for it to be considered prior to any decision being made.

 

Stage 2: Determining the severity of the breach

Those who have been convicted of employing illegal labourers within the past three years face harsher penalties than those who have not.

Employment of illegal workers within the previous three years is defined as having been issued within three years of the current violation with a civil penalty or warning notice for a breach of IANA 2006 where the liability was maintained following any objection and/or appeal. It also encompasses having committed an offence under IANA 2006, s 21 (knowingly employing an illegal worker) within the same time period.

Where an employer has employed illegal employees within the preceding three years, the penalty per illegal worker begins at £20,000. The exception to this rule is when a business has multiple locations and each location organises recruitment independently. In such circumstances, the calculation of the penalty will not begin at £20,000 unless the Home Office determines that the employer’s central recruitment processes failed on a broad scale.

In all other cases, the minimum penalty per illegal worker is £15,000.

Following an announcement in August 2023, the level of civil penalty fines for illegal working are set to increase from the start of 2024, for up to £45,000 per illegal worker for a first breach, and up to £60,000 for repeat breaches.

 

Phase 3 – Determining the Penalty

The Consideration Framework specifies the mitigating factors that must be applied in each circumstance:

• Is there evidence that the employer has already reported a suspected illegal migrant to the Home Office and received a unique reference number?
• Is there evidence that the employer actively cooperated with the Home Office, as the second mitigating factor?
• Additionally to mitigating factors 1 and 2, is there evidence that the employer has implemented effective right-to-work verification procedures?

 

Employers will only be eligible for reductions if they can provide evidence of meeting the mitigating factors. Each mitigating factor may result in a £5,000 reduction per worker in the penalty.

Notably, a business will only be eligible for a reduction based on mitigating factor 3 (effective right to work checking practises) if it has already qualified for a reduction based on mitigating factors 1 and 2 (reporting suspicions to the Home Office and active cooperation with the Home Office, respectively).

In practice, this means that the majority of enterprises are only eligible for one £5,000 discount for active cooperation. Often small businesses may have genuinely believed its employee to have had the right to work, often based on a misunderstanding of documents shown (eg reliance on a driving licence or production of a National Insurance Number) and have never had any cause for suspicion which would trigger contact with the Home Office.

The Home Office will only consider mitigating factors outlined in the Consideration Framework.

Employers will receive a statement of case whenever the Home Office issues a civil penalty, warning notice, or no action notice. This details the type of evidence being relied on by the Home Office and, if a civil penalty has been issued, the calculation for the fine should be provided. It will also provide a response to any issues that had been raised by the employer.

At the objection stage, the Home Office will not divulge the precise evidence it possesses, however, this evidence must be disclosed during any appeal against a civil penalty.

 

How to respond to a Civil Penalty for Illegal Working

A business can either accept and pay the civil penalty for illegal employment, or return an objection form.

Acceptance is encouraged by the Home Office. Payment plans can be arranged and if full payment is received within 21 days the organisation is rewarded with a 30% discount.

On the other hand, the objection process can appear risky and pointless.

Potential objectors are warned that if they elect to challenge the penalty, the Home Office may decide to increase it.

It may, for example, determine that the mitigation applied for an organisation’s cooperation is no longer applicable.

An objection may also seem futile. The review is, after all, undertaken by the same people who fixed the civil penalty UK immigration notice in the first place. They rarely change their mind.

While an objection can appear pointless, it is a necessary stage of the process. A right of appeal to the County Court only arises if an applicant has first formally objected to the decision.

Organisations may feel they have suffered an injustice that does not fit neatly within the narrow grounds of objection the Home Office deems acceptable.

While the Home Office is unlikely to take these matters into account, a County Court judge may be more willing to hear them.

 

Five ways to challenge a Civil Penalty UK Immigration Notice

1. No proof of the offence

If an appeal advances to the County Court, the Home Office will be required to prove an organisation has committed an offence under the Act.

Section 15 requires the Home Office to prove two things:

• A person did not have the appropriate right to work in the UK; and
• A business employed that person.

The Home Office must provide sufficient evidence to prove each of these elements and a valid defence may simply be that it has failed to do so.

A business may, for example, dispute it ever employed a person, because that person was working as an independent contractor or was engaged through a recruitment agency.

In the Court of Appeal case of James v London Borough of Greenwich [2008] EWCA Civ 35, it was determined that a worker engaged through an agency does not become an employee merely because they have worked for a business for a long period. It was held that an employment contract could only be implied if a business insists on the agency supplying a particular person.

 

2. The due diligence excuse

Under section 15(3) of the Act, an employer is excused from paying a civil penalty UK immigration notice if it shows it has complied with the ‘prescribed requirements’ in relation to the employment.

Those requirements are outlined in the Immigration (Restrictions on Employment) Order 2007.

An employer is excused from paying a penalty if:

• The employee has produced to the employer a listed document such as a UK or EU passport, Birth Certificate or Residence Permit;
• The employer has taken all steps to check the validity of the document and that the employee is the rightful owner;
• The employer has copied all relevant material and kept a copy for a period not less than two years after the employment has come to an end; and
• The employer checked any photograph and DOB and determined that it was consistent with the employee’s appearance.

If an organisation has complied with these requirements, it has the onus of proving that this exception applies by producing the relevant documents.

 

3. The Home Office has exceeded its powers

A further basis for challenging a civil penalty UK immigration notice may be that the Home Office has obtained evidence unfairly or in excess of its statutory powers.

The Home Office has a wide range of powers to investigate and enforce civil penalties, but they must follow strict protocols and act within their authority.

This means, for example, they must have specific authority to conduct an ‘immigration raid’, as opposed to entering premises for other official purposes.

 

4. Statutory mitigating factors

When assessing the penalty amount to impose, the Home Office takes into account a number of factors:

• The nature of the checks carried out by the employer;
• The number of offences previously committed by the employer;
• If the employer reported suspected illegal workers to the Home Office; and
• Whether the employer cooperated with the Home Office in any investigation.

 

A civil penalty for employing illegal workers can be challenged on the basis that one of these relevant factors was not properly taken into account.

 

5. Other mitigating factors

The wording of section 15 (2) of the Act, “The Secretary of State may give an employer who acts contrary to this section a notice…” suggests that the Home Office also has an overriding discretion not to issue a penalty at all, even where the elements of the offence have been proven.

The wording of section 19 of the Act, “The Secretary of State shall issue a code of practice specifying factors to be considered…”, rather than “specifying THE factors to be considered” suggests that the Home Office should also take into account other relevant factors that emerge.

It could be argued that this interpretation places a duty on the Home Office to consider all relevant factors and determine whether it is appropriate to issue a penalty at all, rather than take into account only the narrow considerations contained in the Home Office guidelines.

The expense, time and energy required to object and appeal a decision can seem excessive, but if a business receives a civil penalty UK immigration notice, there are significant consequences and many reasons to appeal a civil penalty for immigration.

 

How to challenge the UKVI civil penalty

If you are issued with a UKVI civil penalty notice for illegal working, you have 28 days to pay the fine or to appeal to the Home Office. So it’s important to act quickly, decisively and effectively.

With the stakes so high, having a strategy in place will help you follow the civil penalty appeals process correctly and put the strongest case forward for your organisation. You should also be prepared for a Home Office visit as part of the appeal.

 

Stage 1

Your first recourse is to write to the Secretary of State to lodge your objection(s). This must be within 28 days of the penalty being issued.

There are three types of objection:

1. You are not liable to pay the penalty, for example because you are not the employer of the workers in question.
2. You have a statutory excuse under Section 15 of the Immigration, Asylum and Nationality Act 2006. This applies if you can prove that you carried out relevant document checks of the relevant workers’ documentation before they commenced employment, that you took reasonable steps to ensure the validity of documents and as such that you were unaware of their illegal status. You would therefore not be in breach and not liable to pay the penalty.
3. The level of the penalty is too high, for example, if you meet specified mitigating criteria such as being cooperative with the Home Office investigation or having some reasonable measures in place for compliance.

 

It’s important to note that UKVI can increase the level of your original penalty following an appeal, so you need to be confident there are no grounds to justify an increase in the level of penalty.

The approach you take to challenging your civil penalty notice will depend on your specific circumstances and the nature and level of the civil penalty notice itself. Seeking professional advice can help provide you with a defence strategy to ensure you take the most effective approach to your appeal and minimise the potential for an uplift in the fine.

 

Stage 2

If your written appeal is rejected, the next stage is to make a further objection to the County Court. You have to do this within 28 days of the Home Office’s final decision.

This will lead to a rehearing, where the court can look at any documentation it considers relevant, including documents not considered by UKVI.

Thorough preparation for this hearing is critical. You need to build a strong case based on facts and robust evidence. In our experience, UKVI will prefer to settle in advance of a hearing where there is evidence of non-liability of employers, so good preparation can increase the likelihood of settling before the full hearing takes place.

If your organisation is facing a civil penalty for illegal employment, contact us to discuss strategies for your appeal.

Or for guidance on how to avoid being found liable for a civil penalty notice, please get in touch.

 

How does the Home Office target employers for illegal working?

As part of good compliance practice, it can be helpful to understand how the Home Office targets certain employers in relation to illegal working allegations. In most cases, the Home Office will become aware of the allegations through any of the following:

Intelligence from the employer

If an employer has doubts about an employee’s eligibility to work, they can contact the Home Office to verify the employee’s immigration status.

The employer can use the Employer Checking Service, which enables employers to verify an employee’s potential right to work with the Home Office. Before using this service, the online form necessitates the employer to obtain the employee’s permission. Employers may obtain this consent at the outset of the employment relationship through standard recruitment forms or procedures, or through the employment contract. On such forms, the nature and duration of the assent granted by the employee should be specified with precise language.

Many employers will be understandably hesitant to do so, fearing that doing so could result in civil penalty actions or discrimination claims from affected employees. Although a civil penalty can be issued against an employer in these circumstances, if the employer has reported suspicions to the Home Office, this is one of three mitigating factors that, when combined with the other two, can result in a warning notice rather than a civil penalty for a first breach. The Home Office has issued guidance regarding the prevention of discrimination in the context of right-to-work investigations. This guidance emphasises the consistent and equitable application of right to work checks and related procedures to all employees. Employers should consider instituting or maintaining right to work policies.

 

Intelligence from third parties such as former employees

The Home Office frequently receives ‘tip-offs’ about businesses and potential illegal working. In such cases, the Home Office is likely to conduct an unannounced inspection to investigate the allegations.

 

Compliance inspections

It is strongly recommended to conduct a comprehensive immigration compliance and right to work check audit before applying for a sponsor licence as pre-licence visits are increasingly common. Home Office investigators will attend the business premises to inspect documentation and systems and to interview personnel. A pre-licence mock audit will help to identify areas of risk or non-compliance. Businesses should plan accordingly and familiarise themselves thoroughly with the guidance for employers on their compliance obligations.

In addition, employers should remember that the Home Office may make an unannounced or announced visit at any time, and employers should have a process in place for periodic right-to-work and sponsored worker verification audits.

 

Sector targeting

In practice, the Home Office undertakes special operations targeting specific sectors or local businesses owned by ethnic minorities. Typically, these are small enterprises operated by sole proprietors such as nail salons, convenience stores, takeaway restaurants, security companies and car washes. These businesses have a general understanding of the right to work responsibilities of employers, but are often not aware of the specific checks that must be conducted to ensure a complete defence against a civil penalty. As the Home Office has increasingly shifted to providing digital evidence of immigration status and with the introduction of online and digital right to work checks, many employers are finding it difficult to keep up with the changes in this area.

 

Implications of being issued a civil penalty for illegal working

When an employer receives a civil penalty that is not subsequently cancelled, this can have a number of negative repercussions.

Sponsor licence implications

Part 3 of the Sponsor Guidance outlines the mandatory circumstances under which relevant sanctions will be applied and the discretionary circumstances under which relevant sanctions may be applied (Annexes C2 and C3). Following successive updates to the guidance, mandatory revocation has become the default sanction for a wide variety of situations. In most cases, these situations involve a serious or systemic breach of the sponsor’s responsibilities, a threat to immigration control, or behaviour and actions that are not conducive to the public welfare. Employing workers illegally is a serious breach of the sponsor’s responsibilities and may result in the revocation of the employer’s sponsorship licence and other sanctions.

Mandatory revocation circumstances include issuance of the following documents to a sponsor:

• One civil penalty for employing an illegal worker for a first breach, where the civil penalty is below the maximum amount and the sponsor failed to pay the civil penalty in full, set up a payment plan within the applicable time period, or defaulted on the payment plan.
• Two or more civil penalties for employing illegal workers and remains liable for the penalties after all objection and appeal rights have been exhausted; the civil penalty for at least one of these workers remains at the maximum amount after all objection and appeal rights have been exhausted.

 

Where a sponsor has been issued two or more civil penalties for employing illegal workers and remains liable for the penalties after all objection and appeal rights have been exhausted, the sponsor’s licence ‘will normally’ be revoked. It ‘may’ be revoked under the same conditions as when a single civil penalty was issued.

The Home Office may issue a civil penalty in the event that a sponsor’s licence is revoked for employing illegal workers.

Before an employer can reapply for a sponsorship licence after having one revoked for the aforementioned reasons, there will be a minimum 12-month “cooling off” period.

A civil sanction for employing an illegal worker will have the same effect as revocation on an employer’s ability to apply (or reapply) for a sponsor licence under the Points-Based System. The minimum ‘cooling off’ period is one year from the date the penalty was paid in full, or up to five years if two or more civil penalties have been issued.

 

Reputational damage

The Home Office publishes quarterly reports detailing the names of employers who have exhausted their objection and/or appeal rights against a civil penalty, along with the level of penalty imposed.

 

UK Home Office applications

A civil penalty will be recorded on the systems of the Home Office. Where the employer is subject to immigration control and there is credible evidence that they have employed illegal workers, the Home Office guidance on grounds for refusal is somewhat ambiguous regarding the consequences if the employer later applies for UK immigration.

The Immigration Rules, Part 9, grounds for refusal state that any future immigration application must be denied if the applicant’s presence in the United Kingdom is not conducive to the public good due to their conduct, character, associations, or other reasons including non-criminal convictions. The caseworker guidance confirms that before refusing or revoking permission due to an immigration offense, the caseworker must be satisfied, on the balance of probabilities, that the applicant was knowingly involved in the offence or that the offence was the direct result of their conduct.

In the Home Office Employer’s Guidance, it is stated that if an employer is subject to immigration control and liable for a civil penalty, this will be recorded by the Home Office and may be used to evaluate future immigration applications.

It would be highly likely that Home Office would deny future immigration applications from individuals who have received a civil penalty for employing illegal workers.

 

Credit and board positions

If a civil penalty becomes delinquent and the Home Office initiates enforcement action to collect the debt, this can have a negative impact on a person’s ability to obtain future credit and serve as a company director.

 

Need assistance?

To discuss all the options available for appealing a civil penalty and keeping your business’ clean record, please get in touch.  

 

Challenging a civil penalty FAQs

What is a civil penalty issued under UK immigration law?

A civil penalty under the Immigration Act can be issued by the Home Office in the event an employer is found to be or have been employing someone who does not have the right to work in the UK.

What is the penalty for working illegally in UK?

Employers can face fines of up to £20,000 per illegal worker, and in some cases up to 5 years in prison.

What is a statutory excuse?

Employers may be able to rely on a statutory excuse to cancel a civil penalty for illegal working if they can show they conducted compliant right to work checks on the illegal worker.

Last updated: 8 August 2023