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How to deal with a civil penalty for employing illegal workers: Part 1

This blog considers the civil penalties for employing illegal workers, although there are also criminal penalties for knowingly employing an illegal worker. If an employer is prosecuted under criminal penalties, then they can also be subject to a civil penalty.

Section 15 of the Immigration, Asylum and Nationality Act 2006 gives power to the Secretary of State for the Home Department to levy a civil penalty against an employer.

How does the Home Office find out if you’ve employed illegal workers?

There are three main circumstances in which the Home Office usually become aware of illegal workers at premises. The first example is where the Home Office conduct a raid on a business. This might be because the Home Office has decided to crack down on illegal working and targeted certain types of businesses that might employ illegal workers, such as nail bars. The second example, which may be tied with the first example, is where the Home Office received tipoffs from the public that a business is employing illegal workers. This may prompt the Home Office to undertake a search of the premises an attempt to discover illegal workers. The third example is that where an employer applies for Tier 2 licence and a visit to the premises is conducted, illegal workers may be found.

What happens when an illegal worker is discovered?

Where the Home Office attends a premise and an illegal worker is discovered then an employer has an opportunity to produce evidence that triggers a ‘statutory excuse’ against liability to pay a civil penalty. A statutory excuse is available where an employer has obtained, checked and retained copies of original documents confirming the employee’s right to work. There are strict rules in respect of this that must be followed by the employer if the statutory excuse is to be accepted by the Home Office. The purpose of the statutory excuse is to avoid employers facing penalties where they could not reasonably have known that the employee was an illegal worker. An employer will, therefore, have a statutory excuse where an employee provides them with a document that is fraudulent, and the employer could not reasonably have known that it was a fraudulent document.   

How large is the penalty for employing illegal workers in the UK?

If a civil penalty is issued in respect of employing illegal workers, and the employer has received a previous civil penalty for employing illegal workers within the last three years, then the level of breach will be higher with a starting point of £20,000 per illegal worker. In all other circumstances, the penalty starts at £15,000 per illegal worker.

Mitigating factors

There are mitigating factors that should be applied where relevant. Where an employer has reported a suspected illegal worker to the Home Office, where an employer has actively cooperated with the Home Office and where an employer has an effective document checking procedure in place and otherwise generally complies with employer duties preventing illegal working, then a reduction of the penalty should occur. It will be for the employer to provide evidence that the mitigating factors are engaged. Each mitigating factor results in a reduction of the penalty by £5000 per worker. In reality, it is usually on the ‘compliance’ mitigation that is applied, as in order to engage mitigation for ‘effective document checking procedures’ than specific requirements must be met. 

The Home Office offers a reduction of 30% on the penalty where an employer has not been found to be employing illegal workers within the last three years and where payment is made within 21 days of the date of the civil penalty notice, or the amended notice following an objection from the employer, being issued. If an employer cannot pay within 28 days of the notice, then the Home Office will usually agree on a payment plan by instalments.

Worried about civil penalties?

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