For employers, the process of verifying an employee’s right to work can seem complicated and difficult to manage. The Home Office has laid out a series of regulations, encapsulated in the 2022 Code of Practice on Preventing Illegal Working, that employers must adhere to. Failure to comply can result in severe repercussions, both financial and legal.
As such, it’s imperative for businesses to be well-versed in the potential penalties and preventive measures associated with employing illegal workers, and make sure they remain in full compliance with business immigration law when hiring from overseas.
Understanding the civil penalties
Should any organisation be found in breach of business immigration laws by employing individuals without the right to work in the UK, the financial consequences can be dire. The civil penalty can go up to £20,000 for each illegal worker, which can cause significant financial strain for smaller businesses in particular.
On 7th August 2023, the Home Office announced that, from January 2024, employer civil penalties for a first illegal working breach will increase from £15,000 to £45,000 for each employee found to be working without permission. For subsequent breaches, the fine triples from £20,000 to £60,000 for each employee.
However, there are conditions under which this penalty might be reduced. For instance, if the business can prove that it has an effective right-to-work verification system in place, or if it cooperates fully with a Home Office investigation, the financial penalty might be reduced. This may also be the case for first-time offences.
If a business holds a sponsor licence to employ migrant workers, additional complications can arise. The Home Office may subject the licence to ‘special measures’ or could even suspend or revoke it, causing operational disruptions for both the business and its sponsored employees.
Meanwhile, if a business has multiple sites that each handle their own recruitment, the organisation would only be considered a repeat offender if illegal working is deemed to be a systemic issue within the company’s recruitment practices. If your organisation acquires a new company and employees are transferred under TUPE, there will be a 60-day grace period to ensure all employees are legally employed.
It is crucial to seek legal advice if your business receives a notice of a potential civil penalty, whether you plan to try and mitigate the penalty or challenge it. If you can prove your company was not liable or had a valid statutory excuse, it may be possible to appeal against the penalty; it is also possible to request leniency if the penalty would be unaffordably high for your organisation. As such, a well-supported notice of objection could save a business thousands of pounds.
The potential for criminal sanctions
While the focus often lies on civil penalties, companies should not underestimate the potential for criminal sanctions. Although these are relatively rare occurrences – with only one recorded prosecution between July 2019 and September 2021 – the implications are severe and far-reaching. To secure a criminal conviction, the Crown Prosecution Service must meet the high standard of proving guilt “beyond a reasonable doubt”. This means demonstrating that the employer either knowingly employed an illegal worker, or had reasonable cause to believe that the individual was not authorised to work in the UK.
If the case is escalated to the Crown Court in England and Wales, the employer could face an unlimited fine, a confiscation order to seize assets, and imprisonment for up to five years. Should the case be tried in a Magistrates’ Court, the penalties are slightly less severe but still significant: a fine of up to £5,000 and imprisonment for up to six months. Similar sanctions apply in Scotland.
Individuals within the organisation who hold positions of responsibility – such as directors, managers or company secretaries – can also find themselves personally subject to criminal proceedings. This adds a layer of personal risk for those in leadership roles, making it even more important for businesses to exercise due diligence in employment verification processes.
Legal liability: who bears responsibility?
Determining who bears the responsibility for illegal employment is not always straightforward, especially for companies that may engage a variety of employment types. Generally, the employer who directly hires a worker under any form of contract – be it written, oral or implied – is the one held accountable for ensuring legal employment. This is the baseline rule that most are familiar with.
However, the waters become murkier when a business engages self-employed individuals or freelancers under a contract for services. A common question that arises is whether the company would still be held liable if it fails to conduct the necessary right-to-work checks on these individuals. In our legal view, the answer is yes. The rules define “employment” in a broad manner, encompassing not just traditional paid employment but also unpaid roles, work placements, self-employment and other professional activities. This expansive definition means that businesses cannot afford to overlook any category of worker when conducting right-to-work checks.
How to ensure your workers have a right to work in the UK
For companies that utilise external contractors provided by another organisation, such as a staffing agency, the legal liability for ensuring right-to-work checks generally rests with the agency or organisation supplying the labour. However, while the employer may not be legally liable, it’s considered best practice to confirm that these external contractors have undergone proper right-to-work checks. Failure to do so could expose the company to reputational risks, and could be seen as a lack of due diligence in the eyes of the Home Office, potentially complicating matters in the event of an investigation.
Additionally, UK companies can utilise Identification Document Service Providers (IDSPs) that employ Identification Document Validation Technology (IDVT) to verify the legal status of British and Irish citizens. A positive verification from an IDSP can provide an organisation with a statutory excuse, partially alleviating their liability under the civil penalty scheme.
Overall, any organisation seeking to employ workers from abroad should be aware that the law in this area is complex, in ways that companies cannot afford to overlook. A proactive approach, involving meticulous planning and robust procedures, can save companies from substantial financial and legal repercussions. Treating immigration checks as an afterthought is a risky strategy that can prove to be costly in the long run.
