Right to work checks and the new civil penalty regime

The new regime

In August 2023, the UK Government announced plans to increase the civil penalties for illegal working from £15,000 to £45,000 per illegal worker for a first breach of the civil penalty regime, and from £20,000 to £60,000 for repeat breaches. The Order implementing the changes was made on 23 January 2024 and will come into force for right to work checks (including follow-up checks) carried out on or after 13 February 2024. In preparation for these changes, the Home Office has updated its Code of Practice on Preventing Illegal Working (‘the Code’).

It has now become more important than ever for employers to review their current onboarding processes to ensure they are fully compliant with the right to work regime, ahead of the changes coming into force. Our employer’s guide to right to work checks sets out the various ways to carry out compliant checks.

Which right to work checks will the new Code apply to?

The new Code will apply to all right to work checks carried out from 13 February 2024 onwards. This, importantly, includes any follow-up checks which are required to maintain a statutory excuse. Right to work checks carried out before the implementation of the new code will be looked at in accordance with the version of the code in force at the time the right to work checks were carried out.

What happens if I am found to be employing an illegal worker?

If you have been found, or are suspected, to be employing (an) illegal worker(s) the Home Office should provide you with an opportunity to demonstrate that you have complied with the law. Ideally, you should seek legal representation at the earliest opportunity.

At this stage, it is important that you are able to provide evidence that you have correctly carried out the required right to work checks and established a statutory excuse against liability for a civil penalty. Officials will consider any evidence you provide them with at this stage and either issue you with a No Action Notice or a Civil Penalty Referral Notice in respect of each illegal worker.

A No Action Notice means that officials have accepted that you have established a statutory excuse and your case will be closed.

If officials determine that there are illegal workers for whom you have not established a statutory excuse, you will be issued with a Referral Notice. The Referral Notice will inform you that the details of your case have been referred to officials with responsibility for administering the civil penalty scheme, to consider liability for a civil penalty for breach of section 15 of the Immigration, Asylum and Nationality Act 2006 (the 2006 Act). The Referral Notice should include details of how the case will be considered and the possible decision outcomes. It should also specify the date on which the breach was encountered.

Are there criminal sanctions for employing illegal workers?

If you have knowingly employed illegal workers, consideration may also be given to prosecution under section 21 of the 2006 Act. Criminal sanctions (up to five years in prison with an unlimited fine) remain unchanged.

What happens after I receive a Referral Notice?

A copy of your Referral Notice and any evidence gathered in your case will be sent to the Civil Penalty Compliance Team within 14 days of the suspected breach. You should then be sent an Information Request asking for any further evidence which you wish to be taken into account when determining your liability and, if applicable, the level of any penalty. A deadline for responding should be provided in your Information request.

Your case will be allocated to a case worker who will review all the available evidence and come to a Decision as to whether or not you are liable for a civil penalty and if so, at what level and amount.

Where you are found liable you will be issued with a Civil Penalty Notice which will detail the reasons as to liability, the amount payable, the different methods of payment (including a fast payment option) and the information on how you can object to the civil penalty notice.

How is the level and amount of civil penalty decided?

The level of breach will be determined differently depending on whether you have been found to be employing illegal workers without a statutory excuse (“breached the scheme”) in the past three years. If you have breached the scheme in the past three years the case will proceed to Stage 3, level 2. If you have not breached the scheme in the last three years your case will proceed to Stage 3, level 1.

The actual penalty will depend on your history of compliance with right to work checks and the evidence that you are able to provide. If you are able to provide mitigating evidence then you may receive a reduction in the amount of civil penalty that you are required to pay.

Special rules apply to employers with multiple premises or employers who acquire staff as a result of a TUPE transfer.

How is the civil penalty calculated in practice?

Level 1 Breaches (first breach)

The starting point here is a fine of £15,000 (or £45,000 for right to work checks carried out on or after 13 February 2024) per illegal worker employed, before reductions. Reductions will be made as follows:

• Mitigating Factor 1: You will receive a £5,000 reduction if there is evidence that you already reported the suspected illegal worker to the Home Office and received a Unique Reference Number.
• Mitigating Factor 2: You will receive a £5,000 reduction if there is evidence that you have actively co-operated with the Home Office.
• Mitigating Factor 3: If there is evidence that you have effective right to work checking practices in place together with mitigation for factors 1 and 2, the Home Office will issue you with a Warning Notice. If the answer is no, the Home Office will issue you with a Civil Penalty Notice for the total value calculated in each case.

You may be able to have the amount reduced by 30% if you use the Fast Payment Option (FPO).

Level 2 Breaches (second or subsequent breaches)

The starting point here is a fine of £20,000 (or £60,000 for right to work checks carried out on or after 13 February 2024) per illegal worker employed, before reductions. Reductions will be made as follows:

• Mitigating Factor 1: You will receive a £5,000 reduction if there is evidence that you already reported the suspected illegal worker to the Home Office and received a Unique Reference Number.
• Mitigating Factor 2: You will receive a £5,000 reduction if there is evidence that you have actively co-operated with the Home Office.

The Fast Payment Option is not available where you have been found to be employing illegal workers in the last three years.

Payment options

Fast Payment Option – 30% reduction

For level 1 breaches it is possible to opt to pay via the Fast Pay Option (FPO). This will result in a 30% reduction if payment is received within 21 days of the date of the Civil Penalty Notice. Payment via this method cannot be done in instalments. The FPO is not available for Level 2 breaches.

Payment in Instalments

If you are able to demonstrate why you are unable to pay in one lump sum, the Home Office may consider accepting payment in instalments, usually up to 24 months and exceptionally up to 36 months. Requests for payment in instalments along with details as to why this is required, must be made within 28 days of receipt of the Civil Penalty Notice.

How do I object to the Civil Penalty Notice?

You are able to object to the issuing of a Civil Penalty Notice if you believe that:

• You are not liable to pay the penalty (e.g. where you are not the employer of the illegal worker (s));
• You have a statutory excuse, having undertaken the necessary right to work checks;
• The level of the penalty is too high (either it has been miscalculated or the mitigating evidence that you have supplied has not been taken into account)

Objections must be made in writing and within 28 days of the due date of the Notice.

The Home Office will consider the objection and will send an Objection Outcome Notice setting out whether the penalty is to be maintained, reduced or cancelled. In the event that the penalty is increased a new Civil Penalty notice will be issued. The Home Office must respond to your objection within 28 days.

Can I appeal the Home Office decision?

Yes. An appeal can be made under section 17 of the 2006 Act on the same grounds as above. In Scotland, this would involve a summary action in the Sheriff Court. This must be done within 28 days of either the date specified on the Objection Outcome Notice or the date specified on the new Civil Penalty Notice. The court may: allow the appeal and cancel the penalty: or allow the appeal and reduce the penalty; or dismiss the appeal. In the event that your appeal is unsuccessful the court may order you to pay reasonable costs/ expenses of the Home Office. If successful, the Home Office may be ordered to pay your reasonable costs/ expenses of the appeal.

What happens if I don’t pay?

Enforcement action to recover the civil penalty may be taken by the Home Office in the event that you do not pay.  A negative judgment may have an adverse effect on your ability to obtain credit in the future or act as a company director. If you are liable for a civil penalty and you are subject to immigration control yourself, the Home Office may take this into consideration in any future immigration application that you make. If you are liable for a civil penalty, it could also affect your ability to sponsor migrants under the skilled worker and global business mobility routes.

How can we help?

It has now become more important than ever for employers to review their current onboarding processes to ensure they are fully compliant with the right to work regime. Our immigration lawyers can offer a mini-audit of your onboarding and record keeping procedures to ensure that you are up-to-date with the changes and are complying with government requirements.

Should you find yourself having been served with a Referral Notice, a Civil Penalty Notice or if you wish to object to a Civil Penalty Notice or appeal the subsequent Home Office decision, our team of specialist immigration lawyers will be able to assist you in putting forward the best possible case on your behalf.