Civil Penalty Under UK Immigration Act
A civil penalty can devastate your business’s finances and reputation. Even employing a single illegal worker, no matter how briefly, can result in the Home Office imposing civil penalties on your business.
Our experienced immigration solicitors can help you navigate compliance requirements, challenge penalties, and protect your business interests. Contact us today for guidance on prevention and managing civil penalty notices.
Possible Consequences of a Civil Penalty
Civil penalties inflict severe damage upon businesses and their reputations. The Home Office can impose a substantial financial penalty on a business owner if just one illegal worker is employed, regardless of the duration of employment.
Civil penalties continue to serve as a profitable revenue stream for the Home Office, with businesses of all sizes vulnerable to allegations of illegal working.
Beyond the requirement to pay a hefty fine, a civil penalty may trigger numerous consequences: criminal prosecution of the owner, enforced debt recovery, a County Court judgement, withdrawal of one’s Sponsor Licence, difficulties in securing future credit, disqualification of company directors, or the forced closure of the business.
Each year, the Home Office publishes a list naming all UK businesses that have received civil penalties. This publication often draws negative media attention, adversely affecting profits, credibility and reputation.
What Can Cause a Civil Penalty in the UK?
The Home Office may issue a Civil Penalty Notice if they discover you are employing a migrant worker illegally and you cannot demonstrate a statutory excuse through previously completed prescribed right to work checks. Under section 15(2) of the Immigration, Asylum and Nationality Act (IANA) 2006, this notice specifies the penalty amount and payment deadline.
The financial implications are severe: employers face penalties of up to £45,000 per illegal worker for first-time breaches, rising to £60,000 for subsequent violations. You may be liable for these penalties if you:
- Failed to conduct right to work checks correctly or at all
- Conducted checks but knew or should reasonably have known that documents were not genuine
- Employed someone when their documentation did not belong to them
- Allowed work that was not permitted under the worker’s immigration status
Beyond the substantial financial penalties, employers found in breach of their duties risk criminal prosecution and numerous other serious consequences.
How are Civil Penalties Calculated?
The Home Office determines civil penalty amounts on a case-by-case basis using a sliding scale. The assessment considers your history of compliance with right to work checks and potential reductions based on three key mitigating factors:
- Reporting of suspected illegal workers – providing evidence that you reported the suspected illegal worker(s) to the Home Office before investigation
- Active cooperation – demonstrating that you fully cooperated with the Home Office throughout their investigation
- Effective document checking practices – showing that you have robust systems in place for verifying employees’ right to work
The starting penalty for a first breach within a three-year period is £45,000 per illegal worker. This increases to £60,000 per worker for second or subsequent breaches. These amounts may be reduced if you can demonstrate the first two mitigating factors.
Importantly, if you meet all three criteria – reporting suspicions, active cooperation, and effective checking practices – and have not received any penalties for illegal working in the previous three years, the Home Office may reduce the penalty to a Warning Notice instead of a financial penalty.
The level of reduction will depend on the evidence you can provide to support each mitigating factor and your overall compliance history as an employer.
What to Do If You Receive a Civil Penalty?
If the Home Office discovers you employing an illegal worker, they will first issue a Referral Notice informing you that your case is being considered under the civil penalty scheme for potential breaches of the Immigration, Asylum and Nationality Act (IANA).
This Referral Notice outlines how your case will be assessed and possible outcomes, including the date(s) of alleged breaches. Upon receiving this notice, you should consult “The employer’s guide to the administration of the civil penalty scheme” – official Home Office guidance detailing the civil penalty process, including crucial documentation and deadlines.
Following a civil penalty notice, you have three options, all with a strict 28-day deadline for response:
- Object to the penalty
- Request a payment plan from the Home Office
- Pay the full penalty amount
This deadline is non-negotiable, making it essential to seek specialist legal advice promptly. Our immigration solicitors can assess your case’s specifics and advise whether challenging the penalty is viable or if payment would be more commercially prudent.
When considering an appeal, note that the Home Office has the authority to increase the penalty if your appeal is unsuccessful. Given these significant implications, professional legal guidance is crucial for navigating your response effectively.
Our immigration team has extensive experience helping employers evaluate their options and determine the most advantageous course of action based on the specific circumstances of their case.
Stage 1: Initial Investigation
The Home Office may conduct unannounced inspections of business premises following anonymous reports of illegal working. These reports can come from various sources, including disgruntled employees or customers, and the Home Office has authority to investigate without concrete evidence
During their visit, enforcement officers gather evidence and refer findings to the civil penalty compliance team. If the team determines further investigation is warranted, they will issue an information request requiring:
- Confirmation of whether you employ the identified workers
- Details of any right to work checks conducted and their timing
- Information about any reports made regarding suspected illegal workers
- Specific employment details of identified workers
- Income from employment or self-employment
- Pension income of either partner
- Certain benefits
- Cash savings of at least £88,500, held for 6 consecutive months
If the application was submitted before 11 April 2024, the lower income threshold of £18,600 still applies.
There is no longer an additional income requirement for children, but applicants must still demonstrate that they can accommodate and support dependents without public funds.
You have 10 days to submit the completed information request form with supporting documentation. This response is crucial in determining the final penalty amount, making expert legal representation vital at this stage.
Importantly, while the standard form only collects basic information, we recommend submitting additional detailed representations addressing each allegation alongside your response form.
Stage 2: Penalty Assessment
The civil penalty compliance team evaluates responses against four key criteria to determine appropriate penalties. Based on the mitigation evidence provided, they may:
- Issue a warning notice (no financial penalty)
- Reduce the civil penalty amount
- Issue a full civil penalty
Upon receiving a civil penalty notice, you have 28 days to either:
- Pay the full amount
- Arrange an instalment plan
- Object to the penalty
For first-time cases (no penalties in the previous three years), you may qualify for a 30% reduction through the fast payment option if you settle the full amount within 21 days of the notice date.
As a business owner, you’ll need to weigh the costs of legal representation against the potential benefits of objecting to the penalty. This decision should be based on the strength of your grounds for objection and the likelihood of achieving a reduction in the penalty amount.
How to Pay the Civil Penalties?
Your Civil Penalty Notice will specify both the amount due and payment deadline. You may qualify for a discount through prompt payment, or if you’re experiencing financial difficulties, you might be eligible for an instalment plan.
Note that failing to pay the full penalty, object, or appeal by the specified deadline will result in court registration of the penalty, potentially triggering immediate enforcement action. Similarly, missing agreed instalment payments will lead to debt recovery proceedings.
Fast Payment Option
A 30% reduction is available if you pay within 21 days of your Civil Penalty Notice date. This reduced amount and payment deadline will be clearly stated in your notice.
You retain eligibility for the fast payment option even if you object to the penalty before the deadline. If your objection results in a penalty, you’ll receive a new notice with a fresh deadline for the reduced amount. However, this discount isn’t available if you’ve been found employing illegal workers within the previous three years.
Payment by Instalments
If you cannot manage a single lump sum payment, the Home Office may permit instalment payments over:
- Usually up to 24 months
- Exceptionally up to 36 months
Please note that choosing instalments makes you ineligible for the fast payment discount.
To apply for instalments, you must provide:
- Details of your payment capability over the proposed instalment period
- Explanation of why you cannot pay the full penalty within the standard 28-day window
Importantly, requesting an instalment plan doesn’t affect the time limits for submitting an objection or appeal.
Can You Appeal a Civil Penalty for Illegal Working?
If you’ve received a civil penalty for illegal employment, you may have grounds to challenge it through appeal. This process can result in either a reduction of the penalty amount or its complete removal. However, be aware that penalties can also be increased during the appeals process.
Appealing a civil penalty requires careful analysis of several factors:
- The nature of the alleged breaches
- Evidence used by the Home Office
- Conduct of enforcement officials during their investigation
According to Home Office guidance, you can object to a civil penalty and appeal to a court on these grounds:
- Absence of liability – proving you are not the employer of the illegal worker(s)
- Statutory excuse – demonstrating you conducted proper right to work checks
- Disproportionate penalty amount – showing the fine was miscalculated or proving mitigating factors weren’t considered
You must submit any objection within 28 days using an Objection Form, including all supporting evidence. The Home Office may respond with:
- A Warning Notice
- Confirmation of the original penalty
- A reduced penalty
- An increased penalty
- Complete cancellation
If your objection is unsuccessful, you retain the right to appeal to the County Court within 28 days.
Important note: If during a premises visit you can establish a statutory excuse for the identified illegal workers, the Home Office will issue a No Action Notice instead of a Referral Notice. This carries no adverse implications for future cases. Similarly, if a Civil Penalty Notice is cancelled after objection or appeal (without being replaced by a Warning Notice), it won’t affect any future breaches.
Our immigration team can help assess your case and guide you through this complex appeals process to achieve the best possible outcome.
How to Challenge the Civil Penalties?
If you’ve received a civil penalty notice, we can help you evaluate and pursue the most appropriate response based on your circumstances. Successful challenges can be made on various grounds, including:
- Demonstrating a statutory excuse through proper right to work checks
- Proving the named individuals are not your employees
- Evidencing previous reporting of suspected illegal workers
- Highlighting mitigating factors not considered in the original decision
- Challenging procedural errors in the Home Office’s investigation
Beyond handling existing penalties, you can also consult an experienced solicitor to prevent future issues and risks.
What is the Process of Appealing Civil Penalties?
Understanding Your Options
- You have 28 days to pay the fine or lodge an appeal.
- Appeals can aim to reduce or cancel the penalty entirely.
- The Home Office may increase the penalty during the appeal process.
Requirements for a Valid Appeal
- Appeals must be filed within strict timeframes.
- Grounds for appeal must be legitimate and well-documented.
- Evidence should be tailored to your organisation’s specific circumstances
Seeking Professional Assessment
- Consult experts to evaluate whether appealing is advisable.
- Consider the nature of the breach and likelihood of success.
- Specialists can recommend the best course of action based on your case.
Submitting the Appeal
- Compile and submit objections within the 28-day window.
- Valid grounds include non-liability, statutory excuse, or disproportionate penalty.
- Documentation must be comprehensive to support your claims.
Escalating if Necessary
- Unsuccessful initial appeals can be taken to the County Court.
- A formal hearing will review your evidence and arguments.
- The court may adjust, reduce, or cancel the penalty.
Risks and Prevention of Civil Penalties
Public Disclosure and Reputational Damage
- Civil penalties are publicly disclosed in Home Office quarterly reports.
- Company names, addresses, and penalty amounts are accessible and often reported by media.
- Reputation damage can affect clients, partners, and future hiring opportunities.
Impact on Sponsor Licence Status
- Civil penalties can trigger sponsor licence reviews and potential downgrades.
- Serious breaches may lead to licence revocation, limiting access to international talent.
- Historical penalties can hinder future licence applications.
Legal and Commercial Ramifications
- Non-payment can result in county court enforcement actions affecting directors.
- Penalties may harm credit ratings and business trading relationships.
- Knowingly employing illegal workers can lead to criminal prosecution and unlimited fines.
Protecting Your Business Through Compliance
- Conduct thorough right to work checks for all employees before hiring.
- Use digital or manual checks for foreign nationals and passports for UK/Irish nationals.
- Employer Checking Service provides verification when standard documents are unavailable.
Maintaining Robust Compliance
- Establish ongoing verification and record-keeping systems per Home Office guidance.
- Provide regular training for staff involved in recruitment and compliance.
- Monitor employees with time-limited work permissions consistently.
