Civil Penalties

As the latest data shows, the number of civil penalties issued over a 6 month period in the UK has reached over £4m, therefore it is essential you ensure anyone you employ has the right to work in the UK. A recent raid in Stockport looks likely to result in a fine of up to £40,000.

What is a Civil Penalty?

The Civil Penalty is a fine imposed on an employer found to employ someone who does not have the right to work in the UK. Please see our guide for right to work checks if you need assistance in confirming who does have the right to work in the UK.

The Home Office state that the Civil Penalty scheme seeks to prevent abusive and exploitative behaviour towards illegal migrant workers, tax evasion and illegal housing conditions. It also seeks to prevent an adverse effect on the competitiveness of legal businesses.

What kind of work is covered?

Any work that is undertaken on the premises whether paid or unpaid and whether subject to an employment contract or not.

What is the consequence of employing an illegal worker?

The maximum Civil Penalty payable is £20,000 per worker, this can be reduced where mitigating factors are found. The Home Office has a sliding scale of penalties which take account of employer’s compliance record and mitigating factors.

How and when is the Civil Penalty imposed?

The Civil Penalty process is made up of seven key stages. They are not necessarily in chronological order as some stages may overlap.

• Breach
• Referral
• Decision
• Payment
• Objection
• Appeal
• Enforcement
• Breach

When an employer is found, or suspected to be employing illegal worker(s) during any Home Office official visit to the business premises, the employer will be provided with an opportunity for them to demonstrate that they have complied with the law by showing that they have carried out the correct right to work document checks. This can then give them a statutory excuse against liability for a civil penalty.

The Home Office official will consider the evidence given by an employer to determine whether or not a statutory excuse is established for each illegal worker. They will either issue the employer with a No Action Notice or a Referral Notice in respect of each illegal worker.

A No Action Notice informs that no further action will be taken against the employer.

A Referral Notice informs that the case is being sent to the Home Office official with responsibility to administer the Civil Penalty Scheme. They will consider whether the employer is liable for a Civil Penalty. It also informs how the case will be considered and the possible outcomes.

Referral

A copy of the Referral Notice along with the gathered evidence is sent to the Civil Penalty Compliance Team within 14 days of the suspected breach.

The employer is then sent an Information Request asking them to provide any further information and evidence in the Response Form by the deadline given to assist the Civil Penalty Compliance Team in making their decision about the employer’s liability.

Decision

A decision will be made whether  the employer is liable for a civil penalty. The caseworker will consider who is the employer, what is the worker’s immigration status and employment start date, whether a breach has occurred and what should be the penalty level and amount.

There are several possible decision outcomes and will result in one of the following notices being sent.

• Civil Penalty Notice
• Warning Notice
• No Action Notice

Each notice will be given with a Statement of Case which states the evidence and the explanation of the decision.

A Civil Penalty Notice is given when the employer is found to be liable for a civil penalty for employing one or more of the illegal workers mentioned in the Referral Notice.  It will confirm the breach date, the amount to be paid after any deductions for mitigating factors and payment options.

It will also explain how the employer can object.

The employer must either:

• Pay the penalty; or
• Object against the penalty

A Warning Notice informs the employer why they are not liable for a financial penalty on this occasion and for which illegal worker. It will state that it is a formal warning which will be taken into consideration for any further breaches in the future.

A No Action Notice informs the employer that they are not liable for a financial penalty and the reason.

The Statement of Case informs the employer the type of evidence held by the Home Office with an explanation of their decision. It will inform how the penalty amount has been calculated when a Civil Penalty Notice has been issued.

Payment

The Civil Penalty Notice will state the civil penalty amount and the date it is due by.

The due date for the full amount is 28 days from the date the notice was given.

There is a fast payment option which reduces the amount by 30 per cent if the employer pays the full amount within 21 days of it being due. This option will not be available if the employer was previously found to employ illegal worker within the previous 3 years.

If the employer objects to the penalty then they will continue to be eligible for the fast payment option even if they are subsequently found to be liable following their objection. The fast payment option is only available as one lump sum payment and not by instalments..

If the employer is unable to pay the full penalty amount in one lump sum then the Home Office will consider the impact of the penalty and may agree to accept the penalty by instalments which is usually up to 24 months and only exceptionally up to 36 months. However, the full penalty amount is payable in total and it is not discounted.

Objection

 An employer who has received a Civil Penalty Notice has 28 days from the date of the notice to object using the Objection Form which is sent with the notice.

The employer may object on the ground that they are not liable because they are not the employer in question, they have a statutory excuse or that the penalty amount calculation is incorrect. They should provide reasons along with supporting evidence.

The caseworker will review the evidence provided by the employer and make a decision. The employer will be sent one of the following notices along with a Statement of Case informing them of the outcome.

• A Warning Notice
• A new Civil Penalty Notice (where the penalty is increased)
• An Objection Outcome Notice (Penalty maintained)
• An Objection Outcome Notice (Penalty reduced)
• An Objection Outcome Notice (Penalty cancelled)

A new Civil Penalty Notice is issued if the objection is unsuccessful and the penalty is increased. The employer has a right to object to the new notice but may exercise a right of appeal without first raising another objection.

If the penalty amount is reduced or maintained an Objection Outcome Notice (Penalty reduced) or an Objection Outcome Notice (Penalty maintained) is sent respectively. The penalty must either be paid in full or payment instalments set up, or appeal against the penalty by the deadlines given in the notice.

If the employer objected to the penalty before the deadline given in the Civil Penalty Notice, they will continue to be eligible for the fast payment option if they remain liable for a penalty. A benefit of pursuing an objection even if the employer accepts that a Civil Penalty will need to be paid is not only to seek to reduce the amount payable but also to extend the time before it needs to be paid.

Appeal

If the employer’s objection is unsuccessful or they have not been given a decision within 28 days of their objection, they can bring an appeal to a civil court. This must be lodged within 28 days of the date given in the notice unless a longer period was agreed.

The grounds of appeal can be that the employer is not liable because they are not the employer in question, they have a statutory excuse or that the penalty amount calculation is incorrect.

If an employer appeal against a civil penalty, the court may allow the appeal and cancel the penalty; or allow the appeal and reduce the penalty; or dismiss the appeal.

The employer should be aware that if their appeal to the court does not succeed, the court may order that they pay the reasonable costs/expenses of the Home Office in defending their appeal. If, however, their appeal is successful, the court may order that the Home Office pay their reasonable costs/expenses of the appeal.

Enforcement

If the employer do not pay the penalty in full or set up and comply with payment by instalments, or object or appeal by the deadlines given in their Civil Penalty Notice or Objection Outcome Notices, the Home Office will start action to recover the civil penalty.

This action may have an adverse impact on their ability to obtain credit in the future and act in the capacity of a director in a company. This can also adversely affect their future immigration application if they are subject to immigration control. Moreover, if they wish to apply for sponsor licence, it could also affect that application.

Contact Us

If you have any queries or wish to seek advice on Civil Penalties please contact our specialist business immigration team on 0191 232 9547. It is imperative to not only seek early advice but also from someone who has handed this type of case before and has working experience and knowledge of civil penalties.