A Civil Penalty notice for illegal working has serious repercussions for a business. Since February 2024, these include a fine of £45,000 per illegal worker. Company directors may also be disqualified or find it more difficult to obtain credit for the business and some businesses have even faced closure after receiving a sizeable fine. In this blog we outline practical steps businesses should take if they receive a fine.
Referral notice and information requests
The first step in the process is a civil penalty referral notice. The notice will inform you that the Home Office is considering issuing a civil penalty and specify the date the alleged breach was identified.
The Home Office may contact you for further information. This gives you the opportunity to present further information and evidence. This could include evidence that you carried out a valid right to work check.
Responding to an information request within 10 days is considered active cooperation with the civil penalty process and can result in a civil penalty being reduced.
Checking the penalty
If you receive a civil penalty notice, you should check whether the fine appears to be correct. The Home Office may state someone is working illegally in your business when they are not, or they may have set the fine at the wrong level. Immigration law is complex and constantly changing and it is not uncommon for the Home Office to make a mistake.
You should check what Right to Work checks you carried out on the worker(s) in question and the level of the fine. This may reveal that you have a potential ground of objection to the penalty.
Paying the fine
If you accept that illegal working has taken place and do not have any grounds to object to the penalty, payment should be made as soon as possible. If payment is made within 21 days, the penalty will be reduced by 30% under the ‘Fast Payment Option’. We would recommend taking legal advice on a possible objection before deciding to pay the penalty under this option. It is also important to note that receiving, and paying, a civil penalty notice will not prevent you from receiving further notices in the future if you do not remedy the breach for which the civil penalty notice is issued. In August, the Evening Standard reported that a dim sum restaurant in London had received three separate civil penalty notices since 2018, incurring total fines of £470,000 and, after receiving their latest penalty notice, were banned from serving alcohol, playing music and serving hot food past 11pm.
The fast payment option is also available where the employer objects to the penalty within the objection period. If they are still required to pay the penalty after their objection is decided, they must pay within 21 days of the date specified in the objection outcome notice to use the fast payment option.
In the past, paying a reduced fine under the fast payment option was the most pragmatic and commercial option for many businesses. However, given the increase in penalties, many employers now wish to consider an objection to the fine.
Objection
If you have grounds to object to the penalty, you must do so within the objection period. The end of the objection period is stated on the civil penalty notice. It usually lasts 28 days from the due date of the penalty.
The grounds of objection are:
- You are not the party liable to pay the penalty
For example, you do not employ the illegal worker(s) identified on the penalty notice.
- You have a statutory excuse
You reasonably believed the employee had the right to work and you carried out a valid right to work check.
- The level of penalty is too high
For example, the Home Office calculated the penalty incorrectly or you meet the Home Office’s mitigating criteria which means the penalty should be reduced.
Objections must be clearly explained and backed up by supporting evidence. It is advisable to take immigration advice at an early stage to maximise your chances of a positive outcome. We have helped several businesses reduce civil penalties to nil on the basis that there was, in fact, no illegal working.
Once submitted, the Home Office compliance team will consider the objection. There are three potential outcomes:
- Cancellation of the penalty
- Reduction of the penalty
- Penalty is maintained
Mitigating factors
When issuing the initial penalty and considering any objection, the Home Office will refer to their code of practice on illegal working. The code of practice sets out situations in which a penalty can be reduced. It is also possible for a warning to be issued instead of a penalty.
The factors which can lead to a penalty being reduced are:
- The employer reported the suspected illegal worker to the Home Office
- The employer actively cooperated with the Home Office
- The employer has effective right to work practices in place
If all three of the factors apply, the Home Office can issue a warning notice rather than a fine, reducing the penalty to nil.
Appeal Rights
If the Home Office maintains the penalty at the objection stage, an appeal in Scotland can be made to the Sheriff Court. The action must be lodged within 28 days of receipt of the Home Office's final decision. An employer can appeal to the court on the same grounds as they cited in their objection. In addition, they can appeal the size of the penalty based on their ability to pay.
Case Example
An example of a case where the civil penalty was successfully reduced by the Sheriff Court is Ashfaq v Secretary of State for the Home Department.
Mr Ashfaq was issued a civil penalty notice of £5,000 after one of his workers was found to be working illegally and there was no valid right to work check. The Home Office initially set the penalty at the then maximum sum of £10,000 but reduced this to £5,000 because it was Mr Ashfaq’s first penalty and because he had been co-operative.
Mr Ashfaq took the matter to the Sheriff Court and argued that the fine was still too high. The court held that there was no doubt that the Home Office was entitled to issue a civil penalty in the circumstances, but that it should be reduced to £2,500. The court found that the profits of the business were modest and that Mr Ashfaq was a sole trader who had a young family to support financially, justifying a reduction.
How can we help?
Prevention is always better than a cure. This is especially true in the case of civil penalties which increased so significantly at the beginning of this year and can have a hugely damaging effect for any businesses receiving one.
If you have received a fine, we recommend you seek urgent professional support, to maximise the strength of an objection or appeal. We have a specialist team with experience in both immigration law and Sheriff Court procedure, offering a one-stop service to respond to a civil penalty. Our team includes a litigation specialist who has acted for the Home Office in relation to civil penalties, providing a unique insight into the civil penalty process and the possibility of negotiating fines. We have also had success objecting to Home Office penalties, with several clients having had their penalty reduced to nil following our intervention.
For advice and guidance on Civil Penalty Notices and the steps you should take to prevent them, contact us on 03330 430350.
