January 2025 saw a record number of Home Office raids on businesses, including restaurants, nail bars, car washes and warehouses. With civil penalties increasing to £45,000 for a first breach in 2024, it is essential that all employers are complying with immigration law. In this article, we break down what you need to know about civil penalties.
Businesses woke up to the news this week that the Home Office had raided 828 places of work across the UK in January 2025, making 609 arrests. This was a 73% increase on the previous January. The raids aimed to identify illegal employment of people with no right to work in sectors including hospitality, retail and personal care.
This unprecedented level of enforcement makes clear that immigration compliance is now a responsibility that businesses cannot afford to overlook.
In February 2024, civil penalties for illegal working tripled from £15,000 to £45,000 per worker for a first breach. This increase had an immediate impact: by 30 June 2024, the Home Office had issued an eye-watering £21.5 million in civil penalties.
Civil penalties are not the only risk to businesses. For sponsor licence holders, failing to comply with immigration law can mean the suspension or revocation of the licence. The Home Office suspended 1,342 licences and revoked 1,222 in 2024. This is an increase on 569 suspensions and 337 revocations in 2023. There was also increase in criminal prosecutions for illegal working offences.
Many compliance breaches come from honest mistakes. Since Brexit, only British and Irish citizens have an automatic right to work in the UK. Everyone else must hold individual immigration permission. Some employers do not realise this now includes EU citizens, who had a right to work until the UK left the EU and must now show status under the EU Settlement Scheme or another visa.
It is no surprise that many businesses are finding immigration compliance difficult to navigate. There were several changes to right to work guidance and sponsor guidance last year, in addition to the changes to civil penalties.
For small businesses without dedicated HR teams or the resources to pay for regular legal advice, the challenges are acute. The Home Office distinguishes between small and large businesses in relation to sponsor licences – those classed as ‘small’ pay a smaller application fee and a reduced charge to sponsor workers. Yet it does not do so when it comes to civil penalties. A small business is expected to pay the same penalty as a profitable multinational company with hundreds of employees. Is it proportionate that a family-run restaurant which has made an honest mistake is hit with a potentially fatal fine of £45,000?
Under the current penalties regime, however, small businesses are particularly at risk if issued with a civil penalty. Knowing how to deal with this situation is essential.
How to deal with a civil penalty
The first step in the process is a civil penalty referral notice, advising that the Home Office is considering issuing a penalty. This may follow a visit from Home Office enforcement officers. The referral notice gives a business the opportunity to present further information and evidence about the suspected illegal working.
It is essential to respond to this promptly. Responding within 10 days is considered active cooperation with the civil penalty process and can result in a civil penalty being reduced.
Any business which receives a civil penalty referral notice should seek legal advice immediately to ensure that all relevant information and mitigating factors are provided to the Home Office at this early stage.
Paying a penalty
If a business accepts that illegal working has taken place, even unintentionally, and does 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%.
However, given the size of penalties now being issued, we would recommend taking legal advice on a possible objection before deciding to pay the penalty under this option.
Challenging a penalty
If a business believes it has grounds to object to a penalty, it can do so within the objection period on the civil penalty notice – normally 28 days. The Home Office compliance team will consider the objection and either maintain, reduce or cancel the penalty.
If the penalty is maintained, a business can appeal to the Sheriff Court in Scotland or the County Court in England within 28 days of receipt of the Home Office decision.
Recent case law suggests that judges have very limited discretion to take into account a business’s ability to pay the civil penalty issued during an appeal. The grounds of objection to a civil penalty are:
- The business is not liable – the penalty will be cancelled if, for example, the business did not employ the worker identified on the penalty notice.
- The business has a statutory excuse – the penalty will be cancelled if the business reasonably believed the worker had the right to work and carried out a valid right to work check.
- The penalty is too high – the penalty will be reduced if the business reported the worker themselves, actively cooperated with the Home Office and/or had effective right to work checks in place.
These limited grounds mean it can be very difficult to successfully challenge a civil penalty. With this in mind, when when it comes to immigration compliance, prevention is better than cure.
How to avoid a civil penalty
The best defence against a civil penalty is a properly carried out right to work which provides a 100% defence against a penalty. A partially correct right to work check does not provide a defence and will not reduce the fine. Businesses must ensure they are carrying out right to work checks before new employees start work.
Thorntons provides tailored training for employers on right to work and immigration compliance. We offer practical support to businesses on identifying risks and ensuring your business is fully compliant with immigration law, helping you focus on running your business.
For more information, or to arrange a training session for your business, please contact immigration law specialist Jacqueline Moore or a member of our team on +44 3330 430350 or complete an online enquiry and a member of the team will contact you.
