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What is the Penalty for Employing Illegal Workers?

For small businesses in the UK, verifying a prospective employee's right to work can be a complex undertaking. Compliance with Home Office rules is essential, especially considering the 2022 Code of Practice on Preventing Illegal Working. Failure to adhere could lead to severe penalties, particularly impactful for smaller firms.

illegal workers employment Understanding the Civil Penalties

If a small business employs someone not authorised to work in the UK, it faces a civil penalty that could go up to £20,000 per illegal worker. On 7th August 2023, the Home Office announced that, from January 2024, employer civil penalties for a first illegal working breach will increase from £15,000 to £45,000 for each employee found to be working without permission. For subsequent breaches, the fine triples from £20,000 to £60,000 for each employee.

This could be financially crippling. However, this fine can be lessened for first-time offenders or if there are mitigating factors, like an effective right-to-work check system, proactive reporting to the Home Office, or cooperation during investigations.

If your business has a sponsor license for migrant workers, the Home Office might enact 'special measures,' or worse, suspend or revoke your license. This could be problematic not just for your business but also for the employees you're sponsoring.

For businesses with multiple locations, each managing its recruitment, you'll only be labelled a serial offender if Home Office investigations find systemic flaws in your hiring practices. Also, if you take over another company and inherit its employees under TUPE, you get a 60-day grace period to make sure all staff are legally employed.

If the Home Office sends you a civil penalty notice, consult a lawyer immediately, whether you plan to challenge the fine or seek mitigation. A well-argued objection, backed by evidence, could save your business a significant amount of money.

illegal workers employment The Potential Criminal Sanctions

Though uncommon, criminal charges are possible for employing an ineligible worker. The Crown Prosecution Service must prove beyond a reasonable doubt that you knowingly or had reasonable cause to believe the worker was illegal. A conviction can result in an unlimited fine and up to five years in prison in the Crown Court, or a £5,000 fine and six months imprisonment in a Magistrates' Court. Scottish law offers similar penalties.

Who is accountable?

Usually, the direct employer is responsible for ensuring legal employment. However, if your small business uses self-employed contractors, be advised that you could still be liable if you don't perform due diligence.

If you're using contractors from an agency, you're not legally responsible for their right-to-work checks, but it's good practice to ensure that these checks are done. Some businesses also use external Identification Document Service Providers (IDSPs) for more assurance, which offers a level of legal protection under the civil penalty scheme.In short, this is a complicated area requiring careful planning and diligent execution. Failing to take right-to-work checks seriously could cost your business dearly, both financially and reputationally.

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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 25th October 2023.

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