UK Home Office scrutiny of illegal working has increased significantly over recent months – businesses with large, diverse multi-sited workforces appear to be particularly at risk, but civil penalties are no longer something which only happens to other people.

The civil penalty regime has the very laudable aim of deterring UK employers from hiring staff without the right to work. However, certain aspects are overly complex with the result that seemingly minor procedural errors can have serious financial, operational and reputational consequences.

Businesses employing staff in breach of the law face penalties of up to £20,000 per illegal employee. These can be imposed even without proof of illegal employment – it’s then up to the employer to demonstrate that the employee did have the right to work or that it carried out prescribed right to work checks to obtain a ‘statutory excuse’.  In other words, guilty until proven innocent.

In the event of a penalty being issued, businesses employing skilled staff from outside the EEA under a Tier 2 sponsor licence are also at risk of their sponsor licence being revoked. This would mean having to terminate the employment of all Tier 2 staff in the business and, potentially, being prevented from sponsoring anyone else for at least a year. If an employee’s sponsorship is terminated, his leave to remain in the UK will be curtailed to 60 days during which he must find another sponsor to take him on or leave the UK.

Finally, if an employer is found to have knowingly employed staff without the right to work, it could face criminal prosecution including imprisonment and/or an unlimited fine. From 12 July 2016, this offence is being widened to include circumstances where the employer had reasonable cause to believe (as opposed to ‘knew’) that an employee did not have the right work.

Common pitfalls

Most businesses conduct adequate right to work checks before employment begins (this aspect is relatively straightforward). However, the necessary checks become more complicated when an employee’s right to work expires during the course of his employment:

• It’s essential to retain an accurate record of visa expiry dates and have a reliable system for flagging them in advance, failing which the employer will be unable to carry out the necessary follow-up checks before the employee’s visa expiry date. That will leave it open to a civil penalty if the employee fails to apply to extend his leave or submits an application which is rejected. Where an employee applies to extend his leave before the expiry date, he should be able to continue working whilst the application is being considered (even if this is after the visa has expired). However, the employer must also apply to the Home Office’s Employer Checking Service (ECS) to obtain separate confirmation of the pending application in the form of a Positive Verification Notice (PVN) within 28 days after the visa expiry – this protects it from a penalty for a further 6 months even if the application is rejected during that time. Without a PVN, if the employee’s application is rejected but he continues working, the employer is at material risk of a penalty. Many businesses are unaware of the requirement to obtain a PVN, mistakenly relying only on evidence from the employee that an application has been filed.

• Employers are also caught out by doing an ECS check outside the 28 day grace period following a visa expiry, unaware that employee’s application has already been rejected – this simply alerts the Home Office to the fact that employee is working without permission leading it to issue a penalty, even if the employer has taken prompt action as soon as it became aware that the right to work had ended. Again, this highlights the importance of ensuring that visa expiry dates are carefully recorded and monitored and ECS checks are carried out well within 28 days after the visa expiry date.

Practical Steps

• Those with responsibility for recruitment should have a thorough understanding of right to work obligations but this applies equally (though less obviously) to those in charge monitoring visa expiry dates and carrying out follow-up checks when the risk of a penalty is greatest. This often falls to line managers who may not have the same knowledge or support as their recruitment and HR colleagues. Don’t forget them in your training plans.

• Carrying out regular audits to ensure that all employee files contain proper evidence of the right to work can be daunting for businesses with large workforces across numerous sites. But it is vital to root out right to work breaches before they come to the Home Office’s attention.

• If an employee does not have the right to work, businesses should take prompt and appropriate dismissal action. The Home Office has an understanding of the need to carry out dismissals fairly but allowing an employee weeks on end to produce evidence of his claimed right to work can be hard to justify when defending a civil penalty.

• Finally, any Home Office notification alleging illegal employment should be addressed urgently as it takes time to gather the necessary evidence to respond to an information request or submit an objection. Even where the Home Office has valid grounds for upholding a civil penalty, responding on time to an information request can reduce the penalty by £5,000 and avoid revocation of a sponsor licence. It’s also worth seeking specialist advice as the Home Office sometimes issues penalties incorrectly and the employer may not always be aware that it has a legitimate defence.