We reported in September that the government had announced it was planning to increase the maximum Civil Penalty for employing an illegal worker from £20,000 to £60,000.
The government has now published a draft of the new statutory guidance which is currently before parliament. The new Code of Practice will come into force on 22 January 2024 and the Civil Penalties regime will significantly change from that date. The Code, along with the increases themselves, will definitely mean higher penalties for employers.
In simple terms, 'credits' given to employers for mitigating factors have been removed or have not increased in line with the increase in fines, leading to significantly higher penalties.
As expected, the maximum fine has been increased to £60,000. However, there are significant changes in how the fine is calculated, and in some cases fines will be x10 times more than they are now.
Fines are reduced by 'mitigating factors' and at present fines can be reduced to a warning where there has been no breach on the previous 3 years and to £5,000 in other cases.
From 22 January 2024, the maximum penalty in cases where there has been no breach in the previous 3 years will be £45,000, which is a reduction in line with the increase.
However, where the illegal working was not reported by the employer, the fine will be £40,000 per worker, up from £10,000 at present.
In cases there has been a breach in the previous 3 years, the minimum penalty will now be £50,000 where the illegal working was reported, which is a staggering x10 increase from the current £5,000.
Where the illegal working was not reported, the minimum penalty will be £55,000, up from £15,000.
What this means for employers
In two words, 'higher penalties'.
Civil Penalties for employing illegal workers have long represented a considerable financial risk to employers which has significantly increased as a result of this Code.
In most cases employers do not know they employed an illegal worker until after it has been brought to their attention by the Home Office, for example where the employee used a forged passport or just due to human error. In those circumstances, where there is not a full statutory defence, and the employer co-operates, the penalty at present would be £10,000 where there is no breach in the previous 3 years and £15,000 where there has been a breach in the previous three years. As above, that is increasing to £40,000 and £50,000 respectively.
As we said in our previous alert, the good news is that there will always be a full statutory defence, and therefore no penalty to be paid at all, where fully compliant right to work checks have been carried out.
However, even small defects in the right to work checks can lead to fines running into tens of thousands of pounds per worker. We strongly advise employers to make sure they have robust and fully complaint right to work checks in place.
If you would like to discuss these changes or any other immigration issue, please contact the co-author of this article Allan Briddock on abriddock@dacbeachcroft.com.
