Understanding the penalties for employing illegal immigrants

What happens if you employ illegal immigrants?

If a business director hires an undocumented immigrant or someone without the right to work in the UK, they may face an unrestricted fine or up to 5 years in prison. Neglecting compliance checks while hiring could lead to being convicted of endorsing unlawful employment practices, with severe consequences.

 

Fines for Employing Illegal Immigrants: A Guide for Company Directors

In July 2016, fresh regulations concerning the hiring of undocumented immigrants were implemented in the UK. As a business director, it is essential to grasp the compliance procedure and comprehend the consequences of employing individuals without legal permission.

Substantial fines and penalties may be imposed upon those found guilty of hiring illegal immigrants and for not adhering to the government’s guidelines on verifying the status of workers.

 

What are the consequences of employing illegal immigrants?

If you intentionally hire an undocumented immigrant or have ‘reasonable cause to believe’ that the person lacks the right to work in the UK, and you still proceed with their employment, you may confront unrestricted fines and a potential prison term of up to five years.

Neglecting proper checks can result in fines of up to £20,000 for each employee working unlawfully in your business. Moreover, you could face disqualification as a director in such situations.

Furthermore, your business may endure reputational harm if Immigration Enforcement discloses your details, a prevalent practice aimed at discouraging other businesses from employing illegal immigrants.

 

Civil penalty regime for employers of illegal immigrants

If there is suspicion of employing illegal immigrants, you will receive a Civil Penalty Notice specifying the fine amount, which illegal worker(s) it pertains to, and who bears the responsibility for payment. The obligation might fall solely on you, the limited company, or both.

The notice will provide information on:

• The payment deadline
• Whether you can lessen the penalty by paying within 21 days
• Your rights to challenge and the procedure for doing so
• Potential enforcement measures if payment is not made within the statutory 28 days

If you acknowledge the justified penalty and can promptly pay the full amount, a 30% reduction is applicable if paid within 21 days.

If you fail to make the payment, enforcement action can be initiated in the civil court, and the outcome will be recorded in the County Court Register of Judgments. This record may impact your future borrowing prospects, as banks and other lenders can access the register.

HMRC may also demand a security bond for you to continue trading if they become aware of the situation, and you, as the director, would be personally responsible for the bond.

The Insolvency Service has a dedicated team, the Public Interest Unit (PIU), collaborating with Home Office Immigration Enforcement. The PIU actively engages in disqualifying directors found employing illegal immigrants, especially those with outstanding Civil Penalty Notices.

Directors can face disqualification irrespective of the company’s liquidation status. Taking action against directors who blatantly violate the law is clearly in the public interest, serving as a stern warning to others that enforcement is typically swift and effective.

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Your right to object

You possess the right to object to the imposed fine, but you must do so within 28 days of receiving the Civil Notice Penalty. 

Your objection can be founded on three grounds:

• You are not accountable for the penalty as you are not the worker’s employer.
• You have a statutory excuse, indicating that you conducted the required checks on the worker(s).
• The penalty is excessive due to mitigating factors that should be considered.

When initiating an appeal, there are five potential outcomes:

• A warning notice: a formal warning that failing to conduct proper checks on your workforce within the next three years could result in liability for the maximum penalty of £20,000 per illegal worker.
• Increase of the civil penalty
• Maintenance of the civil penalty
• Reduction of the penalty
• Cancellation of the civil penalty

Careful consideration is necessary when deciding to challenge a Civil Notice Penalty, and if you opt to launch an appeal, it’s crucial to provide detailed supporting evidence.

For further details on fines and penalties related to hiring illegal immigrants, contact Vanguard Insolvency. We offer professional guidance to aid compliance with regulations and can assist with challenges when necessary. Our services include free same-day consultations, operating from our extensive network of 100+ offices across the UK, and providing director advice and support promptly.