Immigration: new statutory employer Codes on illegal working

On Friday 16 May the Government released two new statutory Codes of Practice:

• Code of Practice on preventing illegal working: civil penalty scheme for employers
• Code of Practice for employers on avoiding unlawful discrimination while preventing illegal working 

These supersede the existing Codes, although calculations of liability and penalties depend on the date of the breach in question. Revisions had been expected following consultation with employers and equality bodies last year, and the publication of a Draft Code on avoiding unlawful discrimination in April. The publication of the Codes side by side is a telling reminder to employers of the importance of balancing compliance with immigration law with employment law duties to employees – and the risks of falling foul on either side.

The underlying principles and structure of both Codes are similar to their predecessors, but there are some important changes. The stated purpose of the revisions is to “strengthen and simplify” compliance for employers. As with most Home Office “simplifications”, there are actually some new layers of complexity, especially in relation to migrant re-checks.

All employers are affected by the changes and should review their HR systems in the light of them. Licensed sponsors under Tiers 2 & 5 the Points Based System should pay particular attention to the new detail, as failures to keep abreast could lead to downgrading or even revocation of a sponsor licence.

Code of Practice on preventing illegal working: civil penalty scheme for employers

Section 15 of the Immigration, Asylum and Nationality Act sets out the civil penalty scheme via which employers are liable for a fine if they employ a person aged over 16 and subject to immigration control in a role for which they do not have permission. In the absence of actual knowledge of the illegality, the employer is liable unless it has a Statutory Excuse which shows that it examined and retained copies of prescribed documents in accordance with a Code of practice which establish either:

a) an ongoing and unrestricted right to work in the UK (List A documents) or
b) a time-limited right to work in the role in question (List B documents)

The first Code of Practice coincided with the coming into force of the statutory provisions on 29 February 2008. There were subsequent revisions, but the latest version involves more substantial changes.

The new Code applies

• When calculating employers’ civil penalties for illegal working, in respect of any employment which commenced on or after 29 February 2008 where the breach in question occurred on or after 16 May 2014
• When determining employers’ liability, where an initial check or a repeat check to establish or retain a Statutory Excuse to a penalty fell due on or after 16 May 2014

Changes include:

Increase in level and scope of Civil penalty for illegal employment

• A “level 1 “ and “level 2” calculator regime for first and subsequent breaches within 3 years
• The maximum penalty doubles from £10,000 to £20,000 per illegal worker
• Credit in the form of reductions in the penalty is still available for employers which mitigated by reporting suspicions, cooperating with Home Office enquiries and demonstrating generally good prevention of illegal working processes; but
• The scope of Credit is now reduced and for a second breach a fine is mandatory. Previously there may have been a warning letter, which is still available for first breaches with full mitigation.
• A 30% reduction in fines for “fast payment” within 21 days of a penalty notice is only available for first breaches

A change to the “re-check” regime

Annual re-checks for time-limited List B migrants have been a central plank of the prevention of illegal working Codes under the 2006 Act. This is now changing and becoming more complicated:

• There is no longer an automatic need to re-check List B migrants every 12 months but
• There is a new distinction between “Group 1” and “Group 2” documents within List B
• Group 1 establishes a time-limited right to work in the role based on an expiry date; Group 2 establishes that for 6 months only from the date of initial check
• In List B, Group 1 a re-check is required prior to the expiry date identified at initial / most recent check 
• A 28-day “grace period” post-expiry is allowed for List B, Group 1 migrants to be subject to a Positive Verification Notice (PVN) check with the Home Office if they have a pending application for an extension of status with the Home Office and therefore cannot produce original documents
• In List B, Group 2, employers must examine a prescribed document and obtain from the Home Office PVN which lasts only for 6 months, following which a further re-check is required

So, not as simple as an annual re-check for everyone in List B.

The number of acceptable documents in Lists A and B has been reduced

In theory this is a simplification measure, but it pushes employers towards the PVN check. There have been persistent problems with “false negatives” on PVN checks in the past as the Home Office has been slow to log applications and immigration status changes on its system.

Additional evidence of term dates and work restrictions for students

Student immigration status (mainly for those sponsored by their educational institutions in Tier 4) can confer restricted rights to work. In addition to the standard List B documents, employers of student migrants must also obtain from the Tier 4 sponsor copy and retain details of their academic term and vacation dates. Usually this will be in the form of an original letter naming the student. Frankly the guidance could be clearer on the point.

Extended grace period for initial checks for newly acquired employees following a TUPE transfer

This is now doubled to 60 days from the date of transfer.

Code of Practice for employers on avoiding unlawful discrimination while preventing illegal working

A draft Code was published in April 2014 following consultation with the Equality and Human Rights Commission, whose more detailed statutory Code of Practice on Employment is designed to help employers comply with the Equality Act 2010.

The new Code specifically aimed at avoiding unlawful discrimination while preventing illegal working succeeds earlier Codes; the most recent was issued in 2008. Breach of it is admissible in the employment tribunals.

Essentially, the new Code is a common-sense reiteration of familiar employment law principles as to the avoidance direct and indirect discrimination by treating all employees and prospective employees in an even and objective manner in the recruitment process, making sensible allowance for individual circumstances. It sets out examples of obvious “howlers” such as making assumptions based on ethnic or nationality grounds or treating List B migrants less favourably in relation to List A migrants. New features include recommended diversity monitoring to inform an ongoing review of recruitment procedures.

You can find the new Codes at the following links to the Home Office website:

Code of Practice on preventing illegal working: civil penalty scheme for employers (17 pages)

Code of Practice for employers on avoiding unlawful discrimination while preventing illegal working (9 pages)

Right to work checklist (2 pages)