3 Oct 2016

Matthew Davies reviews the Government’s response to public consultation on Strengthening and Simplifying the Civil Penalty Scheme to prevent illegal working. The Home Office has also published new guidance on the current regime. 

The Government has taken some knock-back on its immigration agenda recently. Despite best efforts to command the high ground, the ‘go home’ poster van campaign backfired badly; it also had to shelve the flagship policy of demanding cash bonds to deter ‘high risk’ migrants from overstaying. Coalition consensus on immigration seems to be breaking down as Liberal Democrats execute their promise to inject ‘liberalism’ into the Home Office.​ 

Employers would be mistaken to relax vigilance now, however. The Home Office knows that attacking illegal working is safer political ground, and has issued a muscular report following its consultation exercise on strengthening and simplifying the civil penalty scheme. This will translate into tough proposals to tighten the screw on employers, with higher penalties and less leniency where mistakes occur. In the latest embarrassment, the Home Affairs Select Committee uncovered damning evidence that only a small proportion of tip-offs about illegal migrants have been followed up. The Home Office is determined to show its mettle, and sponsors are about to find themselves in the front line.

The public consultation was launched in August 2013. Despite concern from employers’ groups, the Government’s response report, published in October, states that almost all of the proposals will be enacted via secondary legislation early in 2014.

Key conclusions are:

  • The maximum civil penalty for illegal working will be doubled to £20,000 per illegal worker. The Government thought that 62% in favour constituted ‘clear support’ for the proposal and expects the changes to increase the deterrent effect, make collection of penalties easier and punish the unfair competitive advantage gained by employers who undercut legitimate working.
  • Warning letters will remain an alternative to penalties for the first breach where there are other mitigating factors (good overall compliance, cooperation and self-reporting) but there will be a narrowing of circumstances in which it will be applied. Otherwise the penalty for a first breach increases to £15,000 per illegal worker.
  • The requirement for Annual re-checks for List B migrants with time-limited immigration permission will be scrapped in favour of single check ‘at the point of expiry’. This proved one of the most controversial proposals for employers, opposed by most respondents to our own HR Law survey. It may actually represent a greater burden on employers than an across-the-board annual check, as each must be diarised separately.  It does not properly address the frequent scenario of an employee applying for extension at the time of expiry, whose documents are therefore unavailable for inspection. The report promises that new guidance will ‘make clear’ how this will work in practice. Experience suggests this will be difficult to achieve. The annual re-check is also helpful for indentifying prospective job changes which may require a fresh immigration application or notification in respect of a sponsored worker.
  • Joint and several liability for civil penalties for directors and partners of LLPs to enable recovery where the business fails to pay. Respondents questioned whether this is fair to directors or partners without direct involvement in, or even knowledge of the error or deficiency which resulted in illegal working. Concerns were raised about the complexity of such situations, and the interrelationship with partnership and company law. The Government acknowledged this, but re-states its determination to make this work.
  • More enforcement activity, a boost to ‘national coordinated campaigns’ to deter illegal working and more focus on debt recovery. Given the debacle of the ‘go home’ vans, a new approach to publicity will be needed!
  • EEA family members –  the report acknowledged arguments that it is unlawful to insist family members of EEA nationals produce prescribed documents from Lists A and B evidencing immigration status. The unsatisfactory response from Government is that these migrants may produce alternative documents to satisfy an employer, but the civil penalty will remain payable if it later emerges that the person is not qualified to work in the UK.
  • Students – an additional requirement to produce evidence of term dates seems an unreasonable proposal bearing in mind that many postgraduate and other students do not have fixed term dates. The Government says it will adopt a ‘light touch and proportionate’ approach and give further consideration to the practicalities, but indicates it intends to proceed with this requirement.
  • The report acknowledges that the 28-day window for completing re-checks on acquisition of employees after a TUPE transfer is too short, and will extend it to 60 days.
  • There are concerns about discrimination and the impact on people with protected characteristics (especially race) of the anti-illegal working regime. The Government has published an equality impact assessment as required by the Equality Act 2010, refers to the code of practice on the avoidance of discrimination in undertaking checks and has now published a Policy Equality Statement as an annex to the consultation report.

Coinciding with the publication of the consultation report, the Government has also released updated Full Guidance for Employers on the Prevention of Illegal Working. This is substantially the same as the earlier (2012) version, but is updated to include:

  • Restrictions on Bulgarian and Romanian nationals ending on 31 December 2013;
  • New restrictions on Croatian nationals which came into force in July 2013;
  • A new fast payment option for paying the civil penalty;
  • Statement of circumstances in which a sponsor licence will be immediately revoked on receipt of maximum penalties, repeat breaches or breaches of the conditions of a civil penalty payment plan.

Both documents acknowledge the Home Office’s commitment to simplify document checks as far as possible. The wider roll-out of biometric residence permits (BRPs), including to those applying from outside the UK, should help achieve this over time.

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