Do Employers have a Defence if an Employee is found to be Working Illegally in their Organisation?

Gulbenkian Andonian solicitors discuss the UK employment law and if a UK employer had an obligation to check the immigration status of their employees or prospective employees.

The ability to work legally in the UK and the need to curb illegal employment has been more particularly set out in the law on preventing illegal working in sections 15 – 25 of the Immigration Asylum and Nationality Act 2006 (the 2006 Act) and sections 24 of the Immigration Act 1971.

The 2006 Act replaced previous legislation and imposes a hefty civil penalty provision of £20,000 per Employers will have a defence to any proposed fine on the basis that they had done their best endeavours to ascertain the immigration status of their employee. Depending on the Visa condition of the employee, they may have to repeat the process of checking for those who have time-limited permission to work in the UK when their permission expires.

Need to be compliant

16 May 2014 Following the tightening of the civil penalty scheme raising the maximum penalties levied against employers, from the previous £5000 per offence to the current maximum of £20,000, the Home Office issued detailed guidance advising employers how to undertake a compliant right to work check. We should say at the outset that if any employer is still unsure after carrying out all the appropriate checks, whether an employee is entitled to work or continue to work with them, they should ask the Home Office to check the employees or potential employee’s immigration status using the employer checking service: – https:/www.gov.uk/employee-immigration-employment-status.

Revocation of sponsorship licences and various other detriments to the offending employer

UK employers employing persons outside the EU must apply for and obtain a Tier 2 sponsorship licence to do so. Employing this one not entitled to work can also result not only in a hefty fine but the revocation of a sponsorship licence.

The impact of civil penalty breach can be far-reaching, and may not end with a hefty fine and the revocation of the sponsorship licence, or indeed on a first warning by the Home Office for the employer to clean up their act, may not end by the downgrading of their sponsorship licence from class A to class B. This could also have a disastrous effect on the employer, particularly a small to medium-size business. It could result in prospective employees not applying to work for a B classified employer.

Furthermore, illegal employment could result in prosecution, enforced debt action, County Court judgement, adverse impact on ability to obtain future credit, disqualification of company directors; inclusion on the Home Office civil penalty offenders list, bad press, reputational harm and a resulting hit on profits and a small business could be forced to cease trading.

What must an employer do if served with a civil penalty notice?

If the business has been served with a civil penalty notice under the Immigration Act, consideration can be given to various options, for example challenging the fine only if there is a good defence to the allegation of employing illegal workers, or coming to some agreement with Home Office officials assigned to deal with this aspect of the work in order to limit the financial operational and reputational impact. Negotiations can, therefore, be made with the immigration service.

Appeals and judicial reviews

The appeals process in the event of failure to reach agreement can be complex and expensive and one has to weigh the pros and cons of such an action. The Home Office has the power to increase the level of original penalty at the appeal stage, if it considers that the employer knew or ought to know that they were employing someone with no permission or who had restricted hours of work on their visa, so it is important to proceed with an objective assessment and only proceed with litigation if confident that the case merits the challenge. There is a need, therefore, to respond to a penalty notice within a 28-day period. The Home Office is strictly enforcing the timeframe and there is usually no option for an extension.

Attendance at the employer’s premises to review files before issuing Tier 2 sponsorship licence

When businesses apply for Tier 2 sponsorship licences, representatives of the Home Office do usually attend the offices of the employer to ensure that all the documentation is in order, and they may wish at this stage to have a look at the list of employees and be aware of details of their immigration status to ensure that the employer is doing nothing untoward in employing any illegal migrants, prior to the approval of the sponsorship licence. It is difficult to obtain the licence but so easy to lose it!

Can an employee make a claim for unfair dismissal if dismissed because of illegal working?

Insofar as making a claim for unfair dismissal is concerned if it is ascertained that the employee should not have been working in the first place, in many cases the law is fairly clear. At one end of the spectrum, all individuals in the UK regardless of their immigration status are entitled to basic human rights under the Human Rights Act 1998. At the other end, the law says that in an individual should not be allowed to profit from their unlawful activity. In an employment context, this means that illegal workers cannot claim protection from unfair dismissal or assert any contractual rights where the employment contract itself is prohibited by law.

What about discrimination?

However, the position is less clear where an individual is subjected to poor treatment amounting to harassment or discrimination. In a matter of Hounga v Allen [2014] UKSC 47, Miss Hounga was a Nigerian national. At the age of 14 whilst living in Nigeria, she accepted employment from Mr and Mrs Allen as a housekeeper in the UK in return for board and schooling and £50 per month. In collusion with Mr and Mrs Allen, she obtained a Nigerian passport and a six months UK visitor’s Visa using false identity documents. She knew it was illegal for her to live and work in the UK but she stayed in the Alan’s family home performing housework and looking after children.

She remained there for 18 months. During that time Mrs Allen inflicted serious physical abuse on Hounga, and told her that if she left the house and was found by the police she would be sent to prison because she was an illegal migrant.

She was then dismissed suddenly one evening. Mrs Allen became angry that the children had not eaten supper. She attacked and beat Hounga, poured water over her and evicted her from the house.

Hounga’s claim for unfair dismissal, breach of contract and unpaid wages failed.

However, she also claimed that her dismissal and her treatment she suffered before constituted discrimination on grounds of her nationality. Mr Mrs Allen argued that those claims could not succeed on grounds of illegality and that she could not claim protection from discrimination because she was an illegal worker.  The Supreme Court found in Hounga’s favour; although public policy dictated that a person should not be able to profit from their illegal conduct, in this case, Hounga’s illegal employment provided no more than the context in which she was abused by Mrs Allen and subsequently dismissed. It was not inextricably linked to the discrimination she suffered. Here an award of compensation did not allow her to profit from her wrongdoing in performing work legally but compensated her for injury to feelings following the abusive nature of her dismissal.

The Supreme Court’s view was that this did not compromise the integrity of the legal system by encouraging illegal employment.

Conversely, if Mr and Mrs Alan’s arguments were allowed to succeed, this might have caused employers to believe that they could discriminate against illegal workers without punishment.

The Supreme Court considers relatively few employment cases. In order to reach this final stage of appeal, a case will normally have already been considered by an employment tribunal, the employment appeals Tribunal and the Court of Appeal. Only those cases where the law is particularly unclear or matters which are of significant public importance are considered by the U.K.’s most senior judges.

What checks should employers make?

It is best therefore that employers before employing anyone whether an EEA or a non-EEA national, or a person who says they are settled here or have permission to work as a student, or even if they say they are British citizens, conduct physical check on documentation or perform online check to establish a right to work. Physical documentation can be obtained from various sources and these are acceptable to the Secretary of State. For example, an up to date passport showing the holder’s details coupled with a biometric residence card with details as to the category of leave granted and whether there is a right to work.

If the individual says he/ she is an EEA national then a valid EEA passport or an ID card. If a member of an EFTA country, a valid passport issued by the authorities of Norway, Sweden, Iceland, Lichtenstein and also Switzerland. If a British citizen then when noting the British passport. If a dependent of an EEA national, by considering a residence card or a permanent residence card together with a valid national passport. If an EEA national under the settled or pre-settled status programme after Brexit, by showing evidence of pre-settled or settlement status online both of which status give a right to work.

What if it’s still not obvious if an employee is allowed to work? — Section 3C and section 3-D leave/ students-  those with old style ILR endorsed on their passports

Sometimes there are difficult circumstances. If an employee has limited leave to remain in the UK, he/ she will need to apply to the Home Office to extend such leave before the time limit expires. This is the date on the biometric residence permit. If they make a valid application to extend the leave in the 28-day period before the expiry date of the leave permission, this is called making an in-time application, and they will still have valid on-going permission to stay, even though their visas may long have expired. The important point is that they would have made their application to extend their leave prior to the expiry of the same. The purpose of the leave is therefore extended in the circumstances by section 3C of the Immigration Act 1971. This section applies if a person has limited leave to enter or remain in the UK, they have applied to the Home Office for a variation of that leave, the application for variation is made before the leave expires, the leave expires without the application or variation having been decided, and the application for variation is neither decided nor withdrawn.

Section 3C leave continues during any period when an in-country appeal could be brought, ignoring any possibility of an appeal out of time with permission, the appeal is pending within the meaning of section 104 of the Nationality Asylum and Immigration Act 2002, meaning it has been lodged and has not been finally determined.

Section 3C leave continues during any period when an administrative review could be sought, the administrative review is pending in that it has not been determined and no new application for leave to remain has been made.

Section 3C leave does not apply if the person concerned having failed in the administrative review, applies for permission to move for a judicial review. The employer is not allowed to employ further in the circumstances.

With respect to section 3-D of the Immigration Act 1971, the section tells the employer about transitional arrangements for people whose leave has been extended by this section. Section 11 of the Immigration, Asylum and Nationality Act 2006 added section 3-D to the Immigration Act 1971. When leave to enter or remain is curtailed or revoked for some reason, for example because the college has lost its sponsorship licence or because there has been deception on the part of the appellant and his leave has been curtailed, section 3-D extends that leave while an appeal against that decision can be brought or is pending. Following the changes in appeal rights by the Immigration Act 2014, however, decisions to curtail or revoke leave no longer give rise to a right of appeal. Section 3-D continues to apply only to people whose leave was revoked or curtailed before 6 April 2015 and who have appeals pending against the decision to revoke or curtail their leave under the pre-6 April 2015 appeal system.

There may also be circumstances where a student is only allowed to work a limited number of hours, for example, 20 hours during term time. This may not be evident from the passport or resident document.

Some employers may not be aware of any other form of leave to remain and work, other than what they can see on a passport or residence document. If this happens a letter should be sent to the employer by the employee or better still by their solicitors explaining the situation. As it can be seen there may be some explaining to do if it is not obvious to the employer that the employee has permission to work. If the employer is still not satisfied, then there will be recourse to the employers checking service details of which have been given in the early part of this article.

Finally, there may be those who have not updated their ILR grant. They may have been given indefinite leave to remain endorsed on their passport, prior to the introduction of the residence card system. If that is the case, these endorsements and paper residence cards which were the predecessors of the current biometric cards, may not be acceptable to employers. In those circumstances an employee would most probably have to apply for a biometric residence card by completing Home Office form NTL to transfer the former leave to remain into a biometric residence permit to be an acceptable form of work authority.