At a glance

• Civil penalties for breaches of illegal working regulations will be tripling on 13 February 2024 to GBP45,000 for a first offence and GBP60,000 for each illegal worker for repeat or significant breaches.
• From 6 April 2024, all sponsors with a licence expiration date falling on or after 6 April 2024 will no longer be required to renew their licences every four years and these licences have automatically been extended for a further ten years. Whilst this is a preparatory measure, put in place with an aim to abolish sponsor licence renewals completely, it remains unclear whether other requirements will need to be met during the automatically extended period before this is done.
• Sponsors with licence expiration dates falling before 6 April 2024 will need to submit a renewal application in the usual way.
• The removal of licence renewal requirements suggests there is likely to be an increase in Home Office compliance checks and audits. This, coupled with the increase in illegal working penalties, looks to set the tone for a more enforcement based immigration policy.
• Employers of migrant workers should proactively review processes and records to ensure they are fully compliant with the current requirements and any sponsorship obligations they may have.

On 13 February 2024, the penalties that can be imposed on businesses for employing someone who does not have an appropriate right to work in the UK where the correct checks have not been carried out, are set to triple. This is the third rise in immigration related government costs since October 2023 and supports a notion of disguised taxation on businesses and migrants at a time when the UK Government are seeking to drive migration figures down and simultaneously increase revenue.

Since 2008 businesses have had to agree to comply with certain obligations and duties set by the Home Office in order to hold a Sponsor Licence and be able to sponsor migrants to work for them in the UK. Separately they have also had to carry out right to work checks for prospective employees so that an appropriate statutory excuse is in place to protect the organisation against the imposition of a civil penalty should an employee later be found to be working illegally the UK.  These provisions effectively delegate the policing of migrant workers to the employer.

But it’s not easy to navigate through varying Home Office policies and guidances that are in place. With the consequences of getting things wrong being potentially disastrous, it is important for businesses to safeguard against non-compliance from an immigration perspective.

Increased penalties for employing illegal workers

Regardless of whether or not a business holds a sponsor licence, all employers are legally obligated to carry out a right to work check which complies with government guidance. If a business fails to do so, and on investigation by the Home Office one of its employees is found to be illegally working in the UK, the business can be issued with a civil penalty.

On 23 January 2024, the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2024 was formally brought into law. Under this order, the illegal working civil penalty fines will triple for employers. From 13 February 2024, the maximum penalty will increase as follows:

• For a first breach of illegal working the penalty will increase from GBP15,000 to GBP45,000 per illegal worker
• For repeat breaches of illegal working it will increase from GBP20,000 to GBP60,000 per illegal worker

These penalties might be reduced, or a warning only imposed, if the Home Office accepts that there are mitigating factors in place.

In addition to the civil penalty, the Home Office publish a quarterly list naming each employer or business that has received a penalty and the amount imposed. This ‘name and shame’ approach can cause reputational damage. Between 1 April 2023 and 30 June 2023, the gross value of penalties issued by the government totalled just over GBP5.5 million.

It’s also important to note that where the responsible person within a business knew, or had ‘reasonable cause to believe’, that an employee did not have a right to work in the UK, they could face a criminal penalty of up to five years imprisonment or an unlimited fine or both.

Sponsor licence renewals

Whilst the automatic renewal of sponsor licences may be seen as a welcome relief, the removal of this requirement should also be viewed with some caution. For many businesses, the four yearly renewal process acted as a trigger to self-audit and review sponsor licences for any reportable changes, as well as reviewing internal processes and systems to identify any potential compliances issues.

It is not only significant breaches that will result in compliance or enforcement action being taken by the Home Office. Small innocent mistakes or oversights that accumulate over time can also be used by the UK authorities against a business.

Should a sponsor receive a compliance visit and is found to be in breach of its obligations, the Home Office has the power to down-grade, suspend or revoke a sponsor licence which will jeopardise the ability of the business to sponsor new migrant workers in the UK and potentially result in the cancellation of the UK visas for its existing sponsored migrant workforce.

The removals of the trigger to self-assess compliance could result in an increased risk for minor compliance issues to accumulate and unwittingly land sponsors in hot water with the Home Office, particularly as it appears likely that there will be an increased level of compliance checks. To avoid being caught out, sponsors should proactively carry out regular mock audits and internal checks to ensure that all compliance and legal obligations are being adhered to.

Common compliance issues and pitfalls

It is surprisingly easy for a business to fall foul of its compliance duties or obligations: either because the relevant information is not filtered through to the correct individual or it is believed that minor clerical errors will not have a significant impact. Common issues that we regularly encounter are:

• Failure to report changes in corporate structure and/or ownership, including changes to minority ownership and company flotations which impact the direct ownership and controlling voting rights of the business.
• Failure to request the addition of branches for new legal entities which are set up for sponsored workers to be employed by.
• Failure to add work sites where sponsored employees will be required to work.
• Overseas linked entities not being added or updated on Global Business Mobility sponsor licences and overseas employees being transferred to the UK from an unlinked employing entity.
• Registered office details not being updated.
• Failure to report change in sponsored workers’ circumstances.
• Businesses not tracking or being aware of short-term business visitor activities taking place within their UK business.
• Discrepancies between employment contracts, employee files, pay and consistent detailed job descriptions.
• Right to work or repeat right to work checks not being carried out in line with Home Office policy guidance.
• Where necessary, failure to apply for a new sponsor licence within the required time frame.

Most actions need to be carried out by employers or sponsor licence holders within specific time frames and so legal advice or guidance should be sought if you are unsure of the actions or steps that need to be taken.

Takeaways for employers

Together the increase in penalties and the removal of the licence renewal process means employers and businesses need to ensure they remain alert to the changing landscape and various adjustments in Home Office policy documents.

Particular attention should be paid to right to work checks, processes and record keeping, to ensure this is in line with the relevant guidance. For sponsors, this is also a timely reminder to review your licence details in full and ensure it is as up to date as possible. A review of reporting and tracking mechanisms should also be carried out and a refreshed awareness and understanding of sponsorship obligations considered.

Businesses and employers may wish to carry out a thorough mock audit to identify any risk areas and put in measures now to protect against possible shortfalls.

If you have any queries in relation to topics raised within this article, or your UK immigration-related obligations generally, please contact Gulcin Kashano, Eilidh Moncrieff or Kate Hodgkiss.

 

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