What to do if you receive a civil penalty for illegal working

UKVI can issue a whopping fine of up to £60,000 to a company that is alleged to have employed someone illegally in the UK. The size of the fine is partly determined by whether the breach is a first for the business or not.
 

Much like other civil penalties, scenarios whereby a business can become involved in illegal working can come about inadvertently. For example, an employee who does have a right to work when their employment commences but the expiration of this is missed by the employer, or a student who works more than 20 hours for more than one employer but conceals this from an unwitting employer.

Previously the issuing of civil penalties was a reasonably infrequent event which required immigration officers to identify illegal working, or reliance on tip-offs. However, with the increased digitalisation and exchanging of information between government departments, there appears to be an uptick in the number of employers receiving civil penalties as enforcement action increases.

Most significantly, UKVI appears to be pulling data from HMRC and its PAYE records to determine whether someone without correct immigration permission may have been working for an employer.

The number of civil penalties increased in Q1 of 2025 by nearly 53% on the previous quarter.

Net to widen beyond employees

Employers should also keep an eye on new upcoming legislation around right to work checks. At present, generally speaking, employers are only strictly required to check the right to work of their employees (although sponsors must check everyone they sponsor on a visa). The Border Security, Asylum and Immigration Bill aims to expand out the need for right to work checks to those in alternative working arrangements and where services are being provided outside of a direct employment relationship, especially in the gig economy where one worker may substitute for another. Employers who get it wrong will be hit with civil penalties.

What to do if you have received a penalty notice?

Firstly, the business needs to confirm that the penalty notice was correctly issued (e.g. checking the name and employee details). The date by which it must respond must also be noted – if the employer wishes to contest the notice, it must do so in writing within 28 days of receipt.

Accepting the penalty and paying early is incentivised and can reduce the fine due. However, given the sums of money involved, it is very important to check thoroughly whether the business might possibly be able to avoid liability for the penalty and by checking whether the penalty might have been issued wrongly or whether there are mitigating circumstances.

The organisation that has received the penalty should also verify whether it has a valid right to work check that provides it with a statutory excuse, and thereby a “get out of jail free” card. The right to work check must be compliant and in accordance with UKVI’s guidance (which regularly changes!). Even if it turns out a person has been working in the UK illegally, a validly performed right to work check protects the organisation against any liability.

How to challenge a civil penalty for illegal working

The grounds on which a civil penalty can be challenged are limited and set by the law (namely section 16 of the Immigration, Asylum and Nationality Act 2006). There are three grounds:

1. There is no liability (e.g. the penalty is issued incorrectly, such as to the wrong employer)
2. The employer has a valid right to work and statutory excuse
3. The penalty issued is too high (due to mitigating circumstances that have not been accounted for)

As stated above, any challenge to the penalty must be made in writing and within 28 days of the notice being issued.

A penalty notice can be substituted with a warning notice if UKVI decides not to pursue the action; however, if the penalty is not removed, the next step for the organisation is to potentially challenge this further is by appealing to a County Court and within 28 days of notice of UKVI’s decision to uphold the penalty.

As with any court proceedings, there are procedural and statutory requirements that must be adhered to, otherwise a claim can run into difficulties.

What else might follow?

Unfortunately for some organisations the troubles with a civil penalty do not end with payment of the fine.

If an organisation holds a sponsor licence, it is very likely that enforcement action will follow a civil penalty, with repeat or multiple civil penalties risking mandatory revocation of an organisation’s sponsor licence.

For some businesses that operate in regulated sectors, such as FCA-regulated businesses or law firms, there are points to consider around whether civil penalties must be reported to their governing body and what implications that might have.

Reputational risk is a potential issue as UKVI publishes online a list of organisations that have been issued with more than one civil penalty for illegal working or is failing to pay a penalty. There is also potential for criminal allegations if UKVI considers that an employer may have knowingly contrived to break immigration laws.

Organisations need to steer well clear of civil penalties but if the eventuality should happen, then proactive steps need to be taken to ensure that a penalty and related problems can be dealt with as fairly and as promptly as possible.

further information

If you have any queries in relation to the issues above or any other immigration matter, please contact a member of the immigration team.

about the author

Robert has extensive experience of assisting individuals and organisations with their UK immigration and nationality matters. His experience covers all kinds of immigration and nationality applications but with a particular emphasis on corporate immigration matters and complex immigration issues faced by individuals.