£45k Civil Penalties for Illegal Working - Help!!!

[London Life]

I have a good friend who was in the process of closing down his very small removal companyas he is retiring. He had sorted out all his paperwork. Paid back a directors loan on the last company accounts, maybe owes HMRC about£600-£1000 which he can just about pay and was planning on doing so.
He just received a £45k Civil Penalty for accidentally employing an illegal worker (he had made the correct checks but this employees righ to work had expired by 6weeks - harsh)
No money in the account to pay this fine and no assets (his van is scrap value)
He does own a property in spain and this is his only asset and not worth that much.
The business cannot pay this fine - he could personally, but feels the fine unfair and disproportionate.
How could he best get out of this situation. If he did absoloutely nothing - literally nothing. No filing of accounts, no annual statement, not reply to any letter - what would happen. Could he become personally responsible for the fine?

 

[fisicx]

Start by talking to the people who issued the fine. Explain the situation and see what they say.

 

[Newchodge]

Is it a limited company?

 

[London Life]

Is it a limited company?

yes, it is - all legal. He has always done things correctly

 

[WaveJumper]

They could have fined your friend up to 60k. I don't know where they would stand if company has been wound up so can't comment, what I would say is the Gov (it will probably be the home office) are being very tough on this and coming down hard on companies especially current UK climate on the topic.

They have 28 days to appeal, I would say make sure that your friend has copies of all paper work, visa's etc. If the HO still pursue I would strongly advice in getting an immigration lawyer on board.

As tough as it is your friend should have been very aware when visa expired

 

[London Life]

Start by talking to the people who issued the fine. Explain the situation and see what they say.

i would do that, but from what i hear it is a political issue. I think he has has the stuffing knocked out of him by this

 

[London Life]

They could have fined your friend up to 60k. I don't know where they would stand if company has been wound up so can't comment, what I would say is the Gov (it will probably be the home office) are being very tough on this and coming down hard on companies especially current UK climate on the topic.

They have 28 days to appeal, I would say make sure that your friend has copies of all paper work, visa's etc. If the HO still pursue I would strongly advice in getting an immigration lawyer on board.

As tough as it is your friend should have been very aware when visa expired

i believe they are being tough. He said it has become increasingly hard to find temp staff since Brexit. He hs tried to do all the checks, but he is effectively a one man business and does all the HR stuff himself

 

[Newchodge]

yes, it is - all legal. He has always done things correctly

Unfortunately this is not a crime that affects only the limited company. Directors (and managers) can face fines (and imprisonment), so he may end up being personally liable.

Throwing himself on their mercy is the only real option. The are not known for being sympathetic.

 

[London Life]

would an insolvency practitioner be able to help.?
...and if so, could he get redundancy?

 

[Newchodge]

They could have fined your friend up to 60k.

Not for a first offence. The maximum is 45K

 

[Newchodge]

from what i hear it is a political issue.

No, it is the criminal law.

 

[Newchodge]

would an insolvency practitioner be able to help.?
...and if so, could he get redundancy?

A criminal lawyer would be better.

 

[fisicx]

i would do that, but from what i hear it is a political issue. I think he has has the stuffing knocked out of him by this

Irrelevant. Pick up the phone and talk.

 

[London Life]

Unfortunately this is not a crime that affects only the limited company. Directors (and managers) can face fines (and imprisonment), so he may end up being personally liable.

Throwing himself on their mercy is the only real option. The are not known for being sympathetic.

i would like to figure out what would be the legal mechanism that the issue would pass from the company to his personnal liability

 

[London Life]

Irrelevant. Pick up the phone and talk.

probably the best advice

 

[Newchodge]

i would like to figure out what would be the legal mechanism that the issue would pass from the company to his personnal liability

The way the legislation is written. As imprisonment is one of the possible penalties, there has to be a human to be imprisoned.

 

[London Life]

maybe legal advice is the best route.
he has only been fined and as far as i am aware no threat of imprisonment.

 

[Newchodge]

maybe legal advice is the best route.
he has only been fined and as far as i am aware no threat of imprisonment.

No, that would be for repeat offenders.

 

[London Life]

No, that would be for repeat offenders.

thanks - that is what I thought

 

[WaveJumper]

Yes I know it can be a real shock, I always hope other people reading these types of threads take note re the sort of issues that can hit them as a business. If taking on foreign workers companies big or small need to be so careful, check double check, keep copies of everything and if in any doubt get advice.

As mentioned above the 45k is a "discounted" down figure and could still be substantial reduced when talking to HO, again advice given above pick up the phone.

As a bit of an aside: if Ltd is still active going to be difficult to side step this, as my reading was company still active.

1, phone call check lie of the land
2, Depending on how that goes, get proper legal advice

 

[London Life]

Yes I know it can be a real shock, I always hope other people reading these types of threads take note re the sort of issues that can hit them as a business. If taking on foreign workers companies big or small need to be so careful, check double check, keep copies of everything and if in any doubt get advice.

As mentioned above the 45k is a "discounted" down figure and could still be substantial reduced when talking to HO, again advice given above pick up the phone.

As a bit of an aside: if Ltd is still active going to be difficult to side step this, as my reading was company still active.

1, phone call check lie of the land
2, Depending on how that goes, get proper legal advice

yes, we have to be so careful - we sent out requests for proof to all our contractors the day i found out about my friend. Everyone who employs people need to check. he had no warning - just a straight £45k fine with i think 30% discount is paid within 21 days

 

[Newchodge]

yes, we have to be so careful - we sent out requests for proof to all our contractors the day i found out about my friend. Everyone who employs people need to check. he had no warning - just a straight £45k fine with i think 30% discount is paid within 21 days

And just as a reminder. Everyone should be checked, even if you know they were born and brought up in the UK. Only checking 'foreigners' can lead to claims of race discrimination.

 

[eteb3]

www.legislation.gov.uk/ukpga/2006/13/crossheading/employment

@London Life a careful read of that should tell your friend what he needs to know. In particular note 15(5): SoS can impose a civil penalty before hearing whether the person has an excuse - the policy is "fine first, rescind later". There is a clear procedure given there to object or to appeal. Ref too to a code of practice SoS has to be guided by, so check that, too: if they haven't followed this, it is grounds for challenging the penalty.

Also the penalty is if you "employ" someone subject to immigration control. Above you have mentioned employment, but also a "contractor" (ie, self-employed). If this person wasn't employed, then afaict no penalty can be imposed. Similar terms apply for the criminal offence.

Assuming it was employment properly speaking, and the employer was the Ltd, the civil penalty falls only on the Ltd.

The Ltd is the one primarily liable to criminal prosecution, also. The offence can only be imputed to a director personally if the Ltd committed the offence with that director's "consent or connivance". There will be case law on that, and a criminal solicitor should be able to help. The general rule is that criminal offences require a mens rea (criminal intent of some sort), so if it was truly inadvertent, that may well be a defence.

The CPS guidance makes clear that the civil penalty route is preferred (follow that link and search on the page for "Employment Offences" - it's the third of 3 matches). Prosecutors are expected to challenge requests for prosecution where it appears this has not been considered. (Remember CPS has to be of opinion both that there is a 51% chance of a conviction, and that it is in the public interest to prosecute.)

So, if your friend feels confident they won't be prosecuted personally, then sending the Ltd insolvent may be an option.

 

[Newchodge]

www.legislation.gov.uk/ukpga/2006/13/crossheading/employment

@London Life a careful read of that should tell your friend what he needs to know. In particular note 15(5): SoS can impose a civil penalty before hearing whether the person has an excuse - the policy is "fine first, rescind later". There is a clear procedure given there to object or to appeal. Ref too to a code of practice SoS has to be guided by, so check that, too: if they haven't followed this, it is grounds for challenging the penalty.

Also the penalty is if you "employ" someone subject to immigration control. Above you have mentioned employment, but also a "contractor" (ie, self-employed). If this person wasn't employed, then afaict no penalty can be imposed. Similar terms apply for the criminal offence.

Assuming it was employment properly speaking, and the employer was the Ltd, the civil penalty falls only on the Ltd.

The Ltd is the one primarily liable to criminal prosecution, also. The offence can only be imputed to a director personally if the Ltd committed the offence with that director's "consent or connivance". There will be case law on that, and a criminal solicitor should be able to help. The general rule is that criminal offences require a mens rea (criminal intent of some sort), so if it was truly inadvertent, that may well be a defence.

The CPS guidance makes clear that the civil penalty route is preferred (follow that link and search on the page for "Employment Offences" - it's the third of 3 matches). Prosecutors are expected to challenge requests for prosecution where it appears this has not been considered. (Remember CPS has to be of opinion both that there is a 51% chance of a conviction, and that it is in the public interest to prosecute.)

So, if your friend feels confident they won't be prosecuted personally, then sending the Ltd insolvent may be an option.

Sec 22 "
(2)If an offence under section 21(1) [F14or (1A)] is committed by a body corporate with the consent or connivance of an officer of the body, the officer, as well as the body, shall be treated as having committed the offence.

(3)In subsection (2) a reference to an officer of a body includes a reference to—

(a)a director, manager or secretary,

(b)a person purporting to act as a director, manager or secretary, and

(c)if the affairs of the body are managed by its members, a member."

The Director carried out the role of HR and failed to keep up to date with their right to work checks. I think that makes them potentially personally liable.

 

[London Life]

www.legislation.gov.uk/ukpga/2006/13/crossheading/employment

@London Life a careful read of that should tell your friend what he needs to know. In particular note 15(5): SoS can impose a civil penalty before hearing whether the person has an excuse - the policy is "fine first, rescind later". There is a clear procedure given there to object or to appeal. Ref too to a code of practice SoS has to be guided by, so check that, too: if they haven't followed this, it is grounds for challenging the penalty.

Also the penalty is if you "employ" someone subject to immigration control. Above you have mentioned employment, but also a "contractor" (ie, self-employed). If this person wasn't employed, then afaict no penalty can be imposed. Similar terms apply for the criminal offence.

Assuming it was employment properly speaking, and the employer was the Ltd, the civil penalty falls only on the Ltd.

The Ltd is the one primarily liable to criminal prosecution, also. The offence can only be imputed to a director personally if the Ltd committed the offence with that director's "consent or connivance". There will be case law on that, and a criminal solicitor should be able to help. The general rule is that criminal offences require a mens rea (criminal intent of some sort), so if it was truly inadvertent, that may well be a defence.

The CPS guidance makes clear that the civil penalty route is preferred (follow that link and search on the page for "Employment Offences" - it's the third of 3 matches). Prosecutors are expected to challenge requests for prosecution where it appears this has not been considered. (Remember CPS has to be of opinion both that there is a 51% chance of a conviction, and that it is in the public interest to prosecute.)

So, if your friend feels confident they won't be prosecuted personally, then sending the Ltd insolvent may be an option.

thanks for taking the time to put this together. I bit of light reading for a Saturday evening
The contractor above was for my business, my friend i believe gets temp emplyees for the day of a removal - so on an ad hock basis. there was definitely no intent to employ illegal workers. He had previousley checked this guys right to work. He then used him a few times and the temporary right to work had expired and my friend has simply forgtten to check again. he even paid this illegal workers tax through the MTD PAYE - i will have a read and see if i can make sense of it.
All my friend wants to do is shut down his business as he had planned to so he can retire (60 years old)
he just does not want tghis hanging over his head at this time of life
thanks again

 

[London Life]

Sec 22 "
(2)If an offence under section 21(1) [F14or (1A)] is committed by a body corporate with the consent or connivance of an officer of the body, the officer, as well as the body, shall be treated as having committed the offence.

(3)In subsection (2) a reference to an officer of a body includes a reference to—

(a)a director, manager or secretary,

(b)a person purporting to act as a director, manager or secretary, and

(c)if the affairs of the body are managed by its members, a member."

The Director carried out the role of HR and failed to keep up to date with their right to work checks. I think that makes them potentially personally liable.

"potentially" is the word that carries a lot of worry.

 

[eteb3]

The Director carried out the role of HR and failed to keep up to date with their right to work checks. I think that makes them potentially personally liable.

I agree “potentially”. But the ingredients of the offence have to be made out, and I think it’s equally possible that on the facts (so far as we know them), the active mens rea implied in “consent or connivance” isn’t there. I’d be asking a criminal law specialist for their view.

But, especially in light of HO published policy not to routinely prosecute (which in public law terms gives the director a “legitimate expectation” of this being dealt with by way of civil penalty only), I think he can sleep reasonably easily.

 

[London Life]

I agree “potentially”. But the ingredients of the offence have to be made out, and I think it’s equally possible that on the facts (so far as we know them), the active mens rea implied in “consent or connivance” isn’t there. I’d be asking a criminal law specialist for their view.

But, especially in light of HO published policy not to routinely prosecute (which in public law terms gives the director a “legitimate expectation” of this being dealt with by way of civil penalty only), I think he can sleep reasonably easily.

Thanks - my friend is coming to stay with me next week and i can have a good chat about all this. I appreciate all of your time

 

[fisicx]

Thanks - my friend is coming to stay with me next week and i can have a good chat about all this. I appreciate all of your time

They need to make the call Monday morning, not wait until you next meet.

 

[London Life]

They need to make the call Monday morning, not wait until you next meet.

thanks - i will pass on the advice

 

[UKSBD]

They need to object as the Company to the harshness of the penalty based on what you have said here; It was accidental, they are a small one man band company, on verge of insolvency, it was just a temp worker who had previously been checked

 

[Porky]

@WaveJumper

When you say taking on illegals, if I hire someone overseas to do work remotely and pay by invoice as a contractor, does that bypass all that ?

Are you talking employ uk on paye but not checked id out etc ? Right to work? Etc

 

[Newchodge]

@WaveJumper

When you say taking on illegals, if I hire someone overseas to do work remotely and pay by invoice as a contractor, does that bypass all that ?

Are you talking employ uk on paye but not checked id out etc ? Right to work? Etc

If someone works overseas, generally they are covered by the laws of the country where they work. This is about taking on an employee in the UK who does not have the right to work in the UK.

 

[Newchodge]

I agree “potentially”. But the ingredients of the offence have to be made out, and I think it’s equally possible that on the facts (so far as we know them), the active mens rea implied in “consent or connivance” isn’t there. I’d be asking a criminal law specialist for their view.

But, especially in light of HO published policy not to routinely prosecute (which in public law terms gives the director a “legitimate expectation” of this being dealt with by way of civil penalty only), I think he can sleep reasonably easily.

I think this is the equivalent of an 'absolute offence'. There is no mens rea - there is no need to intend to commit the offence. The offence is employing someone who does not have the right to work. There is an absolute defence if the accused can show they did everything required of them to ensure they did have the right to work. In this case, they did nit. The gov4rnment deliberately made this a civil liability to avoid numerous criminal court cases, but as far as I can see the only defence to the civil penalty is showing that you carried out the required checks. This employer did not, so no defence.

 

[Newchodge]

on the facts (so far as we know them), the active mens rea implied in “consent or connivance” isn’t there.

The Director consented to the employment knowing that the checks had not been carried out. That is certainly consent.

 

[UKSBD]

From my reading of the act it is only a fixed penalty if not done deliberately, it only becomes a crime if done knowingly

 

[eteb3]

The gov4rnment deliberately made this a civil liability to avoid numerous criminal court cases, but as far as I can see the only defence to the civil penalty is showing that you carried out the required checks.

Agreed. I thought we were talking about the criminal offence. (Well, both)

The civil penalty is strict liability (as most are). The crime is as good as strict liability as a primary offence by the Ltd, because the mens rea in s35 is so widely drawn. Moving it up to the director is a different offence requiring “consent or connivance” in the primary offence.

They need to object as the Company to the harshness of the penalty based on what you have said here; It was accidental, they are a small one man band company, on verge of insolvency, it was just a temp worker who had previously been checked

This rings true to me. All the detail will be in the Code of Practice. Any appeal should usually expressly refer to specific paragraphs there. Do all the reasoning for the decision-maker so they can just agree and get on with their day

 

[eteb3]

The Director consented to the employment knowing that the checks had not been carried out. That is certainly consent.

Sorry, I missed this. Alternatively, D consented to the employment while believing the work permission to still be valid. That’s consent to employment, but the mental act is not consent to illegal employment - even though the employment is illegal as a matter of fact.

You may well be right, but there seems enough ambiguity to me to justify asking a crime specialist. (Besides the fact that CPS says they will not normally prosecute)

 

[eteb3]

I'm not down a rabbit-hole, honest.

The nature and extent of evidence the prosecution must adduce in order to establish "consent, connivance or neglect" on the part of a corporate officer will vary depending on the facts of each case. In R v Chargot Ltd (t/a Contract Services) [2008] UKHL 73, the Court noted that a corporate officer "had to be proved to know the material facts which constituted the offence by the corporate entity and to have agreed to its conduct on the basis of those facts", but that "consent can be established by inference as well as by proof of an express agreement". Thus, "the state of mind that the words 'connivance' and 'neglect' contemplate is one that may also be established by inference".

https://www.cps.gov.uk/prosecution-guidance/corporate-prosecutions
(Bailii link & emphasis added - see [32]ff of the case for discussion)

 

[Newchodge]

Alternatively, D consented to the employment while believing the work permission to still be valid.

I think it is actually made worse by the fact that this was not continuing employment - the employee was taken on each time there was an appropriate job for them to do, so the check should have been made every time, and the director certainly knew it had not been done as there was no-one else to do it.