UK: UK Immigration Changes: Penalty Dilemmas For Employers

Last Updated: 3 April 2008
Article by Scott M. James and Christabel Oh

Heightened emphasis on enforcement is a cornerstone in the radically different immigration system being implemented in the United Kingdom over the next year. Employers who sponsor foreign persons to work in the UK will have greater obligations to check and report on the status of these workers. As of 29 February 2008, unauthorized employment of foreign workers can subject employers to new civil penalties and an additional criminal offence.

Employers Face New Obligations And Potential Penalties

Employers are still required, under the new immigration system, to ensure all employees are authorized to work for them. Eligible employees include citizens of the UK and most other countries in the European Economic Area. Various provisions of the immigration system—invoked through registration, visa application or by operation of law—also entitle foreign nationals to work in the UK.

Before every employee starts work, employers must check, copy and retain documents, showing the worker is lawfully in the UK and eligible to work. This document check must be conducted at least once a year for employees whose stay in the UK or whose permission to work is restricted.

As of 29 February 2008, employers who employ a person who is not lawfully in the UK or who does not have the right to work can be subject to a penalty of £10,000 per illegal worker. In more serious cases, criminal sanctions can apply. Employers who can show they conducted proper document checks may be excused from this penalty, but those who knowingly employ unauthorized workers will not be able to invoke this defence. Employers who sponsor a foreign person for a work permit are required to report to the Border & Immigration Agency if the worker leaves employment prematurely—whether by resignation or by termination by the employer. Under the new system, employers must also report if a sponsored foreign worker does not start work or is absent for 10 working days without permission. Additionally, employers must report any significant change in the person's work conditions and any suspicion the sponsored worker is breaching conditions of his or her permission to work in the UK. Failure to comply with the reporting and record-keeping obligations may affect an employer's ability to sponsor foreign persons to work in the UK.

New Rules Complicate Work-Authorization Requirement

Many employers have found it difficult to verify that all of their workers are authorized to work. This situation is likely to be aggravated by the additional compliance obligations in the new immigration rules. Two recent cases illustrate the difficulties employers have had in determining whether an employee has authorization to work.

The case of Colleen Kay Kelly v University of Southampton, UKEAT/0295/07, concerned an unfair dismissal claim by Ms Kelly, an employee who was dismissed by the University of Southampton because she no longer had leave to remain in the UK.

Ms Kelly, an American, was employed by the university as a senior lecturer. Following the expiration of her leave to remain in the UK on 8 January 2005, Ms Kelly made an application for indefinite leave to remain. This request was subsequently granted on 7 February 2005. Having received legal advice, the university considered that it would be committing a criminal offence under Section 8 of the Asylum and Immigration Act 1996 (AIA 1996) if it were to continue to employ Ms Kelly after her right to remain in the UK had lapsed. Accordingly, it proceeded on the basis that Ms Kelly was not entitled to be put through the statutory dismissal procedures and summarily dismissed her in January 2005.

The Employment Appeals Tribunal (EAT) held that in circumstances where an employee's leave to remain had expired prior to the expiry of her work permit period, it was not necessarily reasonable to dismiss the employee even though her continued employment would breach a statutory enactment. Ms Kelly had been granted permission to work under the applicable immigration rules. Those rules did not state that this permission ceased to apply when leave to remain expired. Therefore, the university was not entitled to summarily dismiss her and should have followed the statutory dismissal procedures. Since the university had not followed those procedures, Ms. Kelly's dismissal was automatically unfair.

In addition, the EAT held that, while employers are expected to make sure their employees continued to have permission to work in the UK, it could not have been Parliament's intention that employers were to police continuation of their employees' leave to remain in the UK. [Note: This reasoning has now been superseded by the 29 February 2008 implementation of exactly that intention, as expressed in the Immigration Asylum and Nationality Act 2006.]

Similarly, in Elens Klusova v London Borough of Hounslow, [2007] EWCA Civ 1127, Ms Klusova, an employee of the London Borough of Hounslow (the local authority) and a Russian national, was summarily dismissed by the local authority when her leave to remain in the UK had expired. Like the University of Southampton in the Kelly case, the local authority took this action because it believed it could no longer employ Ms Klusova without being in breach of Section 8 of the AIA 1996.

Unlike the Kelly case, however, here the employee had made a timely application for indefinite leave to remain in the UK. By submitting this application before her original leave to remain expired, Ms Klusova was entitled to remain and continue to be employed until there was an adverse determination of her application, even though her original leave to remain expired in the meantime. In these circumstances, the Court of Appeal found Ms Klusova was entitled to be put through the statutory dismissal procedures and the local authority had therefore been wrong to dismiss her summarily. Since the local authority had failed to comply with the statutory procedures, her dismissal was automatically unfair.

The cases above highlight the difficulties inherent in establishing whether or not employees are authorized to continue working in the UK and also underline the importance for employers in monitoring and determining whether their employees are authorized to work, even where it may seem clear at the outset. These responsibilities, and the potential penalties for getting it wrong, are now greater than ever.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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