UK: Immigration Update - July, 2009

Last Updated: 26 July 2009
Article by Nichola Carter

Business Immigration Case Law Round-Up

This round-up of cases over the last five years highlights a range of issues that are relevant to those who employ migrant workers, including:

  • dismissal relating to lack or expiry of immigration permission to work
  • illegality of employment and discrimination
  • facilitation/proceeds of crime legislation

Dismissal cases relating to lack or expiry of immigration permission to work

Klusova v London Borough of Hounslow - Court of Appeal (November 2007)

On checking the immigration status of Ms Klusova with the Home Office, the council was informed that she did not have permission to work in the UK. It dismissed her immediately and without following the statutory dismissal procedures then in force. Subsequently it transpired that the Home Office advice was incorrect and there had been no breach of immigration legislation by Ms Klusova.

The court held that a genuine but mistaken belief that the employment breached a statutory restriction could amount to a potentially fair reason for dismissal for 'some other substantial reason'. However, in this case the dismissal was held to be unfair because the employer had not followed statutory dismissal procedures.

Comment: This case provides a reminder that while an employer can dismiss an employee who is established to be working illegally on the grounds that the employment breaches a statutory restriction, it is important that such action is fair. Employers should only dismiss employees summarily where they are certain that there is an actual breach of a statutory restriction on employment.

This case also highlights the need for employers to consider independently the immigration status of their employees.

Colleen Kay Kelly v The University of Southampton - Employment Appeal Tribunal (December 2007)

The facts of this case are unusual in that, at the time of her dismissal, Dr Kelly held a 60 month work permit document which had not expired. She had however only been granted leave to remain for 48 months. By the time Dr Kelly filed her application for indefinite leave to remain, her leave had expired. When this came to the attention of her employer, she was suspended then dismissed because it was concerned that continued employment was unlawful. It also decided that the disciplinary procedure was inapplicable because Dr Kelly's contract had been terminated by operation of the law.

In considering her claim for unfair dismissal, the Employment Appeal Tribunal (EAT) decided that, by virtue of the 60 month work permit, Dr Kelly was 'permitted to work under the Immigration Rules' for the purposes of regulation 3(3) of the Immigration (Restriction on Employment) Order 2004. The EAT's position was that regulation 3(3) could not be construed as applying only where the employee has subsisting leave to remain. It was held therefore that the employer had not committed a criminal offence contrary to section 8 of the Asylum and Immigration Act 1996 and the summary dismissal was automatically unfair.

Comment: Employers should be cautious and follow fair dismissal procedures unless there is absolute certainty that summary dismissal will be found to be fair. They should also have systems in place which alert them in advance to the expiry of the leave of employees who are subject to immigration control.

Cases covering illegality of employment and discrimination

Blue Chip Trading Ltd v Mr A Helbawi - Employment Appeal Tribunal (November 2008)

This case involves illegality of the contract in relation to a claim under the national minimum wage legislation. Mr Helbawi was in the UK as a student and subject to conditions including (i) not working more than 20 hours during term time and (ii) not pursuing a career by filling a permanent full time vacancy. He accepted that he had on occasions breached condition (i).

The issue was whether his employment contract was illegal because of the breach of either of the two conditions. The EAT found that he was not filling a permanent post, ie not breaching the first condition of his leave and so the contract was not unlawful in its inception.

It then considered if the whole contract was rendered illegal by the occasional breach of the 20 hour per week time limit and decided that there could be recovery by Mr Helbawi of the payments due for those weeks when there was no breach.

Comment: Employers and HR personnel should ensure that they understand the significance of immigration conditions. The case also confirms that it is possible to sever the illegal aspects of a contract from the legal aspects. Employers should not assume that they may fairly dismiss a person or otherwise expect their liability under employment legislation to be limited where only part of a contract is unlawful.

V v Addey & Stanhope School - Court of Appeal (July 2004)

Mr Addey had indicated on his job application form that he had permission to work in the UK when he did not. The issue was whether his involvement in such illegal conduct barred him from bringing a discrimination claim.

The court agreed with the test in Jill Hall v Woolston Hall Leisure Ltd (23 May 2000) - the complaints made of discriminatory treatment in employment were so inextricably bound with the illegality of conduct in obtaining and continuing the employment that, if it were to permit him to recover compensation for discrimination, the EAT would appear to condone his illegal conduct.

The court commented that, even if the employee could prove his allegations of race discrimination, he would still not be entitled to any compensation or other remedy as he had by his own illegal conduct disqualified himself from pursuing his claim.

Comment: The employer in this case had performed approved right to work checks and had obtained a document which appeared on the list of documents that may establish a defence (evidence of national insurance number which is no longer acceptable). Had it not obtained such a record, the employer would also be liable to sanctions.

V Olatokun v Ikon Office Solutions - Employment Appeal Tribunal (May 2004)

The employee in this instance was initially hired as an agency worker and was then offered permanent employment. Part of the company's recruitment procedure was to request the passports of those who stated on the application form that they were born outside the EU.

The form, which was not completed by the employee until four months after the employment commenced, stated she was Nigerian. The employer accordingly requested her passport.

If the employee was illegal, the employer would not have been able to establish a statutory defence under section 8(2) of the Asylum and Immigration Act 1996 because it failed to perform the check before employment commenced.

The employee did not produce any confirmation of her right to work and, after a six week wait, the employer summarily dismissed the employee.

The policy of requesting passports only from those who were born outside the UK was held to be discriminatory. However, since the employer was acting in order to prevent an offence, it was protected by section 41 of the Race Relations Act 1976 (ie pursuant to legal enactment). The EAT found that if the employer had not made a check before the employment commenced, it was entitled to do so later.

Comment: Employers using agency workers should ensure that the check is completed in the time gap between the end of the agency contract and the commencement of the employee's permanent employment contract. Employers should ensure that they are familiar with the Government's code of practice on avoiding discrimination in undertaking those checks.

Osborne Clarke Services v Mr A Purohit - Employment Appeal Tribunal (February 2009)

Osborne Clarke Services had a policy of not considering any application for training contracts from individuals who required permission to work in the UK. The firm believed that such positions could be filled by resident workers.

Its online application process posed three filter questions. These related to whether the applicant could work in the UK. Candidates answering 'no' could not proceed.

Osborne Clarke's case was that it could not in good faith complete the Border Agency's declaration that it knew of no suitable resident who would be displaced by a migrant worker and, even if it could, the Agency would reject the application thereby wasting funds (an argument found to be an 'unattractive way of justifying indirect discrimination'.)

The EAT referred to the Code of Practice on Racial Equality and Employment which makes it clear that work permit issues should come into consideration at the later stage of selection. The code also states that employers should make an application for a work permit/work authorisation, leaving it up to the immigration authorities to determine the outcome. The claim for discrimination was upheld.

Comment: Employers who consider immigration aspects too early face increased risks of discrimination claims being upheld. It is of note that the case of Osborne Clarke was dealt with under the old work permit scheme when the Home Office made the decision as to whether or not the criteria for employing a migrant worker were met or not. Under the points based system, employers should consider carefully and record any decision against applying for a sponsor licence. They must ensure that they can justify such a decision against legal and commercial criteria in the event that it is ever challenged by a potential employee who considers that he or she should be sponsored by the employer.

Other relevant reports relating to facilitation/proceeds of crime legislation

R v David Kai Xu: R v Lu Xu - Court of Appeal (October 2008)

Two owners of a restaurant were found to have employed illegal migrants between 2002 and 2006. The joint owners were convicted by the Crown Court on 7 July 2006 of committing an act which facilitated a breach of immigration law contrary to section 25(1) of the Immigration Act 1971 and were sentenced to several months imprisonment (suspended).

A confiscation order under the Proceeds of Crime Act 2002 was also imposed for the entire receipts from the restaurant throughout the duration of the period for which the illegal migrants were employed (£244,613.17), with sentences of imprisonment to be served in default of payment. The owners appealed.

The court held that since the three illegal immigrants made up a quarter of the restaurant's workforce, it would be appropriate to confiscate one quarter of the receipts of the business during the period they were employed.

Comment: It is often assumed that the only sanctions for employing illegal migrants arise under section 8 of the Asylum and Immigration Act 1996 and, more recently, under section 15 of the Immigration, Asylum and Nationality Act 2006. This case is a warning that there are other sanctions and the use of them is on the increase.

Temptations Chinese Restaurant in Colchester - Harwich Magistrates Court (May 2009)

As reported on UKBA's website, six illegal workers were employed at the restaurant. The company employing them was found guilty of six offences contrary to section 8 of the Asylum and Immigration Act 1996. What makes this case unusual is that, in addition, two directors were personally charged with the offence as co-defendants and were both found guilty.

Each of the three defendants was fined £5,000 per offence - the maximum permissible at a magistrates' court - making a total of £90,000, plus £6,000 costs and £15 victim surcharge. This was a triple recovery for the same offence and demonstrates the heightened risks for directors and other officers.

Comment: This case is one of many that will be appearing before magistrates' courts around the country as the UKBA cracks down on employers of illegal workers. UKBA also publishes on its website details of employers on whom civil penalties have been imposed, including the name of the employer, the name of the business, the level of fine and the number of illegal workers discovered.

Conclusion

The cases above highlight many of the obvious and less obvious risks which employers now face if they employ migrant workers who do not have the correct permission to work in the UK, or take wrongful action in relation to those whom they mistakenly believe do not have permission to work.

Recently Penningtons has been involved in the following scenarios:

  • negotiating with UKBA to preserve the 'A' rating of a sponsor licence holder which had not been conducting correct right to work checks, including demonstrating to UKBA that the correct procedures were now in place, that all current employees had been checked and that UKBA guidance would be followed in the future;
  • advising a FTSE 100 client on the legal continuation of employment of a senior director whose marriage to a German citizen had failed;
  • advising a corporate client that an agreement with a third party that it would check employees' right to work documents and pay any civil penalties in the event they were imposed would not be considered lawful (Government fines, prison sentences and other sanctions cannot simply be transferred to third parties)
  • successfully appealing the refusal of tier 1 (general) leave to remain for a senior work permit holding employee of a corporate client which had failed to notify UKBA of an alleged change in her role;
  • securing the cancellation by UKBA of £45,000 of civil penalty fines in relation to a business which was working with self-employed contractors. UKBA had initially refused to accept that the individuals were not employees;
  • securing the cancellation by UKBA of £30,000 of civil penalty fines in relation to a business which had conducted only partially correct right to work checks following initial judicial review action.

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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