Court of Appeal dismisses challenge to employer penalty notice

The Court of Appeal has held that “a simple statement to an employer that one of the people working for it has no right to work” is sufficient for the purposes of section 15(1) Immigration Asylum and Nationality Act 2006 when issuing an employer penalty notice. The case is Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2024] EWCA Civ 1387.

Background

On 13 March 2023 the appellant was issued with a civil penalty notice under section 15(2) of the Immigration Asylum and Nationality Act 2006. The notice stated that the Home Secretary had concluded that the appellant had breached section 15 of the Act:

by employing (an) adult(s) subject to immigration control who has a) not been granted leave to enter or remain in the UK, or b) their leave to enter or remain in the UK is invalid or has ceased to have effect, or (c) who is subject to a condition preventing them from accepting the employment in question.

The notice identified the employee, Mr Veldi, and said that the reason for the penalty was “no right to work”. Evidence referred to in the notice in support of the penalty included interview records, photographic evidence and a statement of case attached to the notice. The statement of case included that the employee was found in the kitchen of the restaurant and the evidence from him and his manager supported the conclusion that he was a contracted employee. Home Office records showed that the employee did not have the right to work in the UK.

The penalty given was £15,000 with no reduction for mitigating factors.

On 6 April 2023 the appellant sent a notice of objection asserting that Mr Veldi was lawfully present in the UK with no conditions preventing him from working. It was also said that no information request had been received which meant the appellant had been denied the opportunity to mitigate the penalty.

An objection outcome notice was issued by the Home Secretary on 26 April 2023 advising the appellant that the penalty decision was upheld and that the Home Office systems had confirmed that Mr Veldi did not have permission to work.

On 12 May 2023 an appellant’s notice was filed in the County Court. The initial ground for appeal was that Mr Veldi had valid section 3C leave and was permitted to work. The appellant said that the Home Secretary had not provided any evidence of Mr Veldi’s alleged lack of permission to work.

The appellant’s position subsequently changed and they emailed the Government Legal Department on 8 August 2023 asserting that the penalty notice was defective and therefore invalid. The appellant said that the penalty notice had stated that the employee was “subject to a condition preventing him from accepting employment” as provided for in section 15(1)(b)(iii), whereas the correct basis was section 15(1)(b)(ii) which was that the employee’s leave had “ceased to have effect”.

The Government Legal Department rejected the argument, making it clear that the basis for the penalty notice was that the employee was an overstayer and the penalty notice said “no right to work” not “working in breach”.

Relevant legislation

It is useful to set out the relevant parts of section 15 of the Immigration Asylum and Nationality Act 2006 which sets out civil penalties for employers who employ a person who does not have permission to do the work.

Section 15(1) states:

(1) It is contrary to this section to employ an adult subject to immigration control if—
(a) he has not been granted leave to enter or remain in the United Kingdom, or
(b) his leave to enter or remain in the United Kingdom—
(i) is invalid,
(ii) has ceased to have effect (whether by reason of curtailment, revocation, cancellation, passage of time or otherwise), or
(iii) is subject to a condition preventing him from accepting the employment.

Section 15(6) provides that:

(6) A penalty notice must—
(a) state why the Secretary of State thinks the employer is liable to the penalty,
(b) state the amount of the penalty,
(c) specify a date, at least 28 days after the date specified in the notice as the date on which it is given, before which the penalty must be paid,
(d) specify how the penalty must be paid,
(e) explain how the employer may object to the penalty or make an appeal against it, and
(f) explain how the Secretary of State may enforce the penalty.

County Court

At the County Court, the Home Secretary first had to apply for relief from sanctions for failing to serve evidence setting out Mr Veldi’s immigration status. This was granted.

The appellant took a preliminary point that the penalty notice was defective because it had not specified a “statutory reason” under section 15(1). The Home Secretary’s position was that it was enough for the penalty notice to specify that there had been a breach of section 15 for one or more of the reasons set out in section 15(1).

The appellant also argued that because the Government Legal Department had (erroneously) referred to the penalty being issued under section 15(1)(b)(iii), this meant that the Home Secretary “could not resile from that” in the later correction that it was actually section 15(1)(b)(ii) that was relied on for the penalty notice. The judge rejected this argument as it was the appellant’s solicitors who had initially referred to the wrong section and that error was then repeated by the Government Legal Department lawyer.

Court of Appeal

Permission to appeal to the Court of Appeal was granted on one ground:

The Judge erred in law in determining that:
i) The Respondent’s civil penalty was compliant with section 15(6) of the 2006, with reference to section 15(1) of the 2006 Act. Notwithstanding the fact that the Respondent’s civil penalty listed all statutory reasons (albeit in the alternative), and those statutory reasons are all mutually exclusive of one another, and/or
ii) The Respondent could change the basis/reason upon which it issued the Appellant with a civil penalty pursuant to section 15(6) of the 2006 Act, seven days before the substantive appeal hearing and without requiring her to re-issue the civil penalty.

On the argument that the notice was defective because it referred in one part of the penalty notice to all of the grounds under section 15(1) and that this could not be cured by the fact that the correct ground was identified elsewhere in the notice, the Court of Appeal said:

I have no hesitation in rejecting that submission. In determining whether the notice satisfies the requirement in s.15(6)(a), it is necessary to look to the notice as a whole. On the front page alone, it contains two references to the reasons for the notice being given: under the heading “penalty reason” and in cross-referring to the attached statement of case. There is no basis for requiring the reasons to be set out in any particular place on the notice.

The court also dismissed the argument that there was a requirement in section 15(6)(a) to state which of the grounds in section 15(1) apply, stating that the language is “general and non-prescriptive”. The court also said that it was important to consider the statutory scheme as a whole and the purpose is to discourage illegal employment.

The appeal was dismissed.

Conclusion

The Home Secretary was refused her costs in the County Court for various reasons, but even excluding that, I would be surprised if the costs of all of this for the appellant were much less than £15,000. However on 13 February 2024 civil penalties were tripled, which may mean that we start seeing more legal challenges to these decisions. The best thing for employers to do is to avoid being in this situation to start with, which means making sure that right to work checks have been carried out.