UK Immigration Changes: Penalty Dilemmas for Employers

A cornerstone of the radically different UK immigration system being implemented over the next year is a heightened emphasis on enforcement. From 29 February 2008 new civil penalties and an additional criminal offence apply for the unauthorized employment of foreign workers. Employers who sponsor foreign persons to work in the United Kingdom will have greater obligations to check, and report on, the status of these workers under this new system. Two recent cases illustrate the difficulty employers have balancing their obligations under immigration law with those they owe their employees.

Employers' Obligations Previously

Until recently, employers were required to ensure that all of their employees were authorized to work for them. This could be established by the employee being a citizen either of the United Kingdom or of one of most of the countries in the European Economic Area, or by having some special entitlement under the immigration system through registration, a visa application or by operation of law. If an employer sponsored a foreign national for a work permit, the employer was required to report when that worker left employment prematurely, whether by resignation or termination by the employer.

Employers' Obligations from 29 February 2008

Under the new immigration system, these obligations continue and are supplemented by new ones. From 29 February 2008, employers who employ a person who is not lawfully in the United Kingdom or does not have the right to work will be subject to an increased penalty of £10,000. In more serious cases, criminal sanctions can apply. An employer will be excused from this penalty if it has checked, copied and retained the worker's documents showing that the person is lawfully in the United Kingdom and eligible to work for the employer. This document check must be undertaken before every person starts work and, for employees whose stay in the United Kingdom is subject to restrictions, at least annually afterwards. However, employers who nevertheless know that a worker is no longer permitted to work will not be able to invoke this defence.

Employers who sponsor foreign workers to work in the United Kingdom under the new system now not only have to report if the employment ends prematurely but also if the worker does not start work or is absent for 10 working days without permission, if there is a significant change in the person's work conditions, and if the employer has any suspicion that the sponsored worker is breaching the conditions of his or her leave to be working in the United Kingdom.

Employers' Difficulties

The requirement to check that all of their workers are authorized to work has been troublesome for employers, and this situation is likely to be aggravated by 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 United Kingdom.

Ms Kelly, an American, was employed by the university as a senior lecturer. Following the expiration of her leave to remain in the United Kingdom on 8 January 2005, Ms Kelly made an application for indefinite leave to remain, which 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 United Kingdom 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 were expected to make sure their employees continued to have permission to work in the United Kingdom, it could not have been Parliament's intention that employers were to police the continued existence of their employees' leave to remain in the United Kingdom. [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 United Kingdom 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 United Kingdom. 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 that 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 United Kingdom 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.