Being Accused of Employing Illegal Workers: How to Challenge a £45,000 Civil Penalty

An Immigration Enforcement visit can quickly trigger severe legal and financial problems for a business. Officers may question staff and request records before the Home Office decides whether to issue a Civil Penalty Notice.

Many employers might assume that receiving a Civil Penalty Notice means liability has already been established and payment must be made. However, a Civil Penalty Notice is not the same as a court judgment. It is an administrative decision that could be open to challenge. Both the decision itself and the relevant notice must comply with strict legal requirements. An important recent Supreme Court decision in the case of Akbars Restaurant (Middlesbrough) Limited (Appellant) v Secretary of State for the Home Department (Respondent) demonstrates just how important this point can be in practice.

The story began with an Immigration Enforcement visit to an Indian restaurant named ‘Akbars Restaurant’ in Middlesbrough in January 2023. Officers identified a worker whom they believed was employed illegally. An information request followed and (after no response was received) the Home Office proceeded to issue a Civil Penalty Notice – imposing a significant £15,000 penalty. The restaurant unsuccessfully challenged the notice in both the County Court and the Court of Appeal but continued to fight hard and ultimately won in the Supreme Court, more than three years later.

What makes the decision especially meaningful is that it was not decided on a complex immigration law issue. The restaurant succeeded because the Home Office had failed to appropriately explain the legal basis on which the employer was held to be liable for the penalty imposed. The Supreme Court held that where the state seeks to impose a financial penalty, it must identify the allegation being made and explain the legal basis on which it relies. Employers should not be left guessing the case they have to answer.

The practical significance of this decision far more great today. At the time, the penalty was £15,000. Employers can now face penalties of up to £45,000 per illegal worker for a first breach and £60,000 per worker for certain repeat breaches within a three year period.

Enforcement activity is also at high levels. In the first half of 2026, the Home Office carried out 7,270 illegal-working visits, made 4,756 arrests and issued 1,238 civil penalties – with a total value of £74.6 million. Restaurants, takeaways and cafés received the highest number of visits, followed by food, drink and tobacco retail, beauty businesses and warehousing, distribution and delivery operations.

For sponsor licence holders, the effects can extend far beyond the financial penalty itself. Enforcement action may create wider compliance concerns around sponsored workers and the future of their sponsor licences. With penalties now substantially higher, employers should urgently and vigilantly review both the evidence and the legal validity of any Civil Penalty Notice before deciding what action to take.

This article expresses our take on the Supreme Court’s decision, key lessons for employers facing a Civil Penalty Notice and important immigration law changes due to take effect this October.

What Can Trigger an Illegal Working Civil Penalty

Illegal working cases can often begin with an unannounced Immigration Enforcement visit, intelligence received by the Home Office or information provided by another authority.

During a visit, immigration officers may review right-to-work records, question workers and others on the premises and seek to judge whether individuals are carrying out work permitted by their immigration status.

If an immigration officer believes that an individual has been working without the necessary permission, they may issue a Civil Penalty Referral Notice. The case is then passed to the Civil Penalty Compliance Team, which will issue an Information Request. This gives the employer a chance to provide further information, supporting documents and evidence of any ‘statutory excuse’ (explained further below) before liability is decided.

This stage is often critical – a quick and complete response may be treated as active co-operation and reduce the level of any penalty. But failing to engage with the process can make a later challenge considerably more difficult.

Employers should not think the risk is limited to direct employees. The Home Office recommends that businesses satisfy themselves that all workers operating within their business have the right to work in the UK.

A civil penalty may be imposed where the individual (subject to immigration control) does not have the right to undertake the work for which they are employed. This may be because they have no relevant immigration permission, their permission is invalid, revoked, cancelled or expired or because their permission does not permit the role in question.

A criminal offence may also arise where an employer knew, or had reasonable cause to believe, that an employee did not have the appropriate immigration status.

Where liability is established, the starting point for a first breach is £45,000 per worker. For certain repeat breaches within three years, the starting point increases to £60,000 per worker.

The Home Office may reduce the penalty where the employer reported a suspected illegal worker before the Home Office identified them and obtained a Unique Reference Number. A further reduction may also apply where the employer actively co-operated with the investigation.

For some first breaches, a Warning Notice may be issued instead of a Civil Penalty Notice – where the employer can demonstrate effective right-to-work compliance practices and satisfy specific mitigation criteria. Effective practices can include robust document-checking systems, consistent checking procedures, retained right-to-work records and a history of compliance. A Warning Notice is not, however, available for a repeat breach.

Eligible first penalties may also qualify for the Faster Payment Option – which decreases the penalty by 30% if paid in full within 21 days.

These factors can affect the amount of any penalty, but do not decide whether liability exists in the first place.

Understanding the Statutory Excuse and the Importance of Timing

The statutory excuse is key protection which is available to employers facing a civil penalty. An employer will have a statutory excuse where it complies with the prescribed right-to-work checking requirements and preserves evidence that the checks were carried out properly.

The process involves key stages – obtain the required documents or online confirmation, check that the evidence belongs to the individual and permits the work in question and copy and retain evidence of the check.

Timing is critical here – initial checks must be completed before employment begins. A check carried out after employment has started will not create a statutory excuse retrospectively.

No statutory excuse exists where the employer knew that the employment was not permitted.

Many employers will, in practice, encounter difficulties – not because checks were never undertaken, but because records cannot be produced, follow-up checks were overlooked or there is no proof showing when the original check was concluded.

For sponsor licence holders the risks can extend further beyond a civil penalty. Problems identified during an illegal-working investigation can lead to far wider sponsor licence scrutiny and risk.

Challenging a Civil Penalty

After considering the available evidence, the Civil Penalty Compliance Team may issue a Civil Penalty Notice, a Warning Notice or a No Action Notice.

A Civil Penalty Notice should clearly explain:

• why the Home Office considers the employer liable
• the amount of the penalty
• how it may be paid
• how it may be challenged

It should also be accompanied by a Statement of Case setting out the evidence and reasons relied upon.

An employer may object on three grounds – it is not liable, it has established a statutory excuse, or the amount of the penalty is too high.

The objection must be made in writing within 28 days of the due date specified in the Civil Penalty Notice and should include supporting evidence.

Relevant material may include:

• proof that compliant right-to-work checks were carried out
• evidence that the individual was not employed by the business
• information showing that a false document was not reasonably apparent
• information relevant to the level of the penalty
• material that was unavailable when immigration officers attended the premises

Following an objection, the Home Office may cancel, reduce or maintain the penalty. If it decides a higher penalty should apply, it must issue a new Civil Penalty Notice.

An employer must object before appealing. Appeals are brought to the County Court in England, Wales and Northern Ireland, or the Sheriff Court in Scotland and must generally be brought within 28 days of the Civil Penalty Notice or a negative decision following an objection.

The appeal is a rehearing rather than a review of the Home Office’s decision. The court may consider evidence that was not previously before the Home Office – although an employer may only appeal on grounds that could have been raised by way of objection.

An unsuccessful appeal carries a costs risk. The court may order the employer to pay the Home Office’s reasonable costs or expenses in defending the appeal.

An unpaid penalty may be registered and enforced as a civil debt. Employers may request to pay by instalments but must justify why they cannot pay in a single lump sum.

If a civil penalty is not successfully challenged, the Home Office will publish details of the liable party, the employer’s location and address and the amount of the penalty on its public register.

For sponsor licence holders, a civil penalty may be considered when the Home Office considers sponsor licence applications, renewals and compliance action – including whether a licence should be downgraded or revoked. A civil penalty might also prompt a compliance visit. As such, dealing with a Civil Penalty is a serious and pressing matter.

Where liability is disputed employers should preserve relevant evidence as early as possible and are advised to seek professional legal counsel.

What the Supreme Court Decided in the Akbars case

Interestingly in this case, the Supreme Court was not deciding on whether the worker had a right to work.

The issue in question was instead whether the Home Office had correctly explained why it considered the employer liable for the penalty.

Section 15(1) of the Immigration, Asylum and Nationality Act 2006 sets out alternative grounds of liability and the law requires that the Secretary of State explain why the employer is liable.

The key argument here was that before deciding whether to pay, object or appeal, the employer was entitled to know exactly which specific allegation the Home Office was making.

The Supreme Court agreed with Akbars. It held that the Home Office must identify the specific legal basis on which it alleges liability. It cannot simply list alternative grounds and leave the employer to work out which one applies. Employers must be able to understand, assess and challenge the case against them.

More broadly – the judgment reinforces an important principle of procedural fairness. Where the state seeks to impose a substantial financial penalty, employers are entitled to understand precisely why liability is alleged and the legal basis on which the allegation rests.

The Supreme Court also rejected the Home Office’s argument that it could correct the defect later on. An employer should not have to start legal proceedings to ascertain the case it must answer.

The decision, however, does not provide a complete defence to liability. The Home Office may still issue a fresh and compliant notice where appropriate. Nonetheless, the judgment serves as an important reminder that employers should not assume a Civil Penalty Notice is valid merely because it has been issued. The evidence, reasoning and legal basis of the notice all require analysis. This analysis can require strong legal and technical understanding, which is why taking expert legal advice can be invaluable.

Key Immigration Law Changes from 1 October 2026 – How the Scope of Liability is to Broaden

Against the background of alarmingly increasing enforcement activity, the illegal working regime is set to become significantly broader.

From 1 October 2026, changes introduced by the Border Security, Asylum and Immigration Act 2025 will extend the regime beyond traditional employment relationships.

Legal rules shall bring certain workers (individual subcontractors and some online matching services) within the scope of the illegal working framework.

The practical impact is likely to be considerable. Businesses that have never previously viewed themselves as employers for right-to-work purposes will find themselves exposed to the same penalties that currently apply in more conventional employment settings.

Many businesses will therefore need to begin reviewing their procedures, workforce supply chains and onboarding arrangements now to prepare – rather than waiting for enforcement action to expose flaws.

The changes are likely to have particular significance for businesses operating through subcontracting arrangements, platform-based labour models and flexible workforce structures. Construction, delivery services, warehousing and beauty businesses are among the sectors likely to be impacted by the changes.

Training, compliance audits and clearly documented right-to-work procedures will be increasingly important as the scope of the regime and risk to businesses expands.

Our Take and How We Support Employers

One of the most noteworthy takeaways from the Akbars case is that it turned on procedural fairness and statutory interpretation rather than a substantive question of immigration law.

Civil Penalty Notice appeals sit at the intersection of immigration law, civil litigation and public law. They are heard in the County Court and often raise questions about evidence, procedure and the lawful exercise of public powers.

This broader perspective is often critical – because the argument may extend beyond a worker’s immigration status, to the adequacy of the notice, the evidence relied upon and the fairness of the Home Office’s decision making. Challenging such notices requires specialist expertise. Our practice spans immigration, civil litigation and public law experience – allowing us to assess both the underlying allegation and whether the Home Office has acted lawfully and fairly in such cases.

Employers should never accept that a Civil Penalty Notice is adequate simply because it has been issued. Given the level of today’s civil penalties, a thorough assessment is crucial. A substantial penalty may affect cash flow, disrupt operations, create wider sponsor licence risks and even close a business down. Prompt legal advice can therefore be priceless in protecting a business’s interests.

In summary, our key takeaways include:

• do not assume a notice is automatically valid
• take legal advice on the validity of any notice, from the right legal team with appropriate expertise (including general civil law)
• act immediately to reduce risk, especially if challenging the decision
• comply with your legal duties and keep records from the outset to help avoid problems

Employers should know that the climate of enforcement is far more hostile today and it is crucial to prioritise immigration law compliance. We assist employers from the earliest stages of an investigation – including Immigration Enforcement visits, Civil Penalty Referral Notices and Information Requests. We can help to carefully identify the precise allegation being made, assess whether a notice is legally acceptable, prepare responses to Home Office enquiries and advise on objections, appeals, mitigation and settlement strategies.

We also seek to help businesses reduce the risk of enforcement action before difficulties arise. Our support includes compliance audits, right-to-work and sponsorship reviews, assessments of working arrangements and training for managers responsible for onboarding workers. We can also help businesses prepare to navigate the new October 2026 changes and challenges they will bring. Employers can contact us to discuss the specific support we can offer for their business.

Disclaimer

This article provides a high-level and simplified introduction to a complex legal case and area of law and is intended for general information only. It does not constitute legal advice and should not be relied upon as such. Immigration law, enforcement action and litigation are highly fact-specific, and businesses should obtain tailored legal advice based on their own circumstances.