Restaurants that employ workers without the legal right to work in the UK face significant penalties from the Home Office. However, it’s not just the employment of illegal workers that can lead to fines — the way the penalty notice is issued to restaurants employing illegal workers also matters. To avoid costly disputes and ensure the penalty is enforceable, it’s crucial that the notice complies with legal requirements.
A recent Court of Appeal ruling has clarified key aspects of these notices, shedding light on what restaurant owners need to know to protect their business from unjust penalties.
Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2024] EWCA Civ 1387
The Court of Appeal’s recent decision in Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2024] EWCA Civ 1387 provides important clarity on the legal requirements for civil penalty notices issued to employers under the Immigration Asylum and Nationality Act 2006 (the “2006 Act”). The case primarily focuses on whether the penalty notice issued to the employer, Akbars Restaurant, was valid, and whether the Secretary of State (SSHD) was entitled to change the grounds on which the penalty was issued during the appeal process.
The court’s decision addresses two critical issues: first, the sufficiency of the penalty notice in terms of identifying the grounds for liability, and second, the extent to which the SSHD can amend or shift the basis of the penalty during the appeal.
Judgement
In this case, the Court of Appeal ruled that the penalty notice did not need to identify the specific statutory ground under section 15(1) of the 2006 Act that applied. Instead, it was sufficient for the notice to outline the facts and evidence supporting the conclusion that an employee lacked the right to work, and that the employer was therefore liable to a penalty. The court made clear that the notice should identify the reason behind the decision, but it did not need to specify which of the various grounds under section 15(1) applied. This interpretation avoids an overly formalistic reading of the law and places emphasis on the factual basis of the penalty rather than the precise legal grounds.
A key aspect of the judgment was the interpretation of the phrase “state why the Secretary of State thinks the employer is liable to the penalty” in section 15(6)(a) of the 2006 Act. The court confirmed that this requirement is not as restrictive as some might assume. Rather than detailing every possible legal ground under section 15(1), the notice simply needs to provide a clear statement of the facts that led the SSHD to conclude that the employer was liable. This makes the process more straightforward for both the SSHD and employers, as long as the factual basis for the penalty is clear.
Another significant element of the case concerns the appeal process. The court affirmed that, on appeal, the employer is not limited to contesting the penalty solely on the grounds identified in the original notice. Under section 17(3) of the 2006 Act, the court can consider all relevant facts, including those that may not have been identified in the original penalty notice. This means that even if the SSHD initially relied on one ground for issuing the penalty, it is open to the court to examine additional grounds during the appeal. The employer may need to prepare to challenge not just the original grounds cited, but any new arguments or evidence presented by the SSHD.
In practical terms, this means that employers should not get overly focused on the technicalities of the penalty notice itself. While the notice must provide a clear factual basis for the penalty, it does not need to specify the exact legal provision relied upon by the SSHD. Employers who receive a penalty notice should focus on the underlying facts of the case, such as whether the employee had the right to work and ensure they can provide evidence to contest these facts if necessary.
Employers also need to be aware that the grounds for the penalty can evolve during the appeal process. This highlights the importance of being prepared for a broader re-hearing of the case, where the court can consider any relevant facts, not just the original grounds presented in the penalty notice.
Conclusion
Ultimately, this judgment reinforces the need for employers to maintain robust systems for checking the right to work status of their employees. It also underscores the importance of addressing the facts of the case in an appeal, rather than getting caught up in procedural technicalities. Employers should be proactive in ensuring compliance with the legal requirements, and in the event of a penalty, be ready to present a strong case based on the facts, rather than relying on challenges to the wording of the penalty notice.
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