Employer Compliance Essentials: Navigating the UK Right to Work Check Scheme

Grace Shie: Welcome to The Inside Track. My name is Grace Shie and I lead Mayer Brown's Global Mobility Practice from Washington, DC. Today I'm joined by my colleague, James Perrott, who leads our UK immigration and European mobility practice.

James Perrott: Thank you, Grace.

Grace Shie: Hi, James. So we've had a few episodes that have focused on immigration enforcement, including workforce employment verification. The U.S. has quite a prescriptive system under the I-9 rules, and we are not alone in imposing these types of employee workforce verification requirements. So for today's episode, I've asked James to speak to us on immigration compliance in the UK, particularly the employment verification checks that employers are required to undertake in order to obtain a defense against liability for employing an illegal worker. So with that, James, why don't you start with the current state of the law on the prevention of illegal working in the UK.

James Perrott: Thanks, Grace. So in the UK, it's an offense to employ someone who does not have the appropriate immigration permission to undertake their role in the UK. It's a strict liability offence and employers who are found to be employing an illegal worker can be subject to a civil penalty of up to £60,000 per illegal worker. There is also a criminal offence, so if the employer knew or had reasonable cause to believe that a person does not have the right to work in the UK, a faculty of this event can be liable to imprisonment for up to five years and an unlimited fine.

Grace Shie: So that leads to the next question. What does an employer do? What can an employer do in order to avoid liability in those situations?

James Perrott: So an employer can establish what is called a statutory defense against liability for a civil penalty by undertaking a valid right to work check. And this must happen before a potential employee starts work. And there are essentially two types of check depending on the nationality of the employee. So for those who have temporary UK immigration permission or long-term UK immigration permission, the employer must undertake an online check. And once you've undertaken the check, make a note of when the person's immigration permission expires so that they know when to undertake a follow-up check.

Grace Shie: And just to clarify, when you say a check, we mean checking to that. individual has documents evidencing the right to work, the authorization to work in the United Kingdom.

James Perrott: Exactly. So they check to make sure that they have certain, have an immigration permission, which allows them to undertake their job. It's an online check. So the employer goes on to a home office website and can find the details of the individual and their permission to work in the UK. For British and Irish citizens, the situation is slightly different in that at the moment, employers can only undertake a manual right to work check. That actually involves seeing the physical document, which would obviously normally be their passport, taking a copy of that and keeping a copy of that on file. It's important to note that the online and the manual check must be done by an employee of the company. It cannot be outsourced. The only exception is that in the case of British and Irish citizens, where an employer may use what is called a digital verification service to verify someone's right to work. However, if the digital verification service undertakes to check incorrectly, the employee would still be liable for the civil penalty. It's really important that companies should do a full check of the digital verification service provider to make sure they're comfortable that they're doing the check properly. Evidence that the right to work check has been undertaken must be held throughout the individual's employment and for two years after the end of that employment.

Grace Shie: That sounds fairly similar to the US system. In the US system, employees are required to complete Form I-9, so there's a specific form to be completed, but it's the same form for all employees irrespective of their status. It's interesting that in the UK, there's different treatment based on these two groups that you've identified. What happens if a worker is unable to provide information to their employer to evidence their right to work?

James Perrott: So this normally happens in the case of individuals who have temporary immigration permission to work in the UK. And it happens when a migrant has submitted a valid application in countries before their immigration permission has expired, but actually that application is still under consideration and their immigration permission has expired. Now in the UK, provided you submit that valid application before your immigration permission expires, you're allowed to remain in the UK and your immigration permission is treated as continuing until the immigration application is, or decision is made on it when it's hopefully approved. So therefore, if you have the right to work in the UK under your immigration permission, you will continue to have that right to work until the decision is made. But obviously, any check the employer does will show that that immigration permission has expired. So in that situation, the employer needs to contact the Home Office's employer checking service, provide the individual's details, and then that the employer checking service will give the employer what is called a positive verification notice, which will confirm the individual has a valid application submitted and they have the right to work. And the employer just needs to keep a copy of that notice and make a note of the expiry date, which is six months after the issue of the notice. And then within that six month period, either hopefully the individual's application is approved, and then the employer does a full right to work check on the basis of that new permission. Or if it's still not being completed, then the employer needs to do another employer check and service request.

Grace Shie: So that's a very isolated situation. It sounds like it's isolated to those with temporary permission. They happen to be in the extension phase of their status, and the extension has been timely filed but remains pending. So that's a situation outside of their control. It's good to hear that there is a process for employers to verify the work authorization of those types of individuals. Now, is this process that you've described, the different types of checks that a UK employer is to take, is that mandatory? Because certainly here in the US, the I-9 employment verification process is mandatory for all new hires.

James Perrott: Yeah. So in the UK, actually, the answer is no, it's not mandatory for employers to undertake these checks. But obviously, if they don't undertake these checks, then they can be liable to a civil penalty if they are found employing illegal worker. The law is slightly different for those who are who hold sponsor licenses for those companies who hold a license to sponsor migrant workers to work in the UK, then they have to undertake right to work checks because the Home Office sees it as one of their sponsor, license duties and responsibilities.

Grace Shie: And that makes sense if you're a company sponsoring a visa holder to be able to work in the UK that there would be this additional obligation or associated obligation to verify that. And does that obligation then extend to all employees of the company, not just to the migrant workers?

James Perrott: The Home Office interpretation of that rule is that yes, it extends to all employees.

Grace Shie: Okay, so if an employer is carrying out these right to work checks, again, you said it's not mandatory except for certain situations, but it is highly advisable given the liability associated, do they only carry out these checks on prospective employees, potential new hires?

James Perrott: Exactly, at the moment, the right to work checks only have to be undertaken on prospective employees of the company. Where the work is not a direct employee, so for example, they're self-employed, they're a contractor, an employer is not required to carry out a right to work check on them. The only exception to that is it is actually possible to sponsor a migrant worker who is not a direct employee. And in those situations then the sponsor license holder has to do a right to work check on the sponsored employee. The Home Office does advise that companies should undertake right to work checks on individuals who they engage who are not employees, so those who are contractors, because it just really as a matter of best practice. So for example, if you've got a really key worker who is who is working for you, but they're not an employee. And you know, if they were found to be an illegal worker, then it would be a real disruption to your business if they were required to stop working immediately, then it's obviously the Home Office view it as a good idea to do a right to work check on that individual because also it would involve any potential reputational damage that may come from that for the company.

Grace Shie: So what happens if an employer discovers that a worker at the work site does not have permission to, is not work authorized in the UK and this is an employer that has not made it a practice, a standard practice to carry out to conduct these right to work checks?

James Perrott: Yeah, so if an employer finds a legal worker, then the Home Office's guidance states that they should immediately inform the Home Office about this. And then the Home Office essentially will decide what action to take.

Grace Shie: So they have to self-report.

James Perrott: Yeah, self-report. So for a first offense, the starting point is a civil penalty of £45,000. However, if the employer reported it, if they cooperated with the Home Office, and they have a right to work check practice, which is normally effective, then actually the Home Office won't issue a civil penalty, they'll simply issue a warning notice. However, if this is a second or subsequent offence, the starting point for civil penalties is £60,000 per illegal worker. And although the amount can be reduced, it can only be reduced by a £10,000 for reporting and cooperating. In that situation, a warning notice is not available. It's also worth noting that if a company has a sponsor license and they're issued with a civil penalty, that can have repercussions for the license. So the Home Office could revoke the license, which would mean that the company can no longer sponsor their current sponsored workers or sponsor any new ones.

Grace Shie: Any workers, not just that individual, but any workers.

James Perrott: Any workers. however, the Home Office doesn't, it's unlikely to take any action unless an employer is issued with at least two civil penalties. The other thing that the employers need to be aware of is there is a list, the Home Office does publish a list of companies who have been issued with penalties, but they only include those companies who, if it's their first offence, it only includes them if they haven't paid it. If you pay it, you don't get a figure on the list. If you've had two or more civil penalties, then you will appear on this list.

Grace Shie: I see, so the list is not exhaustive because if you've paid the civil penalty and it was your first offense, you don't make it onto the list. But if you haven't paid for two strikes or more, then you make the list. So in contrast to the US where there is a mandatory requirement to conduct these employment verification checks and the requirement relates only to employees, not to contractors and other types of profiles that you mentioned. In the UK, there are some business decisions that employers and companies can make about how they will or will not engage in these types of checks. So what are you seeing in practice?

James Perrott: So when clients come to us, if they do have legal working issues, actually it tends to be a situation where an individual's immigration permission has expired and the company simply missed the expiry date and the individual has not submitted an immigration application in time. So it's really important that employers do have robust systems in place to ensure they actively monitor the visa expiry dates of their employees and they actively follow up with those employees to make sure that they have submitted a valid application prior to their visa expiring. If an employer does discover an instance of illegal working and has not undertaken a valid right to work check, my experiences compared to a few years ago when the Home Office used to be fairly sympathetic in these scenarios, they are not anymore. If they discover illegal working, it's not reported and there's a fine to be issued, The Home Office will issue basically the maximum fine after any deductions that the employer is entitled to, but there is really no discretion. They are literally just issuing those fines. And another common issue that we are seeing, and this comes up particularly when we're undertaking due diligence, so we're reviewing an employer's processes, right to work check processes, is that employers are outsourcing the right to work checks to a third party. Now, although you can use a digital verification service to assist with right to work checks for British and Irish citizens, a third party cannot undertake right to work checks for those with temporary visas. Unfortunately, some third party providers say that they can and that these provide a valid right to work check or they are a valid right to work check, but that is just not the case. If a third party undertakes a right to work check, that would not establish a statutory defense.

Grace Shie: It doesn't provide a statutory defense for the employer if an issue arises. Got it. So, you know, we're hearing here in the US lots of legal changes afoot in relation to immigration enforcement. It's a top priority for the US government. Is the UK government planning on making any changes on this area of workforce compliance in the area of employment verification.

James Perrott: They are, and they've just announced a consultation on this. So essentially what the government want to do is they want to extend the scheme to encompass more of the types of workers that employers engage with. So they want it to go beyond employees and also to cover workers and those who are self-employed. Really this is focusing on the gig economy. They want employers to undertake right to work checks on gig economy workers. So ultimately this means that in the future the scheme may cover casual temporary workers, individual subcontractors, and also those operating what's called online matching services or what the Home Office describes as online matching services. And these are services which provide details or service providers to potential clients or customers and the service gets paid for providing those details. The UK government essentially wants to restrict the ability of companies to take advantage of illegal workers and to encourage businesses to work opportunities beyond employment to those who are permitted to work in the UK. So the government is currently consulting on these changes. The consultation is due to finish at the end of 2025. So we're expecting changes next year.

Grace Shie: So this could have a significant impact on employers and the way they conduct these types of employment verification checks. Certainly if these legal changes that the UK government is considering will greatly expand the pool of workers, and I'm using the term workers loosely, the pool of individuals who are subject to those checks. So with the discussion we've just had, James, what are the things that you would counsel employers in the UK to be aware of, to attend to in relation to the evolving law on the prevention of legal working in the UK?

James Perrott: So I think there are three things that I would encourage sort of employees to do. Firstly, obviously have a robust right to work check process in place. Employees must monitor the expiry dates for those employees who have temporary visas and have a procedure in place for ensuring they fill up with those employers to ensure their extension applications are submitted in good time. I'm always surprised at the number of employers who, you know, they have a right to work check process in place, but actually their follow-up is poor and they miss expiry dates.

Grace Shie: So in the US, we refer to that as re-verification. When an individual or a worker has time-limited immigration permission, the I-9 requirements in the US, there are requirements placed for employers to re-verify and to do a timely re-verification of that legal right to work check. So that's an important point.

James Perrott: Yeah, so in the UK, that's yeah, we call it a follow up right to work check. And it's a really sort of key part of the process. My second point is if a company discovers a legal worker, it is really important that they take legal advice at the earliest possible opportunity. Ultimately, with the legal worker, it's not just immigration. There are also employment law issues to consider, as well as reputational risks. And I've certainly seen issues where an employer has taken steps without legal advice, and that has led to a very poor outcome for that employer. And the third one is when an employer reviews a potential employee's UK immigration status. Now, this comes up when there's the amount of information that Home Office now provides to employers about individuals, immigrated states and restrictions that are imposed on that. There are some employment restrictions that some people have are quite complicated. It's therefore important that employers review those restrictions to make sure that that does not stop the individual from doing the job that is on offer. Because we've seen situations where someone has been told has told their employer, they can work, but the employer hasn't checked fully their terms and conditions of their right to work. And actually that's led to them employing them to do a job which they're not permitted to do.

Grace Shie: So top takeaways have a robust system in place for employment authorization verification and re-verification and certainly ensure that you take legal advice promptly upon the discovery of any type of issue in this particular space because of the, it's a complex area. And as you mentioned, there are legal risks and there are reputational risks.

James Perrott: Exactly.

Grace Shie: So when the new law comes in next year, I propose that we do another episode on how the legal changes impact the advice that we're giving today in terms of the robust checks that are required and how the potential expansion of the pool that are subject to the verification requirements, how that impacts employer processes and compliance risks. So that wraps up this segment of The Inside Track. Thank you for joining me today, James.

James Perrott: Thank you, Grace.