Civil Penalties for Illegal Working: When the Courts Are Asked to Step In And Is It Worth Appealing?
Civil penalties for illegal working can be financially devastating for small and medium-sized businesses, particularly where the breach arises from an honest mistake rather than deliberate non-compliance. A recent appeal before the County Court provides a useful illustration of how Home Office civil penalties are imposed and, importantly, when the courts may be asked to intervene on grounds of proportionality.
The background
The case concerns a small maintenance company that employed a foreign national worker between May 2024 and January 2025. The worker held Home Office documentation indicating that he was permitted to work in the UK, but only in roles listed on the Shortage Occupation List. The work carried out for the company did not fall within those permitted categories.
The Home Office became aware of the employment through routine data-sharing with HMRC. Following an information request and review of the company’s records, the Secretary of State issued a Civil Penalty Notice in May 2025 under section 15 of the Immigration, Asylum and Nationality Act 2006.
The penalty decision
Under the 2024 Code of Practice on Preventing Illegal Working, the penalty was assessed as a “first breach”, with a starting point of £45,000. After the company lodged an objection, the Home Office accepted that the company had actively cooperated with the investigation and applied one mitigating factor, reducing the penalty to £40,000.
The company accepted that a breach of section 15 had occurred. In particular, it accepted that it had failed to obtain verification from the Home Office Employer Checking Service before employing the worker.
The appeal
The appeal was brought solely on the ground that the amount of the civil penalty was excessive.
The company’s position was that the breach arose from an honest mistake rather than deliberate or reckless conduct. The worker had produced Home Office documents stating “WORK PERMITTED”, albeit subject to restrictions. The company’s director sought professional advice and believed, incorrectly, that the employment was lawful.
During the period of employment, the worker was paid lawfully, tax and national insurance contributions were made, and there was no suggestion of exploitation.
The legal framework
Appeals against civil penalties are governed by section 17 of the Immigration, Asylum and Nationality Act 2006. Importantly, such appeals are re-hearings, not mere reviews.
The County Court has the power to cancel or reduce a civil penalty and must have regard to the applicable Code of Practice, as well as any other matters which the court considers relevant.
The Home Office’s position was that the penalty had been calculated strictly in accordance with the 2024 Code and that only the mitigating factors expressly listed in the Code could be taken into account. The company argued that the statutory scheme gives the court a broader discretion to ensure that the outcome is proportionate, particularly where the breach arose from an honest error and the penalty risks forcing a small business to cease trading.
Why this case matters
The central issue before the court is not liability, but proportionality: whether a £40,000 civil penalty for illegal working represents a fair and proportionate response in the particular circumstances of the case.
Cases of this kind highlight a recurring tension in the illegal working civil penalty regime. On the one hand, the Code of Practice applies fixed financial tariffs designed to deter non-compliance. On the other, Parliament has expressly empowered the courts to intervene where rigid application of the Code would produce an excessive or unjust result.
For employers, the case underlines two important points:
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Right-to-work checks must be carried out strictly in accordance with Home Office guidance; and
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Where a civil penalty is imposed, the court may still be prepared to scrutinise whether the amount of that penalty is proportionate.
The appeal is listed to be heard on 18 February 2026.
We will provide a further update once the court has handed down its decision.
Facing a civil penalty for illegal working?
If you are an employer who has received a Home Office civil penalty notice, or are facing enforcement action relating to illegal working, early legal advice is critical. Civil penalties can be challenged, reduced, or cancelled in appropriate cases — particularly where the breach arose from an honest error or where the penalty is disproportionate to the size and circumstances of the business.
If you require advice on civil penalties for illegal working, right-to-work compliance, appeals to the County Court, or Home Office enforcement action, please contact David Tang & Co Solicitors to discuss your position.
This article is for general information only and does not constitute legal advice.
