Corporate Strategy & Finance (Business Recovery Insolvency) Alert - Business Sales: New Employment Risks

At the end of February 2008 new rules were introduced aimed at tightening the existing measures to combat illegal working, by making it more difficult for people to exceed any permission granted to stay in Great Britain or continue working in breach of the conditions imposed on them by the immigration authorities and to make it easier for employers to ascertain whether it is legal for them to engage any prospective employee.

Prevention of illegal working

The new rules, introduced by s 15 - 25 of the Immigration, Asylum and Nationality Act 2006 (the Act), came into force on 29 February 2008 and apply to all employment commencing after that date. They replace the rules under s 8 Asylum and Immigration Act 1996 which continue to apply in respect of employees engaged between 1 May 2004 and 28 February 2008.

The offence

An employer will commit an offence if it employs a person over 16 years old who is subject to immigration controls and not entitled to work in the job he is engaged in. The penalty for an employer in breach of this provision is a fine up to a maximum of 10,000.

The statutory excuse

An employer will have a statutory excuse against liability under the Act if it can be shown that BEFORE the person was employed the employer checked and retained copies of certain listed documents. It is not possible to establish a statutory excuse after the employment has started.

There is only one exception to the provision that the statutory excuse cannot be established retrospectively.

The new rules have introduced a single circumstance where there is a grace period to conduct the necessary checks on an employee: where a company acquires employees pursuant to a Transfer of Undertakings (Protection of Employment) Regulations 2006 transfer of a business. In those circumstances, the new employer must conduct the same document inspection as for any prospective employees but has 28 days from the date of the transfer to complete the necessary checks on all transferring employees.

The documents which a prospective employee may produce to establish a right to take up the proposed employment are contained in two lists: List A and List B. List A comprises those documents which prove that a person is not subject to immigration controls and has no restrictions on his stay and employment in the UK. These documents provide a statutory excuse for the whole of the period of that person's employment. List B documents show that a person has limited leave to be in...