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SHERIFFDOM OF LOTHIAN AND BORDERS AT LIVINGSTON

[2017] SC LIV 23

B176/16

NOTE BY SHERIFF DOUGLAS A KINLOCH, Advocate

Sheriff of Lothian and Borders at Livingston

in causa

ZAFAR MOHAMMED, having a place of business at Kurry King at 56-58 North Bridge Street, Bathgate, EH48 4PP

Pursuer

against

THE ADVOCATE GENERAL FOR SCOTLAND, on behalf of the Secretary of State for the Home Department, Victoria Quay, Edinburgh, EH6 6QQ

Defender

 

Act:  Party

Alt:  Gillian Jamieson, Messrs Anderson Strathern, Solicitors, Glasgow 

 

 

Introduction
[1]        In this Summary Application, the Pursuer appeals under section 17 of the Immigration, Asylum and Nationality Act 2006 (“the 2006 Act”) against a penalty notice for £30,000 served upon him by the Secretary of State under section 15 of the 2006 Act in respect of his employment of two people who, for the sake of brevity, may be referred to as “illegal workers”. 

[2]        The pursuer askes the Court to reverse the Secretary of State’s decision and to reduce the penalty to nil, or alternatively, to reduce the amount of the penalty imposed. 

[3]        The case called before me on 17 March 2017 at Livingston Sheriff Court for a hearing on the appeal.  The pursuer represented himself, although he had formerly been represented by solicitors and by Counsel.  He gave evidence on his own behalf.  The defender was represented by Ms Gillian Jamieson, of Messrs Anderson Strathern, Solicitors, Glasgow.  The defenders led the evidence of Patricia Sharples, an Executive Officer with the Home Office Compliance Team, based in Manchester, and Geoff Hunter, an Immigration Officer, based at Edinburgh Airport. 

 

Background
[3]        The background to this matter was not in dispute and is as set out in the parties’ pleadings.  The pursuer operates a takeaway food establishment in Bathgate, West Lothian.  On 14 January 2016 Immigration Officers attended at the pursuer’s place of business with a warrant allowing them to enter the premises.  They were looking for an individual whom they believed to be working at the premises without permission to do so.  In the course of their visit they carried out checks on other workers at the premises, and it came to light that a total of two of the pursuer’s employees did not have permission to work in the UK.  At the appeal hearing before me the pursuer conceded that the workers were in fact illegal workers, who were not entitled to be working in the UK. 

[4]        As a result of that, and as explained in the evidence of Mr Geoff Hunter, one of the Immigration Officers who had attended at the premises, the Immigration Officers gave the pursuer a “Referral Notice”, which was handed to him when the Immigration Officers were at the premises.  It advised him that they suspected that two employees had been employed illegally, and that his case would be referred to the Home Office’s Civil Penalty Compliance Team, which would consider whether to impose a civil penalty.  The Referral Notice advised the pursuer that he would also receive an “Information Request”, in which he would be asked to provide information.  Thereafter, as explained by Patricia Sharples in her evidence, the Information Request was duly served on the pursuer on 27 January 2016.  It advised the pursuer that he might be liable for a civil penalty, and he was asked to provide information by means of completing a “Response Form”, which was enclosed with the Information Request.  The Response Form, which had to be completed by 5 February 2016, asked the pursuer whether he had carried out certain document checks regarding the illegal workers, and whether he had reported any suspicions of them working illegally.  The Response Form was completed by the pursuer but not until 11 February 2016.  With the Response Form the pursuer submitted information to the Immigration Officers to the effect that he had known one of the illegal workers personally and had seen his driving licence, and believed that this person was entitled to work in the UK.  In relation to the second illegal worker it was stated that he had been hired by the pursuer’s nephew who was in charge of the premises during the pursuer’s absence from work which had been caused by the death of his mother in law. 

[5]        On 24 February 2016 the immigration enforcement department issued the pursuer with a civil penalty notice, advising him that he had been assessed to pay penalties of £15,000 in respect of each of the two illegal workers, that is a total penalty of £30,000.  The civil penalty notice gave information to the pursuer as to how the penalties had been calculated. 

[6]        The pursuer then lodged an “Objection Form” to the penalty notice in March 2016, but on 15 April 2016 the pursuer was notified that his objection had been unsuccessful, and that the penalty of £30,000 remained.  He was advised that if he paid this penalty within 21 days then it would be reduced to £21,000.  He was also advised that he could request to pay the fixed penalty by instalments. 

[7]        The pursuer then appealed the imposition of the civil penalty notice by lodging his Summary Application with Livingston Sheriff Court on 11 May 2016. 

 

Evidence at the proof
[8]        In his evidence before me the pursuer confirmed that he accepted that the two employees in question were illegal workers, but put forward certain mitigating circumstances.  His evidence can best be summarised by quoting from an affidavit which was sent to the Home Office by solicitors who were formerly instructed by him.  The relevant parts of the affidavit are in the following terms: 

“4.  I can confirm SM worked as a delivery driver.  This was on a part time basis.  I knew him on a personal level, and was aware that he was married and had children.  His children also attended the local primary school.  I assumed that he was British, and before he commenced working with me, he showed me his original driver’s license (sic) which I took as confirmation that he was allowed to work.  Unfortunately, I did not retain a copy. 

 

5.  I now realise that I should have been more diligent and perhaps have retained a copy of his driver’s license.  I profusely regret what has become of matters here.  I recall checking a reference before I employed him from Dominoes where he was also employed as a delivery driver.  This is a large multinational company and I assumed that if he had the right to work for Dominoes then he would have had the right to work for me.  I now know that this is not the case, and I really do apologise for what has become of matters. 

 

6.  I now employ thorough checks before I take anyone on and have completely overhauled my HR processes to ensure that the right checks are carried out and that all copies of documents are retained once we have established that an employee, potential or otherwise, has the right to work in the UK. 

 

7.  The Home Office checked everyone’s identification whilst they were carrying out their visit.  They questioned me with regards to a new employee called Aftab Akram.  As I explained to the Home Office official, he had only started work a week or so ago.  I explained to the Home Office that he showed a driver’s license as evidence of his proof to work.  He showed this to my nephew, who works with me and is normally second in charge to me.  The reason for this was that I was not on the premises when Aftab Akram started working due to a family bereavement.  My Mother-in-Law died on 19 December 2015 and this meant that I was off work.  I was very affected by my Mother-in-Law’s death especially as we had just suffered the loss of my Father-in-Law just nine months prior. 

 

8.  I had only started back at work the day before the Home Office enforcement visit.  Aftab Akram was not on duty that day, and I decided that I would speak to him when he was next on duty regarding the documents he was able to provide in relation to his right to work.  Unfortunately, events proceeded (sic) us and due to the Home Office enforcement visit I never got the chance to do this and I only realised he was illegal when the Home Office representative told me this.” 

 

[9]        In his evidence the pursuer also asked me to look at accounts for his business which he had lodged in process.  They show that his net profit for the year to 31 August 2014 was £32,366, and for the year to 31 August 2015 was £15,734.  He told me that his net income for the year to 31 August 2016 was also about £15,000.  He had also lodged bank accounts, and he accepted in cross-examination that he had been spending about £93 a month for Sky TV, and that there were various entries in the accounts which were sums spent on online gambling.  He was also questioned as to whether he had made a full disclosure of his financial position. 

[10]      In their evidence the two Immigration Officers who were led as witnesses for the defender explained the operation of the civil penalty system, including the code of practice, all as summarised in paragraphs 4, 5 and 6 above. 

[11]      In his evidence, and in addressing me at the conclusion of the case, the pursuer accepted that he was not asking me to remove the civil penalties entirely, but was asking me to reduce them to take account of the factors put forward in mitigation as summarised in his affidavit.  He also sought to persuade me that he could not afford to pay such a substantial sum, and that if he was forced to do so it would probably put him out of business.  The solicitor for the defender asked me to dismiss the appeal in accordance with section 17(2)(c) of the 2006 Act. 

 

The Law
[12]      Section 17 of the 2006 Act contains provisions as to an appeal against a civil penalty.  It provides that:

“(1)  An employer to whom a penalty notice is given my appeal to the court on the ground that –

  1. he is not liable to the imposition of a penalty,
  2. he is excused payment by virtue of section 15(3), or
  3. the amount of the penalty is too high.

 

(2)  The court may –

      (a)  allow the appeal and cancel the penalty,

      (b)  allow the appeal and reduce the penalty, or

      (c)  dismiss the appeal.”

 

Despite the apparent simplicity of the appeal provisions, it necessary to have regard to other sections of the Act, and other subsidiary legislation, in order to try and understand how these appeal provisions are designed to operate.  The relevant provisions are as follows.

 

Statutory background

[13]      Sections 15 to 25 of the 2006 Act make provision under the heading “Employment”.  The purpose of these provisions, in summary, is to discourage the employment of those who do not have the legal right to work in the United Kingdom and make an employer of any such person potentially liable to a civil penalty or guilty of a criminal offence. 

[14]      In respect of employment, the main provisions are Section 15(1) and (2), which provide:

“(1) It is contrary to this section to employ an adult subject to immigration control if –

  1. he has not been granted leave to enter or remain in the United Kingdom, or
  2. his leave to enter or remain in the United Kingdom –
  1. is invalid,
  2. has ceased to have effect (whether by reason of curtailment, revocation,cancellation, passage of time or otherwise), or
  3. is subject to a condition preventing him from accepting the employment.

 

(2)  The Secretary of State may give an employer who acts contrary to this section a notice requiring him to pay a penalty of a specified amount not exceeding the prescribed maximum.”

 

[15]      The question of whether an employer is liable to a civil penalty therefore has three elements.  The employer acts contrary to Section 15 if:

(i) he employed an adult,

  1. the adult is subject to immigration control and
  2. the adult falls within paragraph (a) or (b) of subsection (1).

 

[16]      For these purposes two definitions contained in Section 25 are relevant:

“A reference to employment is to employment under a contract of service or apprenticeship, whether express or implied and whether oral or written” (Section 25(b));

 

“A person is subject to immigration control if under the Immigration Act 1971 he requires leave to enter or remain in the United Kingdom” (Section 25(c))

 

The definition of employment is a broad one, and illegal employment takes place in respect of anyone who is not a United Kingdom or EEA national and does not have indefinite leave to remain in the United Kingdom.

[17]      The prescribed maximum penalty referred to in Section 15(2) is currently £20,000 - see the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) Order 2008, Article 2.

 

The Statutory Excuse

[18]      Section 15(3) of the 2006 Act provides that an employer “is excused from paying a penalty if he shows that he complied with any prescribed requirements in relation to the employment”.  This is the first step in the consideration by immigration officers of the imposition of a civil penalty in respect of an employee.  Put briefly, an employer will have a statutory excuse against liability for a civil penalty if he has correctly carried out the prescribed right to work checks using acceptable documents before employment commences.    The burden of establishing that the “prescribed requirements” have been complied with rests with the employer.  If the statutory excuse is established then there is no liability for any civil penalty.

[19]      The prescribed requirements are set out in the Immigration (Restrictions on Employment) Order 2007 as amended by the Immigration (Restrictions on Employment) (Code of Practice and Amendment) Order 2014.  Under Articles 3, 4, 4A and 5 of the Order the employer is excused if the employee produces to the employer the relevant documents described in the schedule and the employer complies with the requirements set out in Article 6 as amended.

[20]      The requirements under Article 6 of the 2007 Order as amended relate to the verification, copying and retention of the documents produced by the employee.  They are that:

“(a) the employer takes all reasonable steps to check the validity of the documents and retains a record of the date on which any check was made;

(b) the copy or copies are retained securely by the employer for a period of not less than 2 years after the employment has come to an end;

(c) if the document contains a photograph, the employer has satisfied himself that the photograph is of the prospective employee or employees;

(d) if the document contains a date of birth, the employer has satisfied himself that the date of birth is consistent with the appearance of the prospective employee or employee;

(e) the employer takes all other reasonable steps to check that the prospective employee or employees is the rightful owner of the document;

(f) if the document is not a passport the employer retains a copy of the whole of the document in a format which cannot subsequently be altered;

(g) if the document is a passport, the employer retains a copy of the following pages of that document in a format which cannot be subsequently altered –

(i)…

(ii) any page containing the holder’s personal details including nationality; 

(iii) any page containing the holder’s photograph;

(iv) any page containing the holder’s signature;

(v) any page containing the date of expiry; and

(vi) any page containing information indicating the holder has an entitlement to enter or remain in the UK and undertake the work in question; and

(h)…”

 

[21]      Fundamental to all these requirements is the employer’s obligation to keep proper records of any checks made.  “Record keeping lies at the heart of the system established by the 2006 Act and it is essential that employers understand and comply with this”:  Qudos Leisure Limited v Advocate General for Scotland 2010 SLT (Sheriff Court) 13.

[22]      The requirements in Article 6 of the 2007 Order might be described as cumulative: if an employer fails to comply with any one of them, the statutory excuse is not available.

 

Code of Practice

[23]      Section 19(1) of the 2006 Act requires the Secretary of State to issue “a code of practice specifying factors to be considered by him in determining the amount of a penalty imposed under Section 15”.  Under Section 19(3) the Secretary of State must from time to time review the code, and may revise and reissue it.  If an employer cannot show that he can found on the statutory excuse, then the statutory code of practice sets out a framework by which a civil penalty is to be calculated. 

[24]      The current code of practice issued by the Secretary of State in accordance with this duty is entitled “Code of Practice on Preventing Illegal Working: Civil Penalty Scheme for Employers”.  It came into force on 16 May 2014 (Article 10 of the Immigration (Restrictions on Employment) (Code of Practice and Amendment) Order 2014).  A copy of the code of practice was lodged in process by the defender as no 6/17.

[25]      The status of the code of practice is explained in its introduction (page 4):

“It is a statutory code.  This means that it has been approved by the Secretary of State and laid before Parliament.  The code does not impose any legal duties on employers, nor is it an authoritative statement of the law; only the Courts and the employment tribunals can provide that.  However, the code may be used as evidence in legal proceedings in Courts and employment tribunals must take account of any part of the code which may be relevant.  Home Office officials will also have regard to this code when administering illegal working civil penalties under the Act.”

 

[26]      The code explains to employers (page 6):

“The civil penalty scheme is designed to encourage you to comply with your duty as an employer to prevent illegal working by carrying out document checks … The civil penalties we impose are intended to be proportionate to the level of non-compliant behaviour and are therefore calculated on a sliding scale.”

 

[27]      The code sets out a “consideration framework” (table 1 on page 8) which is supplemented by a “civil penalty calculator” (table 2 on page 9).  The code explains that the amount of the penalty imposed will depend on the employer’s “history of compliance with right to work checks as an employer” and will be determined “according to whether [the employer qualifies] for reductions in the penalty amount by providing evidence that [he has] met mitigating factors”.

[28]      The consideration framework consists of three stages which can be summarised as follows:

Stage 1: Determining liability: Does the employer have a statutory excuse?  If he does the case is closed; if not, proceed to stage 2.

 

Stage 2: Determining the level of the breach:  Has the employer been found to be employing illegal workers within the previous 3 years?  If he has not, proceed to the level 1 civil penalty calculator; if he has, proceed to the level 2 civil penalty calculator.

 

Stage 3:  Determining the penalty amount by means of the civil penalty calculator, by reference to three mitigating factors.

 

[29]      The civil penalty calculator contains 2 levels.  Level 1 is used where the employer has not been found to be employing illegal workers in the previous 3 years; level 2 is used where he has.  Both levels start with a maximum penalty amount: £15,000 in level 1 and £20,000 in level 2.  Both then apply a series of deductions from the relevant maximum, depending on whether the employer meets the 3 mitigating factors, to arrive at the penalty amount.  The mitigating factors are:

Mitigating factor 1: Has the employer already reported the suspected illegal worker?

Mitigating factor 2: Has the employer actively cooperated with the Home Office?

Mitigating factor 3 (available only in a level 1 case and only if factors 1 and 2 are met):  Does the employer have effective document checking practices in place? 

 

[30]      This approach under the code to the calculation of the penalty amount thus specifies a series of outline questions which result in a clear identification of where on the scale the penalty should be fixed.  The questions build in relevant issues of mitigation, and seem designed to ensure the proportionality of the penalty, and to ensure consistency and predictability of treatment for all employers. 

[31]      The question of an employer’s ability to pay a civil penalty is not relevant in fixing the amount of the penalty under the code.  However, it is taken into account, where appropriate, by allowing the employer to pay by instalments.  The code explains this at page 7:

“We will consider the impact of the penalty only in so far as you are unable to pay it in one lump sum.  We may agree that you are able to pay your penalty by instalments over an agreed period of time, usually up to 24 months, and exceptionally up to 36 months.  We will not reduce the penalty amount.  You must provide details of your ability to pay over the instalment plan period and why you cannot pay the penalty in full.  This information should be supplied within 28 days of the civil penalty notice in order for your application to be considered.”

 

[32]      The current code is the result of a review and revision by the Secretary of State under Section 19(3).  It replaces the previous version of the code, which had been in force from 29 February 2008.  One of the changes in the revised code (summarised in page 3) is a “revised method for calculating civil penalty levels”.  The revised method is significantly different from that under the original code.  The different framework used in that code is summarised in Qudos Leisure (paragraph 2).  In addition, the original code required a specific consideration of the fairness of the penalty, which was to be assessed by reference to a list of factors set out in appendix 4 (discussed in Naeem Ashfaq v Secretary of State for the Home Department 2012 WL4866907 (unreported, Stirling Sheriff Court, 1 October 2012) (paragraph 48)).  As a result of those factors, the assessment of the penalty amount involved an exercise of discretion which is absent from the current code.  Instead, the fairness and proportionality of the penalty are now ensured by building in the relevant mitigating factors to the civil penalty calculator. 

 

Onus of proof

[33]      Before considering the way in which these appeals operate, it is worth recording that at an earlier stage of proceedings, when the pursuer was represented by Counsel, an argument was put forward to the effect, as I understood it, that in every appeal under section 17 of the 2006 Act there was an onus on the defender to prove by leading evidence at the hearing of the appeal that the illegal workers in respect of whom a notice had been issued were indeed working illegally.  The basis of the argument, as I understood it, was that it was only the defender who had proper access to official records showing the immigration status of the employees concerned.  The effect of this argument appeared to be that even though the appeal proceedings are at the instance of the employer, and even though the employer may not actively dispute the fact that employees had no entitlement to work in the UK, nevertheless the defender had to lead evidence to establish the illegal status of the employees concerned.  The result of that argument, if correct, was presumably also that it might be appropriate for the defender to lead at any proof in an appeal hearing. 

[34]      It seemed to me that whether evidence as to the illegal status of the employees would be required from the defender in any appeal would really depend on the issues raised in the appeal.  For instance, if the employer actively contended that a civil penalty had been wrongly imposed because the employees were entitled to work in the UK, and if that was denied by the defender, then it seems to me that as that would be the crucial issue in the case, evidence would be required (no doubt from both parties) as to the employees’ immigration status.  The point would be more difficult in the more usual situation where an appeal is taken and the appellant simply maintains that he does not know whether the employees concerned were entitled to work in the UK.  It may possibly be that the prudent course for the defender would be to lead evidence as to the employees’ immigration status, or to provide information to the appellant regarding the employees’ immigration status, and to seek to have that matter agreed by way of a Joint Minute of Agreement.  It may also be that an appellant could in an appropriate case bring the matter into focus by calling upon the defender in the pleadings to provide information as to the employees’ immigration status.  In the event, in the present case the pursuer conceded that the employees were not entitled to work in the UK, and their status was not therefore something which required evidence to be led. 

 

The Scope of a Section 17 Appeal

[35]      Section 17(3) provides:

“(3) An appeal shall be a re-hearing of the Secretary of State’s decision to impose a penalty and shall be determined having regard to –

 

  1. the code of practice under Section 19 that has effect at the time of the appeal (insofar as the appeal relates to the amount of the penalty), and
  2. any other matters which the Court thinks relevant (which may include matters of which the Secretary of State is unaware);

 

and this subsection has effect despite any provision of rules of court.”

 

Submissions regarding the appeal

[36]      In relation to the present appeal the pursuer sought to persuade me that I should reduce the civil penalty to take account of his evidence that he did not know that the employees were working illegally, and to take account of the effect of the penalty on him. 

[37]      The Advocate General’s solicitor addressed me in detail on the law, for which I am grateful.  She argued that since the new code of practice came into force in 2014, it was not open to me to take into account the factors founded upon by the pursuer.  I was advised by the defender’s solicitor that there was no reported case in Scotland dealing with the correct approach of the court in an appeal relating to the new code of practice, and that the present case was regarded by the defender as being of some importance.  The defender’s solicitor provided me with copies of Qudos Leisure and Naeem Ashfaq, which are the only two available written decisions in Scotland on Section 17 appeals.  Both  were decided under the original code, by reference to its different method of calculating the civil penalty amount, and it respectfully seems to me that the both cases are probably now of little relevance in relation to the issue of how an appeal ought to operate.   

[38]      The solicitor for the defender argued that if a court in an appeal such as this were to take account of general mitigating factors which might be thought to reduce the seriousness of the matter, or were to take into account an appellant’s financial circumstances, it would entirely undermine the operation of the code of practice.   There would be no incentive on employers to report any suspicions they might have as to employees’ immigration status; there would be no incentive to check documentation or keep records; and there would be no incentive to employers to cooperate with immigration officers.  In other words, the mitigating factors under the code of practice, all of which led to substantial reductions in the amount of the penalty, would be rendered largely worthless.  The employer could simply wait until a civil penalty was levied, and then appeal the amount of the penalty by arguing, for example, that his financial circumstances were poor.  If a civil penalty could be reduced in this way, then there would be no incentive on employers to comply with the code of practice, and the appeal system in a sense would operate to the real prejudice of other employers who comply with it. 

[39]      The solicitor for the defender also argued that if the pursuer’s position was correct, then it could have a real impact on the question of the expenses incurred in relation to an appeal.  If a penalty were to be reduced on the basis of mitigating factors or ability to pay, then the appeal would have been successful, and if the normal rule that expenses follow success were to be applied, then the successful pursuer would be awarded the expenses of the appeal.  The defender, it was argued, was drawn into these appeals as there was usually no choice but to defend them.  If the defender faced being found liable in expenses every time a civil penalty was reduced, even where the code had been correctly applied, then this would have a huge impact on the defender’s position. 

 

Decision as to the correct approach of the court

[40]      The real question in this appeal is whether I can have any regard to the factors put forward in mitigation by the pursuer, or can have regard to his ability to pay the civil penalty. 

[41]      Having considered the submissions put forward on behalf of the defender, I am persuaded that if an appeal hearing were to become a wide ranging enquiry into general mitigating factors, or into ability to pay, it would introduce huge uncertainty into the operation of the code of practice, and operate as a very considerable disincentive to employers to comply with it and to cooperate with immigration officers.  I am also persuaded that this would be to the very real prejudice of employers who did not appeal the imposition of a civil penalty notice.  They would effectively be penalised for complying with the code.

[42]      Applying the approach urged on me by the defender means that in a very real sense an appeal becomes “a re-hearing of the Secretary of State’s decision to impose a penalty”, which is what it must be in terms of section 17(3) of the 2006 Act.  To deal with an appeal in any other way means that it would be a new hearing looking at matters in an entirely different way from the Secretary of State’s original decision, rather than a re-hearing.  The defender’s arguments also mean that the appeal will be determined having regard to the code of practice, which the court must do in terms of section 17(3).  To look at general factors in mitigation would mean that an appeal would be determined by having regard to factors outwith the code of practice. 

[43]      It therefore seems to me that the arguments put forward on behalf of the defender have to be seen as correct. As I see it, the Court does not have an unfettered discretion in considering an appeal.  In particular, where the amount of the penalty is in question the court must have regard to the code of practice.  It is not permitted simply to determine what it thinks is an appropriate penalty, considering the matter independently. 

 

How would an appeal work?

[44]      If I am correct in my view, then as I see it, the court in an appeal will most commonly look to see whether the Secretary of State has properly applied the law and the code of practice.  An appeal might be successful if, for instance, an employer could show that he is not the employer of the illegal workers, and is therefore not liable to pay any penalty.  Or it might be successful if he could show that he has a statutory excuse, for instance that he properly carried out the prescribed document checks before the employment started.  Here, again, the penalty would be cancelled. Or it might be successful if he could show that the level of penalty was too high, for instance because specified mitigating criteria have not properly been taken into account.

[45]      Thus, an appeal under section 17(1)(a)  (namely that the employer is not liable to the imposition of a penalty) would, I think, be most likely to arise where the employer claims that he was not the employer, or that the employees were in fact entitled to work in the UK.  This type of appeal would involve an examination of the employees’ employment or immigration status to see whether they were working legally or not.  If the court was satisfied that the employees were not employed or was satisfied that they were entitled to work in the UK, then the civil penalty would have been wrongly imposed, and the court would cancel the penalty under section 17(2)(a). 

[46]      An appeal under section 17(1)(b) (namely that the employer ought to be excused payment of the penalty by virtue of the fact that he complied with any prescribed requirements in relation to employment) would involve a consideration by the court as to whether the employer carried out prescribed document checks before taking on the employees by taking all reasonable steps to check the validity of acceptable documents given to him, and keeping proper records of this.  So, for example, an employer might try to prove to the court that he had examined an employee’s passport and kept a copy, and therefore ought not to pay any penalty. 

[47]      An appeal under section 17(1)(c) (namely that the amount of the penalty is too high) would involve a consideration by the court as to whether the Secretary of State correctly considered and applied the mitigating factors as set out in the code of practice.  As set out above, the mitigating factors are whether (1) the pursuer reported the suspected illegal workers, which reduces the penalty by £5,000; (2) whether the employer actively cooperated with the immigration officers, which reduces the penalty by a further £5,000; and (3) in cases where there has been no previous illegal employment, whether there is evidence of strict document checking practices now being in place, which again reduces the penalty by £5,000.  If the court was satisfied that the Secretary of State had incorrectly understood or applied any of these mitigating factors, then the appeal would be allowed and the penalty reduced in terms of section 17(2)(b).  So, for example, if an employer had promptly returned the Information Request form, but it had not been received by the Secretary of State, then the court would hold this mitigating factor to apply, and the penalty would be reduced by £5,000. 

 

The present case

[48]      In the present case, on the approach which I have taken to this appeal I did not have to form a view as to the truthfulness of the pursuer’s evidence with regard to his employment of the two employees, as it does not affect the outcome of this appeal.  I was prepared to deal with the appeal on the basis that his evidence was true, although in fact I think it is unlikely that I would have accepted his entirely unsupported evidence had I been required to come to a concluded view on it. 

 

Availability of the statutory excuse

[49]      The evidence and admissions in this case establishes that the pursuer is unable to take advantage of the statutory excuse: the pursuer cannot provide evidence of having carried out effective document checking practises prior to the commencement of employment of SM and AA.  The pursuer has failed to provide a record of the date on which any checks were made.  In any event, even if the pursuer had carried out appropriate checks, he failed to retain and is unable to produce copies of the relevant documents.  That in itself makes a statutory excuse unavailable. Furthermore, a driving licence is not one of the acceptable documents which can be used to verify immigration status.  

 

Liability for civil penalty

[50]      The evidence and admissions in the case establishes that the pursuer has correctly been found liable to the imposition of a penalty by reference to the 3 elements set out in paragraph 15 above:

  1. The pursuer employed SM and AA;
  2. Both were subject to immigration control;

(iii) Both fell within paragraph (a) or (b) of section 15(1) of the 2006 Act.     

 

Amount of penalty

[51]      The evidence also establishes that the amount of the penalty was correctly calculated in compliance with the framework set out in the code: see pages 6 and 7 of the civil penalty notice (number 6/14 of process).  As he had not been found to be employing illegal workers within the previous three years then the Level 1 table was appropriate, giving penalties of £15,000 (before any deductions) for each employee. 

 

Mitigating Factors

[52]      In relation to Mitigating factor 1, it was correctly applied: the pursuer had not reported suspected illegal workers to the Home Office. 

[53]      In relation to Mitigating factor 2, the “Information Request” form which the pursuer was given requesting that he provide certain information contained the following (in bold letters):

“This is an important request.  Please do not ignore it.  You should provide a response by 05 February 2016.”

 

Further down the same page the following appears in bold letters:

“To enable us to take your information and evidence into consideration at the initial case decision stage we must receive it by 05 February 2016.  You should also note that this is the final date by which we will consider you to be actively co-operating with our request for information.”

 

It is worth noting that on a government website which states that it is: “An employer’s guide to the administration of the civil penalty scheme” the following appears:

“You should complete and return your Response Form, together with any supporting evidence, by the deadline given in the request. Once the deadline has passed, we will make a decision on your case on the basis of the information and evidence we hold, including any additional information you may have sent us.”

 

The importance of the deadline is therefore emphasised at various places.  Although the pursuer, through his solicitors, submitted certain information to the defender before the civil penalty was levied, he did not do so in accordance with the timetable laid down. It may be that the strict application of the time limits was quite hard on the pursuer, but I cannot say that the scheme was improperly applied.  Mitigating factor 2 (evidence of active cooperation) was therefore not met, as the pursuer did not actively cooperate with the Home Office. 

[54]      Mitigating factor 3 was not available because mitigating factors 1 and 2 had not been met. 

 

Ability to pay

[55]      The pursuer’s ability to pay the penalty is not, in my view, something which under the code of practice entitles him to any reduction in the penalty.  The relevance of his financial circumstances is that he could have asked the defender’s officers to be allowed to pay the penalty in instalments over a period of up to three years.  That is not a power which is given to the court under section 17, as the court can only cancel or reduce the penalty, or dismiss the appeal. 

 

Result of appeal

[56]      The result is that the pursuer has produced no good reason for departing from the application of the code.  The Secretary of State’s quantification of the penalty is sound.  Whatever I might think about the likely effect of the civil penalty on his livelihood, the appeal must in my view fail.

 

Expenses
[57]      The solicitor for the defender asked me to find the pursuer liable in the expenses in the event that his appeal was unsuccessful.  I think that motion is irresistible, and I will do so.  She also asked me to certify the case as being suitable for the employment of Junior Counsel.  This was under section 108 of the Courts Reform (Scotland) Act 2014, which provides that the court must sanction the employment of counsel if the court considers, in all the circumstances of the case, that it is reasonable to do so. 

[58]      Counsel did not, of course, appear for the defender at the appeal hearing before me.  I was advised, however, that as the pursuer had instructed a counsel with a specialised knowledge of immigration matters at an earlier stage of proceedings, and as the defender regarded the proceedings as being of some considerable importance, the defender also instructed counsel in order to ensure equality of arms.  Counsel had been involved in advising the defender’s Agents as to various aspects of the case, on which there was no reported Scottish case.  I am satisfied that the importance of the proceedings to the defender, and the novelty of the points raised in relation to the onus of proof regarding the fact that workers were employed illegally, and, more importantly, the correct approach to appeals under the 2014 code of practice, justified the involvement of junior counsel.  In my view it was reasonable for the defender to instruct Counsel.  I will certify the case as being suitable for the employment of junior counsel. 

[59]      The appeal is unsuccessful and is therefore dismissed.