Skip to main content
Publication

Company directors banned for employing illegal workers

12/01/2017

Locations

United Kingdom

Eleven company directors have been disqualified in the second half of 2016 for employing illegal workers.

Eleven company directors have been disqualified in the second half of 2016 for employing illegal workers.

The employment of illegal workers defrauds the tax payer and undercuts honest competitors, so companies have a duty under the Immigration, Asylum and Nationality Act 2006 to ensure that all their workers have the right to work in the UK. Employers must check the relevant documents prior to employing a worker to ensure the individual is entitled to work in the UK, and they must keep appropriate records so that they can prove that the correct checks have been made.

Companies who fail to comply with these duties are liable to be fined. It is also a criminal offence to employ someone who you knew or had 'reasonable cause to believe' did not have the right to work in the UK. Any officer of the company such as a director, manager or secretary can receive a prison sentence of up to five years and an unlimited fine for this offence. This includes where the worker's papers were incorrect or false. In addition, directors of companies who fail to carry out these checks may face disqualification proceedings, resulting in a ban on acting as a director of any company registered in the UK or of any overseas company with UK connections such as running a business or having assets here. Disqualified directors are also prevented from being involved in forming, marketing or running a company, even if they are not a director of it. Other restrictions include being barred from sitting on the board of a school or similar institution and from being a solicitor, barrister or accountant.

Details of a director's disqualification will be published online at Companies House and on the Insolvency Services’ register of directors. If a director breaks the terms of their disqualification they can be fined or sent to prison for up to two years.

In the last six months, eleven companies were fined a total of £450,000 for employing illegal workers and their directors have been disqualified for six years each.

According to Cheryl Lambert, Chief Investigator at the Insolvency Service:

‘Employing illegal workers is not a victimless crime. These directors sought an unfair advantage over their competitors by employing people under the radar who were not entitled to work legally in the UK. If a company is found to be employing illegal workers and not carrying out the checks they are required to by law, then the Insolvency Service will take action to remove the directors from the market place…this action is a warning to other employers to seriously consider their duties and obligations.’

These actions are a stark warning to company directors that if they fail to comply with their duties as employers they will face losing their livelihood themselves. Directors who are unsure whether these requirements are being met should consider conducting an audit of the company's workforce and HR systems and processes to ensure that the company can rectify any current breaches urgently and prevent these happening in future.

With thanks to Amelia Thomson for writing this article.

Sign up to our email digest

Click to subscribe or manage your email preferences.

SUBSCRIBE