Civil Penalty for Illegal Working: How the UK Penalty Calculation Actually Works

The Home Office rarely issues an illegal-working penalty at the headline figure. The calculation starts at a set amount per worker and works downward — reductions for self-reporting, for co-operation, and for paying promptly. Or it replaces the civil-penalty route entirely with criminal proceedings. Which path your business is on depends on a small number of facts the case-worker decides early in the investigation.

This guide walks through how a civil penalty for illegal working is actually calculated under the current Home Office Code of Practice, so the figure you see in a notice is not a surprise.

This guide is for informational purposes only and does not constitute legal advice. For advice on your specific situation, consult a qualified immigration solicitor.

What the civil penalty is

A civil penalty for illegal working is a financial sanction issued by the Home Office under Section 15 of the Immigration, Asylum and Nationality Act 2006. It applies when an employer employs a person who:

Is subject to immigration control, and
Has not been granted permission to work or is in breach of the conditions of their permission, and
The employer cannot show a statutory excuse — i.e. they did not carry out a compliant right to work check at the prescribed times.

The penalty is per illegal worker, not per business. Employ three people without a statutory excuse and three separate penalties are calculated.

The Code of practice on preventing illegal working sets a penalty level for each breach type. The version in force since 1 October 2026 lists a "Penalty level for first breach within the last three years" of £45,000 per worker and a "Penalty level for repeat breach (within 3 years)" of £60,000 per worker. Those are the figures its predecessor set in February 2024, when the 13 February 2024 Code said the penalty would "increase to a maximum £45,000 per illegal worker for a first breach of the Scheme up from £15,000, and a maximum £60,000 per illegal worker for repeat breaches up from £20,000". The penalty is calculated under the Code in force on the date of the breach; the amounts are the same under both.

Offence	Code of Practice penalty level (per worker)
First breach	£45,000
Repeat breach (within 3 years of a previous penalty or Warning Notice)	£60,000

£60,000 is also the single statutory ceiling for the scheme as a whole: the 2024 Maximum Penalty Amendment Order, article 2, substituted "£60,000" for the previous "£20,000". The Home Office penalties for employing illegal workers page puts the headline the same way: "you might have to pay a civil penalty (fine) of up to £60,000 for each illegal worker."

But the penalty level is rarely the actual penalty issued. It is where the case-worker's calculation starts, and the Code then applies reductions only — there is no step in the calculation that raises a penalty above its starting figure. As the Code puts it for a first breach: "The starting point for the calculation of the civil penalty is £45,000." Every adjustment after that is a reduction.

How the calculation works in practice

The case-worker progresses through a structured calculation. The exact mechanics are in the Code of Practice, but the steps are:

1. Identify the offence type

First breach: the employer has not been found to be employing illegal workers within the previous three years.
Repeat breach: the employer has. The Code defines that as having "been issued with a civil penalty or warning notice in respect of a breach of the IANA 2006 for one or more illegal workers which occurred within three years of the current breach, or they have committed an offence under section 21 of the IANA 2006 during the same period."

2. Apply the relevant starting figure

The Code of Practice sets the starting amounts for each offence type: £45,000 per worker for a first breach, £60,000 (the statutory maximum) for a repeat breach. The three-year window is what most employers miss — repeat right to work breaches attract the higher £60,000 penalty even when the second breach involves a different worker at a different site.

3. Apply mitigating factors (reductions)

Each mitigating factor that applies reduces the per-worker penalty by a specified amount:

Reporting suspicions before the Home Office identifies the worker (with a Unique Reference Number): if the employer reported a suspected illegal worker to the Home Office and received a Unique Reference Number "before the Home Office has identified the individual(s)", a £5,000-per-worker reduction applies.
Active co-operation with the investigation: evidence of co-operation during a Home Office visit and investigation reduces the penalty by £5,000 per worker.
Effective right-to-work checking practices alongside mitigation factors 1 and 2: evidence that effective check processes were in place can result in a Warning Notice rather than a Civil Penalty Notice for a first breach. Our guide to a right to work policy sets out what the Code says it looks for as evidence of effective checking practices and how to evidence each.

4. Apply the fast-payment discount (if eligible)

If the (potentially adjusted) penalty is paid within 21 days of the Civil Penalty Notice being given, a 30% fast-payment discount applies. The Code calls this the Faster Payment Option (FPO), and it comes on top of any mitigating-factor reductions. The Code sets two conditions on it: the FPO "is only available for employers in receipt of their first penalty and cannot be paid in instalments."

Read that wording carefully — the Code says first penalty, not first breach, and the two are not the same test. The repeat-breach starting figure is triggered by a previous Civil Penalty Notice or a previous Warning Notice within three years, whereas the FPO condition is written in terms of the employer's first penalty. The Code does not spell out how the FPO applies to an employer who is on repeat-breach figures because of an earlier Warning Notice rather than an earlier penalty. If that is your situation, do not assume either way — ask the Home Office to confirm in writing before relying on the discount.

A common misconception is that objecting costs you the discount. It does not. The Code is explicit: "If an employer objects to the penalty before the deadline specified in the Civil Penalty Notice, they will continue to be eligible for the FPO." If the employer is still liable once the objection is decided, "they will have 21 days to pay by FPO (if applicable) and 28 days to pay in full, from the date specified in the Objection Outcome Notice."

If the (potentially adjusted) penalty is paid in full within 21 days of the notice, a 30% fast-payment discount is applied. This is on top of any mitigating-factor reductions. Two conditions apply, both stated in the Code: it "is only available for employers in receipt of their first penalty", and it "cannot be paid in instalments".

Objecting does not forfeit it. The Code is explicit: "If an employer objects to the penalty before the deadline specified in the Civil Penalty Notice, they will continue to be eligible for the FPO. If the employer is still required to pay a penalty following objection, they will have 21 days to pay by FPO (if applicable) and 28 days to pay in full, from the date specified in the Objection Outcome Notice."

5. Multiply by the number of illegal workers

The final per-worker figure is multiplied by the number of workers identified.

So a small employer with 2 workers identified, no prior penalties, partial cooperation, and prompt payment would see a fundamentally different bill from an employer with 3 workers, a prior penalty inside the three-year window, and an appeal that loses.

A worked example for a micro-employer

A 6-person catering business is investigated. Two visa-holding employees are identified as not having had compliant follow-up checks. Their visas expired 4 months ago. The employer has no prior penalties.

Step 1: First breach. Step 2: Starting figure £45,000 per worker = £90,000 total maximum. Step 3: Mitigating factors — the employer cooperated promptly and had documented initial checks for both employees. One mitigation tier applied; for illustration assume a reduction of £5,000 per worker. Adjusted per-worker = £40,000. Step 4: This is the employer's first penalty, so the Faster Payment Option is available. If paid in full within 21 days, the 30% fast-payment discount takes the per-worker figure to £28,000. Step 5: Two workers = £56,000 final liability.

The numbers above are illustrative — the actual reductions depend on the specific facts and the case-worker's assessment. They show the range: the same set of facts can produce a very different bill depending on cooperation, prior history, and payment timing.

For your specific business and headcount, the penalty risk calculator walks through the same calculation against your numbers.

When civil penalty becomes criminal prosecution

The civil penalty regime applies where the employer could not show a statutory excuse — typically a missed check or missed follow-up. It is fundamentally a strict-liability process: the question is whether a compliant check happened at the right time, not whether the employer "knew".

A separate criminal offence applies where the employer knowingly employed someone without the right to work, or had reasonable cause to believe they did not. Under Section 21 of the Immigration, Asylum and Nationality Act 2006 (as amended by the Immigration Act 2016), the maximum on conviction on indictment is:

5 years' imprisonment, and
An unlimited fine

The threshold for criminal prosecution is "knew or had reasonable cause to believe". An employer who continued employing a worker after their visa had visibly expired, or who employed someone with a document they had reason to believe was false, can be prosecuted rather than (or in addition to) being issued a civil penalty.

For most small UK employers the civil-penalty route is the likely outcome of an investigation. The criminal route comes into play in cases involving deliberate non-compliance or document fraud.

Notice, objection, and appeal

When a civil penalty is issued, the employer receives a Civil Penalty Notice setting out:

The names of the workers identified
The per-worker penalty figures and reasoning
Any mitigating factors applied
The total liability
The fast-payment date for the 30% discount

The employer must pay by the date specified in the Civil Penalty Notice unless they object. The options are:

Pay (with the 30% discount if this is their first penalty and it is paid within 21 days of the notice being given), or
Object to the Home Office in writing "within 28 days of the due date specified in the notice" (an internal review), or
Pay by instalments — the Code says "An employer may request to pay their civil penalty by instalments over an agreed period", giving "the full reasons for their inability to pay the full penalty amount in one payment". Note that instalments and the 30% discount are mutually exclusive: the FPO "cannot be paid in instalments."

If the objection is rejected, the employer can appeal to the County Court (or the Sheriff Court in Scotland) within 28 days of the date specified on the Objection Outcome Notice, or on a new Civil Penalty Notice. The Code describes an appeal as "a re-hearing of the Home Office decision", on the same grounds as an objection.

Objecting does not, in itself, cost you the fast-payment discount. The Code states that an employer who objects before the deadline in the Civil Penalty Notice "will continue to be eligible for the FPO", with 21 days to pay by FPO (if applicable) and 28 days to pay in full from the date specified in the Objection Outcome Notice.

There are, though, two real risks in contesting. An objection can move the figure the wrong way — "If the penalty is to be increased, a new Civil Penalty Notice will be sent." And at the appeal stage, the Code warns that "if their appeal to the court does not succeed, the court may order that they pay the reasonable costs/expenses of the Home Office in defending their appeal."

Neither is a reason to pay a penalty you have a genuine statutory excuse against. Both are reasons to take advice from a specialist immigration solicitor before deciding how to respond.

For the sequence that follows a notice — the objection timetable, the enforcement steps if a penalty goes unpaid, and what a business is left dealing with afterwards — see what the Home Office does after issuing a civil penalty notice.

How to avoid the calculation entirely

The most reliable way to avoid every step in the calculation above is to maintain the statutory excuse for every employee, every time. That means:

Run a compliant initial check for every hire, including British citizens. Selective checking is unlawful discrimination under the Equality Act 2010 and undermines your statutory-excuse position. See our British citizens guide.
Identify the document list and group correctly. List A is the easy case (no follow-up). List B Group 1 and Group 2 carry different follow-up cycles — see the right to work documents list.
Track every visa expiry date and Group 2 follow-up date. Our visa expiry tracking guide walks through the practical setup.
Run the follow-up check before, not after, expiry. Follow-up right to work checks covers the mechanics.
Use the 28-day grace period correctly — it is not an extension you grant yourself; it is a verification window in specific circumstances.
Document everything with dates and copies. A complete, dated audit trail is the single best evidence in an investigation.

A statutory excuse is binary — you either have it or you do not. Once you do, the civil-penalty calculation never starts. That is the calculation worth making.

Sources

Code of practice on preventing illegal working: Right to Work Scheme for employers — GOV.UK (quotations are from the revised Code brought into force on 1 October 2026 by SI 2026/700, which applies to breaches on or after that date)
Code of practice on preventing illegal working (13 February 2024) — UK Government Web Archive (the previous Code, which sets the penalty amount for breaches from 13 February 2024 to 30 September 2026; quoted here only for the February 2024 increase)
Penalties for employing illegal workers — GOV.UK
Illegal working civil penalties: an employer's guide — GOV.UK
Immigration, Asylum and Nationality Act 2006, Section 15 — legislation.gov.uk
Immigration, Asylum and Nationality Act 2006, Section 21 — legislation.gov.uk