The Supreme Court allowed a restaurant company’s appeal against a £15,000 civil penalty for employing a worker who had no permission to work. The penalty notice was invalid because it listed every alternative ground in section 15(1) of the Immigration, Asylum and Nationality Act 2006 without stating which ground the Secretary of State thought applied. Section 15(6)(a) required the notice to state why the employer was liable, including by identifying that ground.
The statutory penalty
Section 15 of the Immigration, Asylum and Nationality Act 2006 permits the Secretary of State to require an employer to pay a civil penalty for employing an adult subject to immigration control. Liability arises if the person has not been granted leave to enter or remain, or if that leave is invalid, has ceased to have effect, or is subject to a condition preventing the employment. Those alternatives are mutually exclusive. The employer has an excuse if prescribed checks were carried out, unless the employer knew that the employment was contrary to the section, but the Secretary of State may issue a notice without first deciding whether the excuse applies.
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A penalty notice must state why the Secretary of State thinks the employer is liable, state the amount, and explain objection and appeal. The employer may object to the Secretary of State and then appeal to the county court. The appeal is a re-hearing of the decision to impose the penalty and may take account of matters of which the Secretary of State was unaware.
The notice and the decisions below
On 15 January 2023 immigration officers inspected the appellant’s Middlesbrough restaurant and identified a worker whose leave to remain had expired. An information request went unanswered. On 13 March 2023 the Secretary of State issued a notice requiring a penalty of £15,000. It said that the employer had breached section 15 because the worker fell within one or other of the alternatives in section 15(1), but it did not say which. The attached statement of case said that Home Office records showed no right to work and explained the calculation, again without identifying the applicable alternative.
The appellant objected on 9 April 2023, saying that the worker was lawfully present and had sought an extension. On 26 April 2023 the Secretary of State upheld the penalty, still without identifying a single ground. In later correspondence she first said that the notice relied on section 15(1)(b)(iii). Evidence served for the county-court appeal then said that the worker’s leave had expired. The Secretary of State afterwards said that both section 15(1)(b)(ii) and section 15(1)(b)(iii) applied. The appellant said that the notice was invalid.
HHJ Gargan dismissed the appeal. He accepted that stating a breach for one or more of the statutory reasons was enough and that the Secretary of State could rely on section 15(1)(b)(ii) and the later evidence. The Court of Appeal dismissed the further appeal. Zacaroli LJ, with whom Lewison and Coulson LJJ agreed, held that the notice had to be read as a whole. He considered section 15(6)(a) general rather than prescriptive: identifying the worker, the employment and the evidence of no right to work stated why the employer was liable. He also treated the purpose of discouraging illegal working, the employer’s onus on appeal, and the possibility of relying on a different limb at a re-hearing as reasons against a stricter reading.
Why the notice had to identify the ground
Lord Sales, with whom Lord Richards, Lord Leggatt, Lady Rose and Lady Simler agreed, accepted that the notice must be read as a whole, but held that this notice still failed section 15(6)(a).
The regime is penal even though the penalty is civil. A person against whom the state invokes a penal power is entitled to know why, and a requirement to give reasons disciplines the decision-maker. Fairness also requires enough accurate information for the employer to decide whether to appeal, identify the necessary evidence, and contest both the alleged breach and any issue about checks or mitigation. A court could not properly explain a £15,000 penalty by saying that one of three mutually exclusive cases applied, and a prosecutor would have to identify the relevant limb. The notice is both the operative decision and the charge which an appeal may test, so the Secretary of State was not subject to a lower standard.
Section 15(2) authorises a notice only once the Secretary of State has established a breach of section 15(1). She must therefore already have decided which mutually exclusive limb applies. In its ordinary meaning, the mandatory requirement to state why she thinks the employer is liable requires her to explain that reasoning, including the limb relied on. The statutory excuse does not alter this. It creates no duty to carry out checks, need not be considered before the notice is issued, and arises only if the employer is otherwise liable. The employer may also have other answers, including that the notice should never have been issued, and must be told the case in order to know whether those answers are available.
Sections 16 and 17 reinforce that reading. An employer can object or appeal on the ground of not being liable only if the notice identifies the limb being denied. On an objection, the Secretary of State must reconsider, and the employer can assist that reconsideration only by knowing the original reasoning. An appeal is a re-hearing of the decision actually made. New evidence may be admitted on the matters decided, but the Secretary of State cannot defend the appeal by relying on an unspecified limb.
The argument from the broad purpose of discouraging illegal working was too abstract. Purpose must be derived from the statutory language in its context. Legislation commonly balances a principal object against fairness and certainty, and courts should not extend a clearly expressed provision merely because doing so would further one objective. Here, the relevant purpose of section 15(6)(a) was to tell the employer why the penalty was imposed and permit an informed decision whether to challenge that reason.
The consequence of the omission
The Secretary of State argued alternatively, relying on R v Soneji, that any breach did not invalidate the notice. By the county-court hearing the relevant limb had been identified, other notice requirements had been met, and there had been substantial compliance. Lord Sales rejected that submission. Soneji asks whether Parliament intended a breach to invalidate the act, but it does not impose a substantial-compliance test in every setting. Here the constitutional context, the scheme as a whole and fairness made specification of the limb a clear condition of validity. The employer should not have had to appeal in order to discover the ground actually relied on. The requirement also had to work where no appeal followed and the notice simply took effect.
The obligation was not unreasonable: the Secretary of State holds the immigration records and must identify the applicable limb before exercising the power to issue a notice. A basic error in applying section 15(1) could not be treated as inconsequential, particularly because a fresh and compliant notice could be issued. JN (Cameroon) did not assist. There the notice was not the operative deportation decision, and failure to name the destination had no material adverse effect on the appeal. Those features were absent here. Giving effect to this notice despite the omission would unacceptably undermine the purpose of section 15(6)(a).
Verdict: The Supreme Court unanimously allowed the appeal. The civil penalty notice failed to comply with section 15(6)(a) and was invalid.
