Penalty appeals start from Code figure but courts may weigh means

County courts rehearing a Home Office civil penalty for illegal working must start from the penalty figure in the Code of Practice on preventing illegal working in force at the time of the appealNationalarchives and give effect to the Code's reductionsNationalarchives. They must then consider any other matter the court thinks relevantNationalarchives, which can include the totality of the penalty, the employer's means, and an effective right-to-work checking system that did not establish a statutory excuse or earn a warning noticeNationalarchivesNationalarchivesNationalarchives. A court that discounts beyond the Code's figures only because it would have been more generous, picks its own starting point, or reduces the penalty to nothing is not deciding the appeal with regard to the CodeNationalarchives.

The appeals concerned two employers penalised under section 15 of the Immigration, Asylum and Nationality Act 2006.Nationalarchives Jen & Jamie Limited of Stockton-on-Tees received a penalty notice on 9 August 2024 of £40,000 for each of two workers, a total of £80,000Nationalarchives. Balbir Singh Johal of Briton Ferry in Neath received a penalty notice on 9 October 2024 of £40,000 per individual. Both appealed to the county courtNationalarchives, where each judge treated the 2024 Code as bindingNationalarchives and dismissed the appeal.

Shortly before the hearing on 13 and 14 October 2026, both employers applied to add a groundNationalarchives based on the Supreme Court's decision in Akbars Restaurant [2026] UKSC 26Nationalarchives of 27 July 2026, which requires the penalty notice and its statement of case, read as a whole, to state which limb of section 15(1) the Home Office relies onNationalarchives. The amendment was allowed despite its latenessNationalarchives because appeals should be decided on the law as it standsNationalarchives, and the point could be dealt with in short written submissions without adjourning the appeal. The Home Office conceded that the Johal notice was invalidNationalarchives, withdrew itNationalarchives, and served a fresh noticeNationalarchives. The Somerset notice survivedNationalarchives because its "breach of work restrictions" reasonNationalarchives, with a statement of case explaining that each woman held a skilled-worker grant yet worked as a shop assistant outside the permitted additional-work terms, identified section 15(1)(b)(iii)Nationalarchives.

On the discretion point, section 17(3) requires the appeal, which is a re-hearingNationalarchives, to be determined having regard both to the Code and to any other matters the court thinks relevantNationalarchives. The 2024 Code, which came into force on 13 February 2024, sets a £45,000 starting point per worker for a first breachNationalarchives, before reductions of £5,000 for reporting a suspected illegal workerNationalarchives and £5,000 for actively cooperating with the Home OfficeNationalarchives, with a warning notice only where effective checking practices accompany bothNationalarchives, plus a 30 per cent faster-payment discount within 21 daysNationalarchives for a first penalty. Totality requires the penalty to be proportionate to the wrongdoing as a whole.Nationalarchives An employer relying on limited means must adduce evidence, ordinarily audited accounts for the last three years covering turnover, profit, directors' remuneration and loan accountsNationalarchives, with an adverse inference available where accounts are withheldNationalarchives.

The Somerset penalty dispute was remitted to the county court.Nationalarchives The only means evidence was one set of unaudited accounts for 2023Nationalarchives showing £711,179 turnover and £31,633 pre-tax profit, alongside an assertion the penalty would force liquidation. None of this was explored at trialNationalarchives because means had been ruled outNationalarchives. The Johal penalty, calculated in line with the Code with no evidence on means or totalityNationalarchives, was not too high on the materials before the judgeNationalarchives, a point relevant now only to costs.

Legal basis: Immigration, Asylum and Nationality Act 2006, sections 15, 17 and 19NationalarchivesNationalarchives, with the February 2024 Code of Practice on preventing illegal working.