How should you deal with an employee who no longer has the right to work in the UK?

You can be sent to jail for five years and have to pay an unlimited fine if you’re found guilty of employing someone who you knew or had ‘reasonable cause to believe’ did not have the right to work in the UK.

You might have to pay a civil penalty of up to £20,000 if you employ someone who does not have the right to work and you did not do the correct checks, or you did not do them properly. It can jeopardise your status as a registered sponsor and the immigration permissions of the people you sponsor. The stakes are high.

But how should you deal with an employee who no longer has the right to work in the UK?

On the face of it, dismissal because continuing to employ them would be illegal would appear to be potentially fair. However, case law has shown that employers in this situation need to be careful, particularly if there is doubt about the employee’s permission to work in the UK.

If you rely on illegality as the reason for dismissal because you believe that your employee does not have the right to work in the UK, you may be vulnerable to a successful unfair dismissal claim. If the employee did have permission to work in the UK (sometimes the Home office makes mistakes), as well as being at risk of unfair dismissal, you may be liable for a damages claim for breach of contract for the wrongful dismissal.

In Klusova v London Borough of Hounslow, an employer’s genuine, but mistaken, belief that continuing to employ a foreign national would breach immigration legislation was capable of amounting to ‘some other substantial reason’ to defend an unfair dismissal claim.

Hounslow Council employed Ms Klusova. a Russian national from November 2000. She was granted leave to remain in the UK until May 2004. In August 2005, the council dismissed her, believing that her continued employment contravened immigration legislation. It did not follow any dismissal procedures and later argued that these did not apply because the dismissal was for breach of a statutory restriction.

However, at the time of her dismissal, Klusova was entitled to work in the UK. She had applied to the Home Office for further leave to remain and was entitled to work pending that application. The confusion arose because in March 2005, Klusova had been detained by the police for immigration offences and was released conditionally on her not taking up employment. Hounslow received a copy of the form that set out this condition.

The Court of Appeal was satisfied that Klusova had made a valid application for leave to remain before her visa expired and that she could work until that application had been determined. Conditions imposed by an immigration officer following her detention could not cancel her entitlement to work while her application was being considered.

However, the court accepted that the council genuinely believed Klusova’s continued employment would breach a legal restriction. The fact that it had failed to consult her about its concerns and had not followed relevant guidance did not alter that outcome. The council had made enquiries with the Home Office and received information that suggested it could not continue to employ her.

This genuine but mistaken belief amounted to a potentially fair reason for dismissal (‘some other substantial reason’), but in this case, the dismissal was unfair because the council had not followed its dismissal procedures.

So, what should you do?

In many cases, it will be difficult to be completely certain of the immigration position. In this case, the employer had received official notification that the employee could not work in the UK, but that turned out to be incorrect.

The alternative and safer option is to dismiss for ‘some other substantial reason’, as you believe the employee is working illegally. If this belief turns out to be incorrect it will not make the dismissal unfair, as long as the belief is genuine. However, an employer relying on this alternative ground for dismissal must follow a fair procedure before dismissing, which includes complying with the statutory dismissal procedures. Failure to do so will make the dismissal automatically unfair.