Employment

Joanne Leach, Emma Cocker, Becci Collins
December 2024

Senior Associates Joanne Leach and Emma Cocker and Solicitor Becci Collins explore the government’s recently announced plans to tighten immigration systems, and discuss how this will impact employers and employees, in People Management.

Joanne, Emma and Becci’s article was published in People Management, 17 December 2024, and can be found here.

Government cracks down on foreign labour exploitation: what employers need to know

Emma Cocker, Joanne Leach and Becci Collins explain recently announced plans to tighten immigration systems, and how they will affect business that hire overseas talent.

On 28 November 2024, the government announced that it intends to tighten immigration worker systems by extending categories of breaches, as well as strengthening sanctions. In its pre-election manifesto, the government stated that it intended “to reduce net migration through proper control and management of the visa framework”. The proposed new rules are evident of the government’s intent to “crackdown on visa abuse and prevent exploitation”.

The government proposes extending the circumstances in which sanctions can be issued to companies that sponsor overseas workers, to include those who commit serious employment breaches. It is expected that this will include the reforms proposed in the Employment Rights Bill published in October, as well as existing rights, such as the entitlement to national minimum wage. However it is unclear how a company will be judged to be in breach of employment laws. Such a finding could potentially derive from a successful employment tribunal claim, or a new regulatory body may be tasked with assessing failure to comply with minimum standards.

The current sanctions available to enforcement officers in relation to companies held in breach of immigration laws can only be issued for a period of 12 months. For those who commit repeat offences, this period will be doubled to “at least” two years, suggesting there is a possibility of longer sanction periods.

There will also to be a new initiative to take pre-emptive action against those who are suspected of committing serious breaches.  Where there are already signs of rule breaking, the government intends to use action plans to bind businesses to take specified steps to improve and correct issues. Currently, action plans can be implemented for a period of three months. However, this is to be extended to 12 months. If the required improvements are not made, the sponsor’s licence will be revoked.

Tougher rules to prevent companies exploiting cheap foreign labour should be welcomed. Workforces are strengthened by the diversity brought to organisations by migrant workers and those individuals deserve not to be exploited. This issue is also addressed by proposals that intend to prohibit exploitation by passing on the costs of recruiting overseas workers to the individual, sometimes at a premium or excessive rate. These costs can result in individuals being left with unfair and unmanageable debts to their employers. The proposal to ban these practices will help to ensure that only businesses who genuinely require overseas workers – and can afford to recruit them in a fair and respectful way – benefit from the immigration system.

Prudent employers will take the recently published statistics as a warning, indicating how seriously the government takes the issues of tackling abuse and failing to adhere to the immigration system rules. For example:

  • In October 2024, there were 856 visits conducted to businesses suspected of employing illegal workers, a 55% increase on visits carried out in October 2023.
  • Between January and October 2024, more than 6,600 visits were made, a 22% increase on the same period in 2023.
  • Between January and October 2024, over 4,600 arrests were made, a 21% increase on the same period in 2023.

The government’s intention to expand the circumstances in which sanctions can be issued to include employment law breaches, and to extend the penalty from being banned from hiring overseas workers from one year to two, will shift the compliance landscape considerably. Further extending the power of Home Office officials to permanently withdraw a company’s sponsorship licence if they breach employment laws could have catastrophic consequences for businesses relying on an overseas workforce. However, it seems that the proposed expansion only applies to companies. It may be more effective to increase the sanctions on individuals who facilitate these breaches – perhaps further changes are to come before the draft legislation reaches parliament.

It is uncertain when we can expect this law to come into effect, but we shouldn’t expect this to be the final crackdown by the government. We may also see the reintroduction of the resident labour market test, or salary thresholds and visa fees being increased. Hopefully, the government will consult early as to how these changes may be implemented but, in the meantime, companies effectively have a grace period to get their house in order.

Companies should take an active approach to ensure compliance in all areas of employment and immigration law and they should do more than take a simple ‘tick box’ approach. Employers should review their policies and procedures to ensure they are up to date and meet minimum standards to avoid the above-mentioned sanctions, as well as the reputational damage and disruption to the running of a business held to be in breach of immigration and/or employment laws.

This announcement should serve as a wake-up call to all employers that they must comply with employment laws as well as immigration rules, otherwise they will face increasingly severe consequences of enforcement.

If you have any questions about the government’s plans and how you can ensure your business is complying with employment and immigration laws, please contact a member of the Employment team.