Scottish Sheriff Court Decisions

Court Ref : B883/09

 

JUDGEMENT

 

OF

 

SHERIFF GEORGE ALEXANDER WAY

 

 

 

In the Summary Application

 

Of

 

 

QUDOS LEISURE LIMITED, a Company incorporated under the Companies Acts and having its registered office at Unit 1A City Quay, Camperdown Street Dundee

Pursuer and Appellant

 

Against

 

The Rt.Honourable The Lord Davidson of Glenclova, The Advocate General for Scotland, the Office of the Solicitor General for Scotland Victoria Quay Edinburgh EH6 6QQ, representing the UK Border Agency, an Executive Agency of the Home Office

 

Defender and Respondent

 

 

Act: Hunter Solicitor Advocate Alt: Webster Advocate

 

 

Dundee

Date: 29th December 2009

 

 

The Sheriff, having resumed consideration of the cause; sustains the Third and Fourth Pleas in law of the Defender and Respondent, repels the Pursuers and Appellants Pleas and dismisses the Application; Finds the Pursuers and Appellants liable to the Defender in the expenses of the action and allows an Account thereof to be given in and remits the same when lodged to the Auditor of Court to tax and report; certifies the cause as suitable for the employment of counsel.

 

 

 

 

Sheriff of Tayside Central and Fife

 

 

NOTE:

 

1. In this Summary Application the pursuers and appellants sought to establish that a civil penalty imposed under the Immigration, Asylum and Nationality Act 2006 (the "Act") should be quashed or cancelled in terms of Section 17(2) (a) or alternatively reduced in amount in terms of Section 17(2) (b) of the said Act. The relevant provisions of the Act provide, in simple terms, that an employer of a worker who does not have the legal right to work in the UK may be liable to a civil penalty or commit a criminal offence. This is set out in Section 15 of the Act which states:

" 15 Penalty

(1)     It is contrary to this section to employ an adult subject to immigration control if : (a) he has not been granted leave to enter or remain in the United Kingdom or

(b) his leave to enter or remain in the United Kingdom -

(i)                   is invalid,

(ii)                 as ceased to have effect (whether by reason of curtailment, revocation, cancellation, passage of time or otherwise) or

(iii)                is subject to a condition preventing him from accepting employment.

 

The provisions are supplemented by a statutory Code of Practice. This provides general guidance and also sets out the basis for establishing a statutory excuse under section 15 (3) and (4) that an employer should not be subject to penalty where he has complied with any prescribed requirements. The Code provides at paragraph 2.5 that an employer, must before employing a person who is subject to immigration control, check original documents to establish their right to work. Appendix 1 to the Code sets out the type of documents which are acceptable and divides them into two subcategories A and B. In the event that the prospective employee presents a category A document such as a Passport with an indefinite right to remain in the UK then retaining a record of this is all the employer need do. A category B document such as the one presented to the appellants in this case which was a Passport with a limited right to remain to a certain date lays an additional obligation upon the employer to carryout follow up checks to ensure that the employee continues to have the right to work. The follow up checks must be, at the minimum, every twelve months. There is also an obligation to take reasonable steps to establish that the document bears to be genuine or if genuine does relate to the employee.

2. The Code of Practice goes on to set out a framework to assist UKBA in assessing the appropriate level of civil penalty. The Code, however, emphasises that cases will be considered according to their particular facts. The maximum penalty is £10,000.00 per worker. The framework then uses a grid system to take account of whether the failure is a first, second or third (or more) occurrence. The grid is further divided to take account of whether the employer carried full checks, partial checks or no checks at all. A full check is defined as one where original documents, as set out in the Appendix, have been checked and copies retained for inspection by UKBA. The employer having been deceived in some way avoids penalty unless he falls foul of the secondary requirement of taking reasonable steps to ensure that the documents actually relate to the employee. Provision of copy documents does not protect an employer who knew that the employee was not entitled to work. A partial check is defined as one where say only one of two documents necessary to establish a right to work ( such as an Immigration Status Document from the Home Office which must be accompanied by an additional document from the Department of Work and Pensions assigning a National Insurance Number ) have been copied and retained or where an employer has failed to carry out a periodic follow up check on a worker with temporary immigration status having conducted a full check at the point of recruitment. The final division is self explanatory. The Code further sets out that as record keeping is the core value of the system an employer will be considered to have carried out no checks where they cannot produce the records or where they have accepted a document which it is reasonably apparent does not apply to the employee or is patently false. Equally keeping a record which shows on its face that the employee does not have a current entitlement to work is deemed to be a situation where no check has taken place. Where no check has taken place the following penalty guidance is provided; on the first occasion minimum penalty per worker £2,500.00 -maximum £7500.00; on second occasion minimum penalty £7500.00 -maximum £10,000.00; third occasion penalty £10,000.00. Where a partial check has been undertaken: on the first occasion minimum penalty may be a warning letter -maximum £5000.00; on second occasion minimum penalty £5000.00 -maximum £7500.00; third occasion minimum penalty £7500.00 - maximum £10,000.00.

 

3. The parties had, helpfully, entered into a Joint Minute of Admissions ( Number 9 of Process) which when taken with the averments in the Record which were not disputed enables me to sum up the non contentious aspects of this case as follows. The Appellants, who operate restaurant premises in Dundee, employed a Nigerian national, Mr Jibrin Isa Ahmed who had limited leave to remain and work in the UK until 31^st August 2008. The Appellants had checked Mr Ahmed's passport and kept a copy for their employment records. On 23rd October 2008 officers of the United Kingdom Border Agency (UKBA) carried out an inspection of the appellant's premises in Dundee. The appellants fully cooperated with the UKBA officers and made both their records and staff available. In the course of the inspection the officers ascertained that Mr Ahmed no longer bore to have a valid right to remain in the United Kingdom or at least had no right to seek employment. They detained Mr Ahmed. The officers informed the appellants that a report would be submitted and they would hear further on the matter in due course.

4. On 23^rd December 2008 the Secretary of State determined that there had been a breach of section 15(1) (b) (ii) of the Act and issued a Civil Penalty Notice in the sum of £8750.00. The appellants made timely objection (as provided by the Act) and this was upheld to the extent that the civil penalty was reduced to £5,000.00. It is that penalty which is appealed to the Court. The appellants appeal on the grounds that they had complied with their obligations under the Act, and I will turn to that submission in greater detail or that, in any event, the penalty imposed was excessive. The parties also agreed certain productions : the Code of Practice "Prevention of Illegal Working " February 2008 ( The Code of Practice) ; two transcripts from the telephone records of UKBA and the Notice of Penalty issued which was also agreed to have been a "first" notice, the significance of which will become apparent.

5. I heard evidence from Nazam Salimi and his brother Vazeem Salimi for the appellants and from Lynn Davidson and Lucas Polk of UKBA. Mr Nazam Salimi is the Director of the appellants and Head Chef of the restaurant business and Vazeem is the one of the day to day managers. Ms.Davidson was the lead officer in charge of the inspection of the appellants, whilst Mr Polk heads the Appeals section of UKBA. Mr Vazeem Salimi described the appellants' recruitment procedures. They were, as a business, fully aware of their obligations under the relevant immigration legislation and believed they were compliant. They cooperated fully with the inspection which had resulted in the present case. They had copied the passport of Mr Ahmed which was endorsed to the effect that his leave to remain expired on 31^st August 2008. They had also copied his Dundee College Student ID Card. Mr Salimi told me that he had asked Mr Ahmed for up to date evidence of his right to remain and work in the UK and that he had been given sight of, and copied, a letter from UKBA dated 16^th September 2008 which acknowledged that Mr Ahmed had applied for an extension of his leave to remain. He believed that this was the documentary evidence that the appellants needed to continue to employ Mr Ahmed after the 31^st August 2008. He freely accepted that Mr Ahmed had been employed beyond the date endorsed on his passport. He also informed me that he periodically called the UKBA Helpline for advice on employment issues and that it was from this source he had formed the opinion that the letter from UKBA of 16^th September was sufficient evidence of Mr Ahmed's immigration status. This witness was quite determined that the advice he had received from the UKBA Helpline confirmed his understanding of the work status of Mr Ahmed at the date of the UKBA inspection. This was the extent of his testimony. He was cross examined by counsel for the respondent. It was put to him that during the inspection visit he had claimed that Mr Ahmed was a student who had been working at the restaurant for approximately two weeks. This was not an accurate statement and yet he had signed the inspecting officer's notebook to confirm his statement. Mr Salimi replied that he was simply mistaken and did not know the actual starting date and should have said so. It was a slip of the tongue. He was asked to confirm the nature of his telephone calls to the UKBA Helpline. Mr Salimi confirmed that the telephone number used would be either 01382 203070 which was the landline of the premises in Dundee or a mobile 077725 637810. This was the phone of his brother Nazam Salimi but the family tended to use mobiles interchangeably for convenience. Counsel for the respondent put to the witness the transcripts which had been lodged and were referred to in the Joint Minute of Admissions. Production 8/2 was a transcript of a call recorded by the UKBA from telephone number 01382203070 on 27^th October 2009. This was the number Mr Salimi confirmed to be that of the restaurant. The transcript narrates a call from an unidentified caller seeking advice relating to a Mr Jihad Ahmed who is said to be a dependant of one Mohammed Abdul Mukad who is awaiting a decision on a UK work permit. I will not rehearse the whole conversation but in course the caller makes it clear that he seeks advice for his restaurant business in Dundee as to the work status of someone that has an application pending but still awaiting determination. The UKBA representative gives general advice and offers to respond to a faxed enquiry in greater detail. Counsel also put a second transcript (8/3 of Process) to the witness. This was from the same telephone number. This time the caller narrates a slightly different set of facts but, in essence, wants to know if a pending application for residence carries with it the right to work. Mr Vazeem Salimi denied any knowledge of this call. He did not know who might have called using the number. The appellants next lead Mr Nazam Salimi who gave evidence which was largely in line with that of his brother. He too claimed to have called the UKBA Helpline for guidance and formed the same conclusion as his brother. Mr Ahmed had commenced work in an entirely legitimate manner and the steps taken by the appellants to update their records were appropriate. . The letter from UKBA of 16^th September confirmed that Mr Ahmed had applied for an extension of his previous status and until that was determined he had the right to remain and work. Mr Nazam Salimi was also cross examined. He could not account for the fact that UKBA had no record of his call. He accepted that the transcripts lodged were the only calls which UKBA could trace on their system but he could have used one of a number of mobile 'phones which were shared amongst the family. He accepted that although he was the sole Director of the appellants his main function within the restaurant business was as head chef. He was, however, clear that he and his management were well aware of the legislation regarding the employment of people who were not UK subjects and that they complied with this. The appellants checked and copied the documents tendered by Mr Ahmed. They were in order at the commencement of his employment. He was sure that the subsequent checks carried out were appropriate and that Mr Ahmed had the right to work at the time the UKBA inspection took place.

6. The respondent led testimony which was largely unchallenged. Ms Davidson described the inspection visit. She confirmed that the appellants were polite and fully cooperative. She was asked by counsel to comment on the statement made by Mr. Vazeem Salimi on the evening of the inspection regarding Mr Ahmed. She was quite clear that Mr Salimi had informed her that Mr Ahmed was a student who had only been employed for a couple of weeks or so. She had required Mr Salimi to read over and sign his statement in her notebook. Mr Salimi had not disclosed to her that Mr Ahmed had been employed since February 2008 although she did ascertain this from the company's records. She confirmed that Mr Ahmed's leave to remain had expired on 28^th August 2008 as had his right to work. This had caused Mr Ahmed to be detained and the appellants were advised that a report to her superiors would be made and that they would hear further in due course. She was cross examined by Mr Hunter the Solicitor Advocate for the appellants. He did not dispute her narrative of the inspection or indeed the general testimony she gave. He put to her that she seemed to accept that the appellants' records were well kept. She agreed that this was so save for the position of Mr Ahmed. He however invited her to consider the position of Mr Ahmed in light of the letter from UKBA dated 16^th September 2008. He asked her to explain her understanding of what that letter disclosed in relation to the work status of Mr Ahmed. She stated that it was her understanding that where a timely application for renewal or extension of an existing temporary right to work is made then it was UKBA policy to treat the employee as having the same status as before pending determination of the application. She accepted therefore that if Mr Ahmed had applied for an extension before the 28^th August 2008 and that had been accepted a pending application then he would have had the right to work beyond the 28^th August 2008. She understood that Mr Ahmed had applied some two weeks after the expiry of his leave to remain. He was accordingly in default as at 28^th August 2008 and any subsequent application could not cure that. The only evidence she could refer to was the said letter and it was dated 16^th September 2008. This was two weeks after the expiry of Mr Ahmed's leave to remain which accorded with the information she had received. She also pointed out that the letter did not form part of the employment records of the appellants relating to Mr Ahmed at the time of the inspection. The issue for her was what steps the appellants took to check and confirm the immigration status of employees. The copy passport kept by the appellants clearly showed that his leave to remain and work expired on 28^th August 2008. The appellants should not have employed him beyond that date without documentary evidence of his continuing status. They did not produce any such evidence to her at the date of the inspection. Indeed Mr Ahmed, according to Mr Vazeem Salimi, was a recent student employee, not someone who had worked for them for eight months or so.

7. The respondent then led Mr Lucas Polk who is a Higher Executive Officer within the appeals team of UKBA. He spoke to the civil penalty notice procedure in general and the appellants case in particular. He also spoke to the telephone record transcripts previously referred to. He explained that UKBA operated a "call capture" system which in laymen's terms meant that every call was logged by incoming telephone number and recorded. It was his evidence that the only calls recorded by UKBA which might have come from the appellants were those produced. The telephone numbers supplied by the appellants had been scanned through the system and these were the only results. He had not been supplied with any other telephone numbers to check. This was all UKBA could do. He also confirmed that the first penalty notice issued had been in error. That notice had proceeded on the basis that this was not the first such notice issued. UKBA had accepted representations to the effect that this was, in fact, the first notice and re-issued it seeking a revised penalty. He explained that UKBA applied the Code of Conduct and the formula for assessing civil penalties set out therein. The parties had agreed that the copy Code of Conduct lodged in process was that applicable to this case and it was not necessary for this witness to expand on that. This would be addressed in submissions. Mr. Hunter briefly cross examined Mr Polk but no new evidence emerged from this.

8. The Appellants submissions

(i)                  Mr. Hunter invited me to sustain his first Plea in Law and cancel the penalty. He submitted that his clients had complied with the legislation and the Code of Conduct. The purpose of the legislation relating to civil penalties, as set out in the Code of Conduct, was to encourage employers to comply with their legal obligations without criminalising those who are less diligent in operating recruitment and employment practices. The Act provides a statutory excuse for employers if they check original documents presented by prospective employees. The Code sets out at paragraph 2.4 and Appendix 1 the kind of documents that an employer must check. In this case Mr Hunter pointed out that the appellants had fully complied with the Code when Mr.Ahmed was recruited. They saw and copied his Passport with his temporary right to remain and work endorsed thereon. They saw and copied his Student Card from Dundee College. These documents are listed as being "category B" documents in the Appendix to the Code. This means that in addition to keeping the appropriate records the employer must note the date upon which the documents were checked and carry out a follow up check at least once every 12 months. In this case Mr Ahmed had not reached the twelve months review date; he had been employed for only eight months. Mr Hunter accepted in discussion that the issue here was the contention that the appellants had not fulfilled their obligations to carry out follow up checks. The documents presented by Mr Ahmed made it patently clear that his right to work expired on 31^st August 2008. Mr Hunter submitted that I should accept the evidence of the appellants that they had carried out a follow up check. They asked Mr Ahmed what his intentions were and he told them he had applied for an extension of his leave to remain to continue his studies. They made enquiry and then obtained a letter (that of 16^th September) which vouched that such an application had been made. The appellants understood and the respondent own witness Ms Davidson had confirmed that, where an application to extend a temporary leave to remain is pending, the previous employment status subsists until a determination is made by the Home Office. The telephone transcripts were a red herring. Calls may or may not have been made to the Helpline but this did not affect the central issue here. I should accept that Mr Ahmed had the right to work when the inspection took place. The recruitment records of the appellants were in order and there was evidence of the necessary follow up check. No penalty was due.

(ii)               Mr. Hunter further submitted that if I were not with him on his primary submission I should sustain his second Plea in Law that the penalty imposed was excessive. He reminded me that in terms of section 17(3) of the Act an appeal to the court was a re-hearing and the matter of the appropriate penalty was at large for me to determine of new. This was subject to the stipulation in section 17(3) (a) that I must have regard to any Code of Practice in effect at the time. Section 17(3)(b) empowers the court to consider all other matters which it thinks relevant including matters of which the Secretary of State was unaware of at the time. The Code also makes it clear that both UKBA and the court may have regard to general factors \ (which are helpfully set out in Appendix 4 thereto) such as the proportionality of the proposed penalty, the thoroughness and consistency of the employers existing employment processes and the employers ability to pay. The appellants' primary submission was that UKBA had not applied their own Code of Practice in a proper manner. The civil penalty fixed upon, after objection, was reduced from £8,750.00 to £5,000.00. UKBA accepted that this was a "first occasion" case and therefore the maximum penalty, derived from their framework was £7500.00. The appellants had carried out proper checks when employing Mr Ahmed and their records were in order at that point. It was submitted that even if I did not accept the appellants' primary submission, that their records were in order at the date of the inspection, I should treat them as a partial check for the purposes of the guidance set out in the Code. This would make the maximum penalty £5000.00. The appellants' records were, on the evidence of Ms.Davidson of UKBA, otherwise well kept and they had fully cooperated with the inspectors. They should have the benefit of the £2500.00 reduction suggested by the Code and the maximum penalty should have £2500.00. I was invited to reduce the penalty accordingly to that sum.

9. The Respondent Submissions

(i)                  Mr Webster, for the respondent invited me to repel the applicants Pleas and dismiss the appeal. He was brief and to the point. He accepted that the original penalty notice issued had been fixed on the basis that the case of Mr Ahmed was not a "first occasion" and that this was an error. This had been corrected and the respondent has fixed the correct penalty having regard to the framework guidance set out in the statutory Code. This was on the basis that he invited me to accept that this was a "first occasion" but where no checks were deemed to have been carried out. This brought out a maximum penalty of £7500.00. He accepted that the appellants records bore to be otherwise in order and that they had been cooperative during the inspection. He agreed with Mr Hunter that the full £2500.00 reduction was due and only differed upon the starting point for the penalty. No evidence had been lead to suggest the appellants did not have the ability to pay nor had there been any submissions made for the appellants seeking to invoke any of the other additional mitigating factors referred to in Appendix 4. The options before me were, therefore, to accept that there had been no checks carried out to vouch Mr Ahmed's right to work at the relevant date which would mean that the penalty of £5000.00 was the correct mitigated penalty or that there had been partial checks which would reduce this to £2500.00.

(ii)                Mr. Webster took me to the definition of a "partial" check in the statutory Code. In this case he relied upon Code paragraph 2.10 which provides that a partial check includes the situation where the employer has carried out a vouched check at the commencement of employment but where that check disclosed a limited right to remain and work, a follow up check has not taken place. This was the case here. He then, following discussion, took me to Code paragraph 2.11 which provides that where a record of carrying out the required checks cannot be produced then this is deemed to be the same as having carried out no check at all. In this case the appellants, on their own admission, had accepted as evidence of the employee's right to work a document which on its face expired on 31^st August 2008. They had failed to have in their records for inspection any document which vouched the employee's right to work beyond that date. They were accordingly in default at the date of inspection. Production of a document at a later date, which may vouch the right of the employee to remain and work, was irrelevant. The appellants had an obligation to update their records no later than 1^st September 2008. Indeed a prudent employer might well be expected to have a forward diary system for such events with a trigger well in advance of the expiry date. He invited me to reject the evidence of the appellants. The transcript of the UKBA telephone logs revealed no calls to the Helpline save those produced to the court. I should accept the evidence for the respondent on that point. The transcripts revealed calls which bore to emanate from the telephone number supplied by the appellants. Those calls were clearly designed to elicit information on the general situation of an employee like Mr Ahmed but veiled in factual obfuscation. These calls, at best, indicate that the appellants were seeking information on the work status of someone whose original right, under the immigration system, had expired but who had applied for extension. This was all an attempt to deal with the problems created by the continued employment of Mr Ahmed but well after the event. Indeed, in Mr Webster's submission, I should consider these transcripts as tending to prove the respondent's contention that the appellants took no action to update their records on that particular employee prior to the UKBA inspection.

10. Discussion and Opinion.

I have little hesitation in concluding that I prefer the submissions for the respondent. I regret that I did not find the witnesses for the appellants either credible or reliable on the action taken in response to the undisputed expiry of the employee's right to work after 31^st August 2008. The statute and the Code of Practice make it clear that the employer is responsible for both checking and recording the evidence of the right to work in the U.K. The appellants' required to satisfy me that they had updated their records no later, in my opinion, than the 1^st September 2008. The appellants knew, or at least ought to have known, from their own records that the employees right to work expired on a set date and that they were required fresh documentary evidence from him as at that date. They failed to do so. Even if I accepted, which I do not, that the appellants had made enquiry of the employee and had been assured that he had made timely application for renewal, the appellants' obligation was to examine and record the evidence of this. The only evidence which was produced to the court was the letter from the Home Office dated 16^th September 2009. This letter does not vouch that the employee had made timely application for extension of his right to remain and work in the UK but even if it had, it did not form part of the records of the appellants at the relevant date. Record keeping lies at the heart of the system established by the 2006 Act and it is essential that employers understand and comply with this.

I, accordingly, accept that the respondent was correct to categorise the present case as "first occasion-no check" and that the maximum penalty was £7,500.00. The appellants did co-operate with the UKBA inspection and produced records which were, otherwise, in order. In these circumstances both Mr. Hunter for the appellants and Mr Webster for the respondent agreed they should receive the full reduction of £2500.00. I was not directed to any additional factor which should be taken into account and accordingly, I confirm the civil penalty in the sum of £5,000.00 and dismiss the Appeal.

The parties were agreed that expenses should follow success and accordingly they fall to the respondent upon the dismissal of the Appeal.

 

George Alexander Way

Sheriff of Tayside Central and Fife