Employing people from overseas can create many issues for employers, especially if the employee’s work permit has expired. Mandy Higgins offers advice on how to deal with this and avoid a finding of unfair dismissal.

According to the Home Office (October 2007), people born overseas account for one in eight of the UK’s working population. This creates a variety of issues for employers, especially if an employee’s work permit runs out.

Two recent cases have highlighted this issue and offer guidance on how to deal with employees whose permission to work in the UK has expired.

Claims for unfair dismissal were made in the cases of Kelly v University of Southampton, and Klusova v London Borough of Hounslow [2007]. Dr Kelly, a US national, was dismissed by the University of Southampton and Ms Klusova, a Russian national, was dismissed by Hounslow Council – both because their permits to work in the UK had expired.

However, at the time of their dismissal, the employees were in the process of making applications to the immigration authorities to extend their permits. In both cases the dismissal was unfair as their continued employment did not contravene immigration rules.

The employer faces a dilemma upon suspicion that an employee is subject to immigration control and not permitted to work. If the employee is allowed to continue in employment, the employer may be liable, on summary conviction, to a fine not exceeding level five (currently £5,000) for employing someone who has not been granted leave to enter or remain in the UK or whose leave is not valid and subsisting, or is subject to conditions precluding them from taking up the employment (section 8(1) of the Asylum and Immigration Act 1996, soon to be repealed and replaced by Immigration, Asylum and Nationality Act 2006).

Alternatively, if the employer dismisses the employee and fails to follow the statutory dismissal and disciplinary procedures, they may be vulnerable to a claim for unfair dismissal (and/or race discrimination) in the employment tribunal.

Unfair dismissal generally

To avoid a finding of unfair dismissal in any case, the employer must show that the employee was dismissed for one of the five potentially fair reasons listed in section 98(2) of the Employment Rights Act 1996 (ERA 1996) or for “some other substantial reason” (section 98(1) ERA 1996).

One of the potentially fair reasons is where continued employment would breach some other statutory provision. Further, the dismissal must be within the band of reasonable responses.

Employers are required to show that the dismissal was procedurally fair and are required to follow the dismissal and disciplinary procedures set out in the Employment Act 2002 (Dispute Resolution) Regulations 2004 (the DDP’s).

However, where an employee is dismissed because their continued employment would put the employer in breach of a statutory restriction, the statutory DDPs do not apply.

Kelly and Klusova

In both the Kelly and Klusova cases, both employers wrongly believed that continuing to employ the employees would have been a breach of section 8(1) of the Asylum and Immigration Act 1996. They would have constituted a potentially fair reason for dismissing the employees and the employees could be dismissed without recourse to the DDPs.

Having found that the employees were in fact permitted to work in the UK, the Employment Appeal Tribunal (EAT) and Court of Appeal both held that the employers could not rely on that potentially fair reason. Both employers were found to have held a mistaken but genuine belief that continuing to employ the employees was unlawful and both the EAT and Court of Appeal noted that this constituted “some other substantial reason” for dismissal.

It followed that the employers should have followed the DDPs to avoid a finding that the dismissal was automatically unfair. Given that both employers had disregarded the DDP’s, the EAT and the Court of Appeal both concluded that the dismissals had been automatically unfair.

A legitimate disciplinary procedure

Whilst it is understandable that employers will be tempted to take immediate action in relation to a particular employee, on discovering that they may be committing a criminal offence, both Klusova and Kelly serve as reminders that, even in these circumstances, a legitimate disciplinary procedure should be followed which involves giving careful consideration to the decision-making process.

The safest option available to an employer is to follow the DDPs in all cases, even where they believe that they would be contravening another statutory provision by continuing employment.

In Kelly, the EAT noted that even if the DDPs did not apply, matters of procedure were not irrelevant. The question whether it was reasonable to dismiss without following normal procedures depended on the circumstances of the case and, even if it was reasonable for an employer to dismiss without following normal procedures, this was no reason why the employee should not be granted a right of appeal.

Where the employer is certain that they are not bound to follow the DDPs, at the very least, the following factors should be considered in the decision-making process to avoid any tribunal finding that the dismissal was procedurally unfair and/or outside the band of reasonable responses:

1. The scope of the statutory restriction and the degree to which it affects the employee’s ability to do their job.

2. The duration of the statutory restriction.

3. If there are alternatives to dismissal, such as alternative employment or making adjustments to the employee’s existing position.

4. Suspending the employee whilst procedures are followed.

5. If normal procedures are not followed, the employer should provide the employee with a right of appeal.

Managing employees’ immigration status

Employers are only required to ensure that their employees have permission to work in the UK. In Kelly, the EAT commented on the scope of section 8(1) of the Asylum and Immigration Act 1996 and stated that parliament had not intended that employers should have to police their employees’ leave to remain in the UK.

It is recommended that employers consider implementing a system that can be easily maintained, to enable them to continually ensure that their employees have permission to work in the UK. This process should start by requiring all prospective employees to produce certain documents (usually a work permit or HM Revenue & Customs document along with some form of identification) before employment commences.

Cases cited:

Do you check the legal status of potential and existing employees? Tell us by taking part in HR Zone’s latest online poll.

Mandy Higgins is a solicitor at law firm Weightmans. She can be contacted at: mandy.higgins@weightmans.com.