With this it will be convenient to discuss new clause 5—“Compensation for a n illegal working closure notice where order is cancelled/no compliance order is given —
‘(1) Where an illegal working closure notice is issued and—
(a) is subsequently cancelled in accordance with paragraph 3 of Schedule 3 to this Act, or
(b) no illegal working compliance order is made (whether or not an application is made for such an order) the Secretary of state shall pay compensation to the persons listed in subsection (2).”
(2) The Secretary of State shall pay compensation under subsection (1) to—
(a) the person to whom the notice was issued or, if he is dead, to his personal representatives;
(b) a person who lives on the premises (whether habitually or not);
(c) any person who has an interest in the premises.
(3) No payment of compensation under this section shall be made unless an application for such compensation has been made to the Secretary of State before the end of the period of two years beginning with the date on which the notice is issued.
(4) But the Secretary of State may direct that an application for compensation made after the end of that period is to be treated as if it had been made within that period if the Secretary of State considers that there are exceptional circumstances which justify doing so.
(5) The question whether there is a right to compensation under this section shall be determined by the Secretary of State.
(6) If the Secretary of State determines that there is a right to such compensation, the amount of the compensation shall be assessed by an assessor appointed by the Secretary of State.
(7) In assessing so much of any compensation payable as is attributable to suffering, harm to reputation or similar damage, the assessor must have regard in particular to—
(a) the conduct of the person to whom the notice was given;
(b) the conduct of the immigration officer.
(8) If, having had regard to any matters falling within subsection (9)(a) or (b), the assessor considers that there are exceptional circumstances which justify doing so, the assessor may determine that the amount of compensation payable is to be a nominal amount only.
(9) The total amount of compensation payable must not exceed the overall compensation limit. That limit is—
(a) £10,000 in a case in which there is no element for loss of earnings;
(b) £50,000 in any other case.
(10) The Secretary of State may by order made by statutory instrument amend subsection (9) so as to vary overall compensation limit.
To provide for statutory compensation to the person to whom an illegal working closure notice is issued and anyone living on the premises or with an interest in the premises in the event that the order is cancelled or that no application is subsequently made to a court for a compliance order, or such an application is made but the court refuses to grant it.
I welcome you to the Chair, Mr Owen, for your first time on our line-by-line analysis of the Bill.
Clause 11 gives effect to schedule 2, which sets out the regime for illegal working closure notices and illegal working compliance orders. The clause and schedule provide new powers to deal with businesses that repeatedly flout the law in this area. Their use would be targeted on the most serious cases where attempts to tackle an employer’s use of illegal workers through the established civil penalty scheme or prosecution have not prevented them from continuing to behave illegally.
When immigration officers conduct an enforcement visit under existing powers to an employer’s premises, any illegal workers identified may be arrested and detained, and the employer may be liable for a civil penalty or prosecution for an offence. Despite this, the employer may continue to use illegal workers who are not apprehended at the time of the visit, or recruited subsequently. Furthermore, some businesses dissolve to evade sanctions, reopen in a new name and continue their non-compliance as before. The intention is to use this provision to break the cycle of business behaviour.
The provisions create a new power for immigration officers to close premises for up to 48 hours in certain cases where the employer has previously faced sanctions for employing illegal workers. Unless the closure notice is cancelled, an application must be made to a court for an illegal working compliance order. The compliance order may extend the closure of the premises or otherwise direct the business to perform certain steps to ensure that illegal workers are not employed or used to provide services on behalf of the business operating from the premises.
The provisions follow a similar approach to the power to close premises associated with nuisance or disorder in part 4 of the Anti-social Behaviour, Crime and Policing Act 2014. New clause 5 has not been spoken to formally as yet, so I look forward to listening to the debate and hearing the points that will be made by the hon. and learned Member for Holborn and St Pancras.
The new clause is intended to make specific provision for compensation to be paid to those affected by an illegal working closure notice served under schedule 2. Specifically, it seeks to address the situation where a closure notice has been imposed but cancelled, or where an application for a compliance order is refused by the court. The new clause seeks to establish maximum limits for compensation payable in certain circumstances, the criteria for assessing compensation claims, and time limits for submitting them.
I presume that the new clause is intended to provide additional safeguards and to encourage immigration officers to exercise caution in serving illegal working closure notices, because of the potential compensation consequences if such notices are then cancelled or compliance orders are not obtained from the courts. However, we judge that the clause is unnecessary, albeit that I stand ready to listen to the arguments that will be proffered, because the existing provisions in the Bill concerning compensation already, in our view, strike the right balance between protecting the interests of legitimate owners and occupiers of affected premises and appropriate expenditure of public finances. Nevertheless, I look forward to hearing the further points that might be raised.
A closure notice may be cancelled only when employers can show that they would be excused from paying a civil penalty. In most cases, that will mean that they can show evidence that valid right to work checks are being conducted in relation to all illegal employees. It is currently operational practice that immigration officers will give the employers an opportunity to provide such evidence before taking enforcement action.
For that reason, and since the Bill expressly prevents a notice from being issued when evidence of right to work checks is provided, the Government expect few closure notices to be cancelled in the short period between issue and consideration by the court. That period is a maximum of 24 hours, except when extended to 48 hours by an immigration inspector. Therefore, it is expected that in the majority of cases premises will be closed for much less than 24 hours, so any financial loss should be kept to a minimum.
In relation to compensation cases—in other words, when cases have gone to court—when compliance orders were not made by the courts, it must be emphasised that, under the Bill, courts have discretion about whether to make such an order. There is a range of reasons why such an order is not made. For example, it may be that premises are about to be sold to an innocent third party. A court’s decision to refuse an application does not necessarily mean that immigration officers were wrong to issue a closure notice. Nor does it mean that the owner or occupier of the premises was compliant with illegal working rules. For those reasons, compensation is not automatically available when an application for a compliance order is refused by the courts.
However, in rare cases in which immigration officers make a mistake and it later turns out that illegal workers were not employed at or in connection with the business operating from the premises, paragraph 15 of schedule 2 does not prevent an affected employer, owner or occupier of the premises from applying for compensation. The Bill places responsibility for determining compensation claims on the courts, not the Secretary of State as proposed in the new clause, and it imposes no limits on the level of compensation payable. To make the Secretary of State the decision maker would lead to lengthy and costly satellite litigation, which the provision seeks to avoid.
Under the Bill, an independent court will determine both the right to and level of compensation, obviating the need for an independent assessor. Lengthy limitation periods such as the two years proposed in the new clause are normally provided when potential applicants would not be aware of the event giving rise to a claim until some time afterwards. As the Bill contains safeguards in relation to the provision of notices, that is not the case.
However, in rare cases in which the fact that the premises have been closed is not immediately apparent to a potential applicant, we regard the three-month limit currently provided in paragraph 15 for making a compensation application to be sufficient. Three months is in line with other limitation periods, such as that for judicial review and the compensation provision for closure orders in section 90 of the Anti-social Behaviour, Crime and Policing Act 2014. When the issue of compensation arises, it is important that the matter is concluded promptly in the interests of all concerned. Immigration officers will be trained to exercise appropriate caution before they use these important new powers to tackle repeat abuse of illegal working legislation.
Schedule 2 incorporates a number of important safeguards that limit the impact of closure notices before a compliance order is obtained from the court. It is important to bear in mind the context in which such orders will be served: on employers who have repeatedly flouted the law by employing illegal workers. It is right that occupiers of premises such as those employers who have failed to take reasonable steps to prevent illegal working from taking place should not be entitled to compensation. The Government have sought to strike the right balance between tackling employers who repeatedly flout illegal working legislation and protecting the interests of legitimate businesses and workers. That is reflecting in the drafting of paragraph 15.
I look forward to the debate on the new clause, but I hope that, on the basis of what I have said and anything I may say after the new clause has been spoken to, hon. Members will feel able not to move it.
It is a privilege to serve under your chairmanship, Mr Owen. The new clause would provide a statutory compensation scheme to persons to whom an illegal working closure order is issued in circumstances as described by the Minister. The purpose is not so much to urge caution on the part of immigration officers as to recognise that it is unusual to have a closure power vested in the Executive rather than in the judiciary. That power is vested in a member of the Executive with quite a draconian, albeit short, power to close down a premises for 24 or 48 hours. I accept that the chief immigration officer must go through a number of hoops to satisfy himself or herself that it is appropriate to make an order. The new clause drives at the situation in which a notice is issued and subsequently cancelled or no compliance order is made.
The obvious case where the new clause would bite is where there has been an error on the part of the chief immigration officer, and there will be errors. It is impossible for anybody to argue that there will not be errors in the issuing of closure orders. In a case in which an error has been made, a business is closed down when it should not have been. The new clause would provide compensation or a scheme for compensation to the individual who loses out as a result. I think there is no disagreement between the Minister and me that justice would demand, in the event of an error, that if someone has lost business, they ought to be compensated. I think that that is an agreed principle, but the Minister says that paragraph 15 of schedule 2 makes the new clause unnecessary.
The problem is that paragraph 15 of schedule 2 provides a power to apply to courts for compensation within three months. Putting that to one side, paragraph 15(3) sets out the circumstances in which an order may be made. Those circumstances are prescribed in sub-paragraphs (3)(a) to (d). Unless I am mistaken, the fact that the order was simply made in error is not within any of those four sub-paragraphs, which cover circumstances such as,
“not otherwise associated with the use of the premises” or, if associated, “took reasonable steps.” Another is, “incurred financial loss”.
I accept that anybody who falls within paragraph 15(3)(a) to (d) would perfectly well be compensated. In principle, there is nothing wrong with the court doing that. It would make sense for the court to do it at the same time that it is considering the matter in the round. The Minister will correct me if I am wrong about this. I do not think that paragraph 15(3)(a) to (d) of schedule 2 covers a case in which it is accepted by all sides that a chief immigration officer has simply made a mistake by closing down a premises, and a business incurred financial loss. Unless there is a sweep-up and I have misread it, that is my understanding.
Paragraph 15(3)(d) of schedule 2 says
“that having regard to all the circumstances it is appropriate to order payment of compensation in respect of that loss.”
That may address some of the other issues that he highlights. I will let the hon. and learned Gentleman reflect on that.
I will do so; that may be helpful. If the record shows that it is understood that that covers the ordinary case of an error, part of the new clause may not be necessary. It leaves a gap when the order is simply cancelled and never comes before a court. Will the Minister reassure me that in the circumstances of an order being cancelled, under schedule 2, the person incurring loss can get before the court for the compensation order? At the moment, I think the scheme is premised on the chief immigration officer applying to the court to have the order confirmed. In other words, even where the chief immigration officer does not apply to the court at all because it is recognised that it was an error—
Thank you, Mr Owen, and I am guided by that, but in the circumstances, the Minister can see the point that lies behind the new clause. If there is an assurance that that is in any event covered in both circumstances—where the order is simply cancelled and no one gets before the court to confirm it, or it goes before the court and it is confirmed and the court has wide enough jurisdiction to deal with an error—I accept that the new clause is not necessary.
It is a pleasure to serve under your chairmanship, Mr Owen.
As with the previous clause, we seem to be giving immigration officers too much power without the relevant training or proper judicial oversight. When he gave evidence last week, Colin Yeo was asked whether he was concerned about the powers to be given to immigration officers. He said that he was, “Very concerned”, and said of the chief inspector:
“In a couple of reports from March 2014, for example, he found that immigration officers were granted the power to enter business premises without a warrant in two thirds of cases, without justification; he also found unlawful use of power, ineffective management oversight, major variations in local practice and inadequate staff training across all grades—really serious concerns are being raised. Reports on removals and emergency travel documents are, again, very critical of Home Office management of the process and training. The idea that more powers should be given to people who are already exercising them in a very questionable way is somewhat dubious, in my view.”––[Official Report, Immigration Public Bill Committee, 22 October 2015; c. 107, Q224.]
We received the Minister’s letter this morning and are grateful for that, but will he clarify “reasonable grounds” for those in the room who are not lawyers, which is probably quite a few of us? As things stand, the scope of the closure powers are far too wide.
The Bill proposes that an officer has the power to close an employer’s premises if satisfied “on reasonable grounds” that the employer is employing an “illegal worker”, as defined, and if the employer has been required to pay a civil penalty in the past three years, has an outstanding civil penalty or has been convicted of the offence of knowingly employing an illegal worker or a person whom the employer had reasonable cause to believe was not entitled to work. The initial closure may be for up to 48 hours. The immigration officer may then apply to the court for an illegal working compliance order, which can prohibit or restrict access to premises for up to two years.
Why are such measures required when criminal sanctions are available? What will ensure that the measures are not used in an oppressive manner? Yes, we need action against bad employers who flout the rules, but the consequences are potentially terrible if enforcement gets it wrong. There should at least be proper safeguards, such as judicial oversight. What about the effect on innocent workers and their families whose workplaces are shut down? The Government should think again.
I am grateful for all the comments. In response to the initial points made by the hon. and learned Member for Holborn and St Pancras, I refer to the provisions contained in paragraph 15 of schedule 2, as I did when he intervened, in particular sub-paragraph (3)(d) about discretion. I also draw his attention to sub-paragraph (1), which states:
“Subject to sub-paragraph (4), a person who claims to have incurred financial loss in consequence of an illegal working closure notice or an illegal working compliance order may apply to the court for compensation.”
I do not read that as someone having to go through to the order stage. In other words, a notice has been issued, but it is open to seek redress through the court under that provision.
It is also relevant to say that for a mistake to have taken place, the grounds specified in paragraphs 3 and 5 to schedule 2 would equally have not been found to have been made out. That implies that a mistake has been made. Therefore, although I pointed to paragraph 15(3)(d) to schedule 2, obviously some of the earlier provisions would be redolent—for example, paragraph 15(3)(b):
“if the applicant is the owner or occupier of the premises, that the applicant took reasonable steps to prevent that use”.
It all ties back.
May I clarify something, if possible? My concern—if this is a misreading, then it is a misreading— is that paragraph 15(1) of schedule 2 gives the power to apply for compensation, and that the circumstances in which the court may order it are in paragraph 15(3). Those are the only circumstances in which it may be ordered. I read paragraphs 15(3)(a), (b), (c) and (d) as conditions that must all be satisfied. I say that because paragraph (d) is not free-standing:
“having regard to all the circumstances it is appropriate to order payment of compensation in respect of that loss.”
The word “that” can only refer back to paragraph 15(3)(c). They are not disjunctive; they are conjunctive. That might just be the way that it is drafted, but paragraph 15(3)(d) makes no sense as a free-standing provision. It must relate back to the others.
I am happy to consider the narrow point raised by the hon. and learned Gentleman on the normal legal definitional drafting issues surrounding the use of “and” and “or”, which he will understand from all sorts of legal documents that he has undoubtedly read. I am content to look again at the provision and see whether any further clarification is needed. My hon. and learned Friend the Solicitor General, sitting alongside me, is shaking his head, but in fairness to the hon. and learned Gentleman, I am happy to reflect further on the narrow point that he has raised and consider it carefully.
I underline the general point that in those rare cases—it is for a limited period as well, just 24 or 48 hours—where a mistake is made and the issuance of a notice does not proceed to an order, any loss that may crystallise is likely to be small, because the period of closure is short. However, I do not make any judgments on that, given the nature and size of the businesses that might be involved and so on. In those circumstances, if it turns out later that illegal workers were not in fact employed at or in connection with the business operating on the premises, paragraph 15 does not prevent an affected employer, owner or occupier of the premises from applying for compensation. I hope that that is a helpful response.
The hon. and learned Gentleman drew some comparisons involving the time periods, and rightly highlighted the process and steps that must be gone through. The concept is modelled, as I have indicated, on other forms of legislation with which he will be equally familiar; I refer him to the Anti-social Behaviour, Crime and Policing Act 2014. I can think of other circumstances, such as under licensing laws, in which temporary closure notices may be granted to the police or a licensing officer in certain circumstances. The concept of a short-term mechanism is understood.
Equally, that addresses the point made by the hon. Member for Paisley and Renfrewshire North about whether it is appropriate for the Executive to have such a power. Yes, it is, in the constrained way that the power is structured within the schedule. It provides an appropriate system and process, as well as judicial oversight in the fact that the court must assess, confirm and validate the power. As we have just said in the discussion on compensation, if the officer gets it wrong, compensation can be awarded through the courts.
In terms of objectives, we are on the same page in seeking to ensure that repeat-offending employers are dealt with robustly. A moment ago, in his response to my hon. and learned Friend the Member for Holborn and St Pancras, the Minister said that the orders would be used in a constrained way. Does he understand the anxiety, given that the schedule does not explain that constrained way, or can he point me to something that I am missing?
I can, if the hon. Gentleman looks at the triggers for the use of the power in paragraphs 15(3) and (5), and the reasonable grounds that would need to be satisfied. I would highlight the second condition in paragraph (5):
“the employer, or a connected person in relation to the employer...has been convicted of an offence under section 21...has, during the period of three years ending with the date on which the illegal working closure notice is issued, been required to pay a penalty under section 15 of the 2006 Act, or...has at any time been required to pay such a penalty and failed to pay it.”
In other words, it is not trying to look for first offenders. Because of the two conditions in paragraphs (3) and (5), it is trying to get at some of those businesses and employers who are not doing things properly and who have already had some form of sanction applied to them.
I mentioned phoenix companies in my opening comments. We have dealt with the concept of a connected person in paragraph 8 of schedule 2. It is important. We know of circumstances in which people will seek to try to subvert the law by creating a new company to try to get round the rules and requirements. They might say it is the first time because they are not able to pierce the corporate veil. So we have considered this measure carefully and we judge that it is appropriate to have such safeguards and that it has that element of the court being able to intervene for compensation or for confirmation of any extended period. This is an important tool to support and take action against businesses that are acting inappropriately.
I say to the hon. Member for Paisley and Renfrewshire North that the matter is about the impact and consequences. I do not think that he would tolerate a business that employed people illegally on a serial basis, because people who are in his constituency and in this country lawfully should have the jobs, rather than the people who are not here lawfully and are staying here illegally. We are seeking a balanced approach and we judge that the manner in which this measure is constructed, and on the basis of experience in other spheres, it is appropriate in terms of the operational benefit that it provides as well as the safeguards contained within it. For those reasons, I will oppose new clause 5. I hope that hon. Members will be minded to see that clause 11 stands part of the Bill.