The Supreme Court has allowed the appeal in Akbars Restaurant (Middlesbrough) Limited v Secretary of State for the Home Department [2026] UKSC 26, holding that a civil penalty notice issued under section 15 of the Immigration, Asylum and Nationality Act 2006 was invalid because it did not specifically state the basis on which the Home Secretary considered the employer liable.
If this is standard practice, this could have implications for a significant number of illegal working penalties, and advisers should check at the outset whether a notice identifies the statutory basis relied upon.
Background
Akbars Restaurant operates a restaurant in Middlesbrough. Following an inspection in January 2023, the Home Office took the view that the company had employed a person who did not have permission to work.
On 13 March 2023, the Home Office issued a civil penalty notice in the sum of £15,000. The notice stated that the company had breached section 15 of the Immigration, Asylum and Nationality Act 2006 by employing an adult subject to immigration control who had not been granted leave to enter or remain, whose leave was invalid or had ceased to have effect, or whose leave was subject to a condition preventing the employment.
The company appealed, contending that the notice did not comply with section 15(6)(a) because it failed to identify which of those alternatives was said to apply. That argument failed in the County Court and in the Court of Appeal, before progressing to the Supreme Court.
The issue
The issue was whether the requirement in section 15(6)(a), that a penalty notice must state why the Home Office thinks the employer is liable, is satisfied by a notice which sets out all of the statutory alternatives without identifying the one relied upon in the given case.
The distinction mattered because although section 15(1) identifies four separate (and mutually exclusive) grounds on which liability may arise, the notice did not specify which ground was relied on and instead listed all the potential grounds (compressed from four into three points by combining leave that is invalid or expired into a single ground. The presentation in the notice is as it was referred to by the court, though it is four grounds in statute itself).
The claimant argued that an employer is entitled to know which allegation is being made against them and that section 15(6)(a) required the Home Secretary to specify this.
The Supreme Court’s decision
The appeal was unanimously allowed. The court held that section 15(6)(a), read in the context of the full regime under which it falls, requires the penalty notice to identify the particular ground of liability relied upon. It is not enough for the notice to assert a breach of section 15 while setting out all of the possible statutory alternatives. That does not tell the employer why the Home Office considers it liable, as required by section 15(6)(a).
A person is entitled to know why a penalty has been imposed on them, and simply saying that one or other of three mutually inconsistent grounds applies does not tell them that.
The court read section 15(6)(a) with the rest of section 15 and in the context of sections 16 and 17, rather than as a freestanding formula. In order to be able to make an objection under section 16 or able to appeal under section 17, an employer needs to show that it is not liable for the penalty, has a statutory excuse or that the amount is too high, which presupposes that they know under which limb of section 15(1) the penalty has been applied.
The court considered the character and purpose of the statutory scheme. Although described as a civil penalty regime, section 15 involves the exercise of a ‘penal’ power to impose a financial sanction for unlawful conduct. The court determined:
Where the state imposes a penalty of this kind, it is to be expected that proper reasons should be given to explain why it is doing that and to show that its action is justified. The person affected is entitled to know why the penal power of the state has been invoked against them. The giving of reasons also imposes appropriate discipline on the state to ensure that such power is being exercised properly and serves as a practical safeguard against capriciousness.
This reflects how a court would be required to act in imposing a penalty and how a prosecution would be required to handle an offence.
The Home Secretary argued that the position was sufficiently apparent from the material read as a whole, including later documents in the appeal. The court rejected that submission and confirmed the statutory obligation is directed to the penalty notice itself. It is that notice which imposes the penalty and requires the employer to decide whether to object, appeal or pay.
The Home Secretary also argued that, following the reasoning in R v Soneji [2006] 1 AC 340, by the time of the hearing, she had specified the limb relied upon and so the employer had not suffered any detriment. This meant that the consequences of non-compliance with the statutory requirements should not invalidate the notice.
The court confirmed that the Soneji framework ‘does not mean that the effect of procedural rules in every statutory context turns on detailed examination of the consequences arising from the breach of the particular rule’. It is down to Parliament’s intended purpose – if Parliament intended that it should operate strictly, failure would invalidate the procedural step.
The court concluded that section 15(6)(a) sets out a clear condition for the validity of a penalty notice in view of the constitutional context, the analysis of the statutory regime itself and the way it is supposed to operate in practice.
An employer who receives a penalty notice is entitled to know from the notice which limb of section 15(1) is being invoked to justify imposing the penalty. The importance of fairness in this context also points to that result. An employer should not have to appeal in order to find out which limb of section 15(1) is in fact being relied on by the Secretary of State, which is what happened here. Further, a penalty notice has effect if there are no later proceedings (ie if there is no appeal), and Parliament’s intention as to the operation of section 15(6)(a) has to be tested in the light of that possibility.
It also rejected the suggestion that identifying the relevant limb of section 15(1) would place an unreasonable burden on the Home Secretary given that establishing that an employer has acted contrary to that section is a prerequisite to exercising the power to issue the notice under section 15(2).
Besides which, the Home Secretary is able to issue a new and compliant penalty notice.
What this means
The decision is likely to be relied upon in illegal working civil penalty appeals where the notice follows the same or similar wording – if this is a standard template, that could be very large numbers of non-compliance notices. Advisers should check at the outset whether the notice identifies the statutory basis of the alleged contravention, rather than merely reproducing the language of section 15(1).
However, the case does not weaken the obligation on employers to carry out and retain compliant right to work checks, and it should not be read as a technical escape route in every civil penalty case. Where there has in fact been a breach by the employer, the Home Office can just issue a valid notice. This reinforces the importance of employers following the Code of Practice and the Home Office’s employer’s guidance in order to establish a statutory excuse to protect them against a civil penalty.
