Policy background Labour Market and Illegal Working
Migrant workers are particularly vulnerable to labour market exploitation and may find themselves living and working in dangerous and degrading conditions. Protections are already in place to ensure that those entitled to work in the UK are paid at least the national minimum wage, enforced by HMRC. All workers benefit from regulation of employment agencies and businesses by the Employment Agency Standards Inspectorate and the licensing of legitimate labour providers by the Gangmasters Licensing Authority. The Modern Slavery Act 2015 ("the 2015 Act") provides further protections.
	The Government believes that labour market exploitation is an increasingly organised criminal activity and that government regulators that enforce workers’ rights need reform and better coordination. The Conservative Party Manifesto also committed to introduce tougher labour market regulation to tackle illegal working and exploitation. The Act establishes a new statutory Director of Labour Market Enforcement, responsible for providing a central hub of intelligence and facilitating the flexible allocation of resources across the different regulators.
	Alongside the measures in the Act, on 13 October 2015 the Government published a consultation paper, 'Tackling Exploitation in the Labour Market' to seek views on the functions of the new Director of Labour Market Enforcement as well as proposals to reform the Gangmasters Licensing Authority and to create a new offence of aggravated breach of labour market legislation. On 12 January 2016 the Government published its response to the consultation, "Tackling Exploitation in the Labour Market: Government response". This consultation fulfils the statutory requirement under the 2015 Act for government to consult on the future of the Gangmasters Licensing Authority.
	In the Government's view, illegal working represents one of the principal pull factors for illegal immigration and is often associated with the exploitation of workers, unfair competition and revenue evasion. Section 15 of the Immigration, Asylum and Nationality Act 2006 ("the 2006 Act") prohibits the employment of adults who are subject to immigration control and do not have leave to enter or remain in the UK, or who are subject to a condition preventing them from undertaking employment. The prohibition is supported through both a civil penalty regime and a criminal sanction for employers of illegal workers.
	The 2006 Act regime replaced the former scheme under section 8 of the Asylum and Immigration Act 1996 which first made it a criminal offence to employ illegal workers. The civil penalty scheme in the 2006 Act, which was implemented in February 2008, is the principal means of dealing with cases of non-compliance by negligent businesses employing illegal workers. In 2013/2014 there were 2,150 civil penalties issued to employers. However, the Government's statistics show that the 2006 Act resulted in a significant decline in criminal prosecutions as civil penalties became a simpler, more cost effective, way to enforce the law in routine cases. In 2014/15 there were 1974 civil penalties issued to employers.
	The Government believes that some employers are deliberately not checking whether their employees have the right to work. The Government believes that these employers are not knowingly employing illegal workers, because they are choosing not to know. This means that they can only be liable for a civil penalty and not be subject to a successful criminal prosecution. Civil penalties are served on businesses not individuals. However, the 2006 Act allows individuals to be prosecuted for knowingly employing an illegal worker when the individual has been indirectly involved in the offence. This enforces individual accountability and discourages employers from continuously using illegal workers by creating new businesses. This Act amends the criminal sanction in the 2006 Act to make it easier to bring prosecutions in these cases. The most serious cases involving the exploitation of illegal labour will continue to be dealt with under legislation prohibiting facilitation and trafficking.
	A person with limited leave to enter or remain may be restricted from entering into employment under section 3(1)(c)(i) of the Immigration Act 1971 ("the 1971 Act"). A failure to observe this condition is an offence under section 24(1)(b)(ii) of the 1971 Act. While persons who require, but do not have, leave to enter or remain may be committing an offence under another limb of section 24, they do not commit a separate offence of working illegally if they engage in paid work, including employment or self-employment. The Act creates a new offence of illegal working with the aim of ensuring that the act of illegal working is always an offence unless the individual does not know or has reasonable cause to believe that their immigration status disqualifies them from working. The new offence will enable the earnings of illegal workers to be seized under the Proceeds of Crime Act 2002, as was announced by the Prime Minister in his immigration speech on 21 May 2015. The victims of modern slavery are not the target of this offence and can rely on the statutory defence in section 45 of the Modern Slavery Act 2015. When immigration officers conduct an enforcement visit to an employer’s premises, under existing powers 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 operate their business and there is a risk that they may be continuing to use illegal workers, possibly not detected by immigration officers as they were not present at the time of the visit. The Act provides the power for immigration officers to close the premises for up to 48 hours in certain cases where the employer has previously been given a civil penalty or has been prosecuted 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 employer to perform certain steps to ensure that illegal workers are not employed. The scheme is designed to be similar to the power to give closure notices to premises associated with nuisance or disorder in Part 4 of the Anti-social Behaviour, Crime and Policing Act 2014.
	The Government believes that a significant proportion of illegal working happens on licensed premises, where there is the sale of alcohol or late night refreshments (hot food or drink sold between 11pm and 5am). The Act aims to tackle illegal working in these sectors by amending licensing legislation such that a licence cannot be issued to an illegal worker and to make the employment of illegal workers a factor that may be taken into consideration when issuing or revoking licences. The Act provides immigration officers with a power to enter premises that are being used for a licensable activity of selling alcohol by retail or providing late night refreshment with a view to assessing whether an offence under any of the Immigration Acts is being committed in connection with the carrying on of the activity.
	The majority of drivers of taxis and private hire vehicles are self employed meaning they are not subject to existing right to work checks undertaken by employers. This leaves scope for this sector to be exploited by those who intend to work illegally. Some licensing authorities conduct immigration checks but these are only advisory, not mandatory, at present. The Act makes immigration checks mandatory and embeds immigration safeguards into existing licensing regimes across the UK.