Commentary on Sections Section 14: Colluding Employers
Section 14 introduces a new discretionary power, which provides for the payment of a financial penalty, as an alternative to prosecution in circumstances where the Department or the authorities administering HB have sufficient evidence to institute proceedings against an employer for either of the following kinds of offence:
	the first kind of offence is one committed in connection with an inquiry into the employment of one or more employees. It will involve the hindering of an investigation. In these circumstances the employer may be offered a penalty of £1,000 as an alternative to prosecution.
	the second kind of offence may involve particular claimants, and will relate to acts or omissions that help those claimants to commit offences. In these circumstances the employer may be offered a higher penalty, as an alternative to prosecution, of £1,000 multiplied by the number of employees involved in the fraud, up to a maximum sum of £5,000.
The penalty may be offered to those organisations or people who employ persons to work in any capacity: it will cover all cases in which a claimant works directly for another person, including cases where the claimant is self-employed.  The penalty applies not only to the person (or company) who is the actual employer but also to individuals who are within the same organisation and who have a delegated responsibility to appoint staff.
The section includes a regulation-making power to prescribe the information to be included in the written notice which informs the employer that a penalty may be offered.
The employer will not be prosecuted for conduct for which the penalty has been offered where he has made an agreement to pay the penalty.  The section includes provision for the employer to withdraw agreement to pay the penalty within 28 days from the date of the agreement.  Non-agreement or withdrawal of agreement may result in prosecution for the conduct for which the penalty was offered.
The measure provides that an unpaid penalty may be recovered as a civil debt, or by deduction from social security benefit where the employer is a claimant and in receipt of benefit.
Section 14(1) inserts a new section 109B into the Administration Act.
Subsection (1) provides for section 109B to apply where the Department or an authority administering HB considers that there are grounds for instituting proceedings against a person for an offence in respect of conduct of a type defined in subsection (2).  The person is referred to in section 109B as “the responsible person”.
Subsection (2) defines the conduct for the purposes of subsection (1).  This is either:
	conduct which constitutes an offence under the Administration Act in connection with an investigation into the employment of one or more employees, or
	conduct, which is such as to assist an employee to commit a benefit offence, whether an actual offence occurred or not.
Subsection (3) defines how the Department or an authority administering HB offers the invitation to pay a financial penalty and the information it must supply when it does so: the Department issues a written notice, which informs the ‘responsible person’ that he may be invited to agree to pay a penalty and that, if he does so in the specified manner, he will not be prosecuted for an offence for conduct described in subsection (2).  This subsection also includes a regulation-making power to prescribe other information, which the Department must supply.
Subsection (4) provides that if the penalty is accepted it may under subsection (4)(a) be recovered as a civil debt and by deduction from benefit in circumstances where the recipient of the penalty notice is in receipt of a relevant social security benefit.  Subsection (4)(b) provides that if the penalty is accepted no criminal proceedings for the specific conduct to which the penalty relates will be instituted. Section 69(10) of the Administration Act (which relates to benefit overpayments) will apply in relation to penalties recoverable under section 109B.  This will enable the penalty to be recovered as if it were an amount payable under a court order.
Subsection (5) fixes the amount of the penalty.  Subsection (5)(a) provides for a penalty of £1,000 for conduct which falls into subsection (2)(a) but not subsection (2)(b).  For conduct falling within subsection (2)(b) subsection (5)(b) and (c) provide for a penalty of £1,000 multiplied by the number of employees involved in the fraud up to a maximum of £5,000.
Subsection (6) gives the ‘responsible person’ the right to withdraw agreement to pay a penalty, in a manner specified by the Department or the authority, within 28 days of having accepted it.
Subsection (7)(a) provides for the repayment of any amount of the penalty that has already been paid where the agreement to pay is withdrawn.  In such circumstances subsection (7)(b) provides that the bar on prosecution will no longer apply.
Subsection (8) defines the different circumstances in which an individual is a  ‘relevant employee’ in relation to conduct of the ‘responsible person’ and provides that an individual is a relevant employee where:
	the conduct described in subsection (2) occurred when the individual was an employee of the ‘responsible person’; or
	where the conduct described in subsection (2) occurred when the individual was an employee of a body corporate of which the ‘responsible person' was a director; or
	the ‘responsible person’ engages in conduct described in subsection (2) whilst claiming to act on behalf of or in the interests of (because of his connection with) any person by whom the individual is employed.
Subsection (9) defines terms used in this section.
Section 14(2) makes provision for penalties under section 109B to be paid into the Consolidated Fund.