I have received a fine for employing an illegal worker – what happens if I can’t pay?

A penalty for employing an illegal worker can arrive without warning, and at up to £45,000 per worker for a first offence, it's a sum that many small businesses simply cannot afford to pay. If your business has been hit with a fine for employing an illegal worker, and don't know how your company is going to pay it, seeking professional advice as a matter of urgency can help you better understand your options.

At BTG Begbies Traynor, our team of licensed insolvency practitioners are seeing a growing number of businesses pushed into financial crisis by these penalties. For some, this is causing major cash flow problems; for others, these fines are tipping the company into insolvency.

What are the current penalties for employing illegal workers?

Since February 2024, the Home Office civil penalty regime operates at the following levels:

• £45,000 per worker for a first breach within three years
• £60,000 per worker for a repeat breach within three years

These figures represent the starting point before any reductions for mitigating factors are made. They apply per worker, so if two or three employees are found without the right to work in one establishment, the total penalty can quickly reach six figures; an amount that the majority of small businesses simply don't have the available money to cope with.

Why are so many businesses being caught out?

The scale of enforcement has reached record levels. Over the course of 2025, the Home Office carried out more than 17,400 workplace raids across the UK, resulting in over 12,300 arrests and more than £130 million in civil penalties issued to employers.

The sectors being hit hardest are those that rely on high staff turnover and flexible labour, particularly hospitality, construction, care, and retail. Restaurants, takeaways, hotels, care homes and building sites have all seen a significant increase in Immigration Enforcement visits.

Many of the businesses being fined aren't deliberately employing people illegally, rather they result from a genuine mistake in carrying out right to work checks, such as:

• Relying on a staff member to handle documentation who didn't follow the correct process
• Failing to repeat checks when an employee's permission to work expired
• Accepting documents that appeared genuine but weren't verified through the correct channels
• Using outdated checking methods, for example, accepting biometric residence cards that must now be verified online

What happens when you receive a fine for employing illegal workers?

The Home Office follows a set process when issuing civil penalties. Here is what you can expect:

1.      Referral notice – This is an initial letter notifying you that your case is under consideration. This is your first warning that a penalty may follow.

2.      Civil penalty notice - The formal notice confirming the fine amount, the worker or workers it relates to, and who is liable. Liability could fall to the company, the director personally, or both. You will have 28 days from the date of this notice to either pay or submit an objection.

3.      Enforcement action - If you neither pay nor object within 28 days, the Home Office can pursue the debt through the civil courts. This can result in a County Court Judgment (CCJ) against your business, bailiff action, and your details being published in the Home Office's quarterly penalties report.

What happens if I cannot pay the fine?

If your company cannot pay the penalty by the deadline, you need to seek professional advice from a licensed insolvency practitioner. A financial penalty of this size has the potential to tip many companies into insolvency.

Once you know, or ought to know, that your company is insolvent, you have a duty to act in the best interests of creditors. Continuing to trade while insolvent, taking on new credit, or making payments to preferred creditors can all expose you to personal liability or even disqualification from acting as a director in the future.

Taking advice from a licensed insolvency practitioner at the first signs of insolvency gives your company the very best chance of survival and also ensures you are complying with your legal obligations as the director of an insolvent company.

What are your options if you believe your company may be insolvent?

The right course of action depends on whether your business is viable, or whether its financial position has taken it beyond the point of rescue. Here are the main options:

• Company Voluntary Arrangement (CVA) — A Company Voluntary Arrangement (CVA) is a legally binding agreement between your company and its creditors to repay debts over an agreed period, usually three to five years. It allows you to continue trading while making affordable payments. A CVA could potentially include the Immigration Enforcement penalty alongside your other debts, giving you a structured way to manage the total amount owed.
• Administration — If the business needs immediate protection from creditor action while a rescue plan is developed, company administration provides a legal moratorium which can be hugely valuable. An administrator is appointed to manage the company's affairs and explore the best outcome, whether that's restructuring the business, selling it as a going concern, or achieving a better return for creditors than immediate liquidation.
• Creditors' Voluntary Liquidation (CVL) — If the company cannot realistically continue trading, a Creditors’ Voluntary Liquidation (CVL) is the formal process for closing an insolvent company. It involves appointing a licensed insolvency practitioner to wind up the company's affairs, realise its assets, and distribute the proceeds to creditors in the correct legal order. Importantly, a CVL also demonstrates that you've acted responsibly in your role as a director.

What to do if I have received a penalty for employing illegal workers?

If you've received a civil penalty notice and you're worried about what it means for your company's future, the sooner you seek advice the better. Understanding your current position and being aware of your future options is the first step towards dealing with it.

BTG Begbies Traynor’s insolvency practitioner’s deal with businesses in financial distress every day, and we understand the pressure you're under. Whether you’re looking to turn around your business’s fortunes, or look at your closure options, we’re here to help. Get in touch today for immediate help and advice.