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Restricting employment allowance for illegal workers

In a move to crack down on illegal workers in the UK, the Government introduced a policy back in April 2018 that removes the eligibility for Employment Allowance for one year if an employer has been found guilty by the Home Office of employing an illegal worker.

In the budget of 2016, it was announced that from 2018 the Employment Allowance, which allows employers to claim a reduction on their annual National Insurance Contribution, would be removed for one year for those organisations who receive penalties for employing illegal workers. The Government is of the view that those who breach legislation by employing illegal workers should not benefit from the Employment Allowance. The purpose of this restriction is to ensure the allowance focuses more on the employers who are providing legitimate employment.

The effect of the change will only impact employers who have received a penalty from the Home Office for employing illegal workers and have exhausted their appeal rights in relation to that penalty. Early estimates suggest that approximately 2,000 employers will be affected by the new policy.

It is the responsibility of the employer who has been penalised and exhausted their appeal rights to amend their payroll software to ensure that they do not claim the allowance during the year in which they are not eligible.

If you need any help and advice in relation to the above, please do not hesitate to contact me or the employment team on 0113 350 4030 or at richard.newstead@scesolicitors.co.uk.

If you would like to be kept up to date on any Employment law changes, please subscribe to our monthly newsletter.

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SCE Solicitors is a boutique employment law practice based in Leeds which advises clients nationwide.  Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Richard Newstead

Richard qualified as a Legal Executive over 20 years ago and has significant experience in Employment law and Litigation.

Richard acts for both employers and employees drafting and advising on settlement agreements, contracts of employment, consultancy agreements, directors service agreements and general workplace policies. He acts for commercial clients in the employment tribunal dealing with unfair dismissals, constructive dismissals and claims for discrimination.
Richard Newstead

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Richard Newstead

Richard qualified as a Legal Executive over 20 years ago and has significant experience in Employment law and Litigation. Richard acts for both employers and employees drafting and advising on settlement agreements, contracts of employment, consultancy agreements, directors service agreements and general workplace policies. He acts for commercial clients in the employment tribunal dealing with unfair dismissals, constructive dismissals and claims for discrimination.

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