Buddy says:  Employing staff who do not have the right to legally work in the UK breaches sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006. If convicted, both the employer and/or the individual employee with responsibility for compliance could be fined and/or given a custodial sentence.

Employees that have accumulated one year's continuous service are protected by the Employment Rights Act 1996 and, to be lawful, any dismissal must be for one of the six potentially fair reasons under section 98. A fair procedure must also be followed. An employer can dismiss an employee who is working illegally on the ground that the employment breaches a statutory restriction, which is a potentially fair reason for dismissal. The statutory dismissal procedures will not apply to such a dismissal. However, employers can only rely on this ground where there has been an actual breach of immigration legislation.

Employer information:  Alternativley, you could, dismiss the employees for "some other substantial reason" which is also a potential fair reason for dismissal.  The substantial reason here being that you had a genuine and reasonable belief, based on reasonable grounds, after a reasonable investigation that the employee is, or would be, working illegally. The fact that this belief may subsequently turn out to be incorrect will not make the decision unfair as long as the belief is genuinely held.

If relying on this alternative ground, the statutory dismissal procedures will apply. Failure to follow this three-step procedure will render the dismissal automatically unfair. Moreover, to avoid any potential breach of contract/wrongful dismissal claims, you should ensure that you pay each employee in lieu of their full notice period.

An employer that negligently employs an illegal worker will commit a civil offence and will be liable to a fine of up to £10,000, unless it has checked certain documents before employing the individual. An employer that knowingly employs an illegal worker, will commit a criminal offence, and will be liable to a custodial sentence of up to two years and/or an unlimited fine.

Under the legislation, there is a statutory defence to the civil offence, whereby employers can avoid incurring a financial penalty if they can show that they complied with prescribed document checks in relation to their employees' immigration status before they started working. However, as you have a reason to suspect that your employees are not allowed to work in the UK, it is likely that you would be ‘knowingly employing’, and thereby committing a criminal offence for which there is no statutory defence.