Civil Penalty Notices for Illegal Working Must Identify the Specific Statutory Ground of Liability

Introduction

In Akbars Restaurant (Middlesborough) Limited v Secretary of State for the Home Department [2026] UKSC 26, the United Kingdom Supreme Court clarified the level of reasoning required when the Secretary of State imposes a civil penalty on an employer under section 15 of the Immigration, Asylum and Nationality Act 2006 for employing a person without permission to work.

The appellant, a restaurant company, received a civil penalty notice requiring payment of £15,000 after immigration officers found a worker whose leave to remain had expired. The notice stated that the employer had breached section 15 but merely reproduced all possible statutory grounds of liability in section 15(1), without identifying which one applied.

The central issue was whether section 15(6)(a), which provides that a penalty notice “must state why the Secretary of State thinks the employer is liable to the penalty”, requires the notice to specify the precise statutory limb relied upon. The Supreme Court held that it does.

Summary of the Judgment

Lord Sales, giving the unanimous judgment of the Court, allowed the appeal. The Court held that:

  • A civil penalty notice under section 15 must be read as a whole when assessing compliance with statutory requirements.
  • However, reading the notice as a whole did not save the notice in this case.
  • Section 15(6)(a) requires the Secretary of State to state the actual reason why the employer is liable, including which of the mutually exclusive limbs of section 15(1) is relied upon.
  • A notice which simply lists all possible statutory alternatives does not give proper reasons.
  • The defect was not merely procedural or curable by later clarification in appeal proceedings.
  • The penalty notice was therefore invalid.

Analysis

Precedents Cited

Statutory interpretation authorities

The Court relied on modern principles of statutory interpretation, citing Rossendale BC v Hurstwood Properties (A) Ltd [2021] UKSC 16; [2022] AC 690, R (O) v Secretary of State for the Home Department [2022] UKSC 3; [2023] AC 255, R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28; [2023] 1 WLR 2594, and BlueCrest Capital Management (UK) LLP v Revenue and Customs Comrs [2026] UKSC 18; [2026] STC 1203.

These cases supported the proposition that statutory language must be interpreted objectively, in context and by reference to purpose. The Court emphasised that purpose cannot be stated at such a high level of abstraction that it overrides the statutory words actually enacted by Parliament.

Fairness in administrative decision-making

The Court cited R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531 for the principle that where Parliament confers an administrative power, there is a presumption that it will be exercised fairly. That principle was central to the judgment. Because section 15 involves the state imposing a penalty, fairness required the employer to be told the real basis of liability.

Purpose and limits of purposive interpretation

The Court referred to Maunsell v Olins [1975] AC 373, Rodriguez v United States (1987) 480 US 522, and R (Buckinghamshire County Council) v Secretary of State for Transport [2014] UKSC 3; [2014] 1 WLR 324. These authorities were used to reject the respondent’s argument that the general objective of preventing illegal working justified a looser reading of section 15(6)(a).

The Court stressed that legislation often balances several objectives, including enforcement efficiency, fairness, legal certainty and procedural protection. Courts should not assume that whatever best advances one policy aim must be the law.

Invalidity for procedural non-compliance

The Secretary of State relied on R v Soneji [2006] 1 AC 340, which rejected a rigid distinction between “mandatory” and “directory” procedural requirements. Under that approach, the question is whether Parliament intended non-compliance to invalidate the step taken.

The Supreme Court accepted the relevance of R v Soneji in principle but held that, in this statutory context, Parliament intended strict compliance. The requirement to state the reason for liability was a condition of validity, not a technical formality.

The Court also distinguished JN (Cameroon) v Secretary of State for the Home Department [2009] EWCA Civ 307; [2009] Imm AR 615. In that case, a defect in a notice did not affect the tribunal’s jurisdiction because the underlying decision remained valid and the appellant was not prejudiced. By contrast, under section 15 the penalty notice itself is the operative act imposing the penalty.

The Court also referred to Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, as endorsed in R v Soneji, for the approach of asking whether invalidity was intended by the statutory scheme.

Legal Reasoning

The Court’s reasoning proceeded in four main stages.

1. The penal and constitutional context

Although the penalty is described as civil, the regime is penal in nature: the state imposes a financial sanction on a person for breach of immigration controls. That context matters. A person subjected to a penalty is entitled to know why the penal power of the state has been invoked.

The Court held that giving reasons also disciplines public authorities, guards against arbitrary action, and enables the affected person to decide whether and how to challenge the decision.

2. The wording of section 15

Section 15(1) contains three mutually exclusive bases of liability:

  • the worker has not been granted leave to enter or remain;
  • the worker’s leave is invalid or has ceased to have effect;
  • the worker’s leave is subject to a condition preventing the employment.

Because these alternatives are mutually exclusive, the Secretary of State must decide which one applies before imposing a penalty. Section 15(6)(a) then requires that reasoning to be communicated in the notice.

3. The wider statutory scheme

Sections 16 and 17 of the 2006 Act provide for objection and appeal. Those procedures only work fairly if the employer knows the case it has to meet. An employer may object or appeal on the basis that it is “not liable” to a penalty. To do that effectively, it must know which statutory ground is alleged.

The Court rejected the argument that the county court appeal, described as a “re-hearing”, allowed the Secretary of State to shift to a different statutory limb. The appeal is a re-hearing of the decision actually taken, not an opportunity to reformulate the basic case against the employer.

4. Rejection of substantial compliance

The Court held that the failure was not cured by later correspondence or evidence. An employer should not have to appeal merely to discover the reason for the penalty. Since the notice itself may become final if no appeal is brought, it must contain the required reasons when issued.

Impact

This decision has significant practical consequences for immigration enforcement and civil penalty regimes.

  • For the Secretary of State: penalty notices under section 15 must identify the exact statutory limb relied upon. Generic or formulaic notices listing all alternatives are insufficient.
  • For employers: recipients of civil penalty notices have a stronger basis to challenge notices that do not state the precise ground of alleged liability.
  • For civil penalty law generally: the judgment reinforces that procedural requirements in penal administrative regimes may be conditions of validity, especially where fairness and legal certainty require clear reasons.
  • For statutory interpretation: the case is a warning against relying on broad policy aims to dilute express statutory safeguards.

Complex Concepts Simplified

What is a civil penalty notice?

It is an administrative notice requiring payment of a financial penalty. It is not a criminal conviction, but it is still penal because it imposes a sanction for wrongdoing.

What does “state why” mean?

In this context, it means more than saying “you breached section 15”. The notice must explain the specific statutory basis for liability, so the employer knows the actual allegation.

What is the difference between objection and appeal?

An objection is made to the Secretary of State, asking for reconsideration. An appeal is made to the court. Both procedures depend on the employer knowing the case against it.

Why did R v Soneji not save the notice?

Because the requirement to identify the statutory ground of liability was fundamental to the validity of the notice. The defect went to the employer’s ability to understand and challenge the penalty.

Conclusion

The Supreme Court’s judgment establishes an important rule: where the Secretary of State imposes an illegal working civil penalty under section 15 of the 2006 Act, the notice must identify the specific statutory ground of liability. Listing all possible grounds is not enough.

The decision strengthens procedural fairness in administrative penalty regimes and confirms that enforcement efficiency cannot override clear statutory safeguards. A penalty notice must tell the recipient the case it has to meet.