Employee change in immigration status; is ignorance bliss?

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Last month it was reported that 141,000 residency claims made by EU citizens were abruptly denied. This followed a change to the status of their online applications from “pending” to “rejected”. These EU citizens are unlikely to have been working in the UK, but the report flags important issues around right to work. As well as the employer having a duty to check there is a right to work before employment begins, the employee also has a responsibility to tell their employer if their immigration status changes and their right to work in the UK comes to an end. 

The legal position

The consequences for an individual in these circumstances are significant and wide-ranging. For employers, the stakes are also high: it is unlawful to employ someone who does not have the right to work in the UK, or who is working in breach of their conditions of stay. If an employer is found to be employing people illegally they could face civil penalties of up to £20,000 per illegal worker, and also criminal sanctions in some circumstances.

Where an employer is also a sponsor under the points-based system, the stakes are higher, and any instance of illegal working could cause the sponsor to lose their licence. 

To comply with the obligation to prevent illegal working, an employer must: 

  • Carry out “right to work” checks on all prospective employees before employment starts. 
  • Conduct follow-up checks on employees who have a time-limited permission to live and work in the UK. 
  • Keep records of all the checks carried out. 
  • Not employ anyone it knows, or has reasonable cause to believe, is an illegal worker.

It is estimated that there are over 5 million EU citizens residing in the UK. The deadline for applications for the EU Settlement Scheme (“EUSS” which was the route for EU and Swiss citizens to secure their right to continue living and working in the UK) was 30 June 2021. New UK immigration rules applied from 1 January 2021, which extended to EU citizens. 

EU citizens and their family members who have resided in the UK for a continuous period of at least 5 years are eligible for Indefinite Leave to Remain (“ILR”) under Appendix EU of the Immigration Rules; this is known as “settled status”.  

EU citizens and their family members who have resided in the UK for a period of less than 5 years but would otherwise be eligible for ILR under Appendix EU; this known as “pre-settled status”. This allows completion of the five-year continuous residence period to become eligible for settled status.   

Many EU citizens who were the first to obtain pre-settled status will soon need to apply to upgrade their status to ‘settled’, otherwise they face having to leave the UK or find another form of immigration permission to stay. Significant absences from the UK in the intervening 5 years could hamper an application for settled status, and individuals should seek advice if they are unsure if they remain eligible.   

It is worth noting that the Home Office is currently facing a legal challenge as to whether the requirement to upgrade to settled status is indeed lawful, and a potential outcome of this could be that EU citizens with pre-settled status do not need to make any further applications. However, for now, EU citizens should take steps to apply for settled status as soon as they become eligible.  

Until 30 June 2021, employers of EU Citizens were able to rely on an EEA passport or ID card to confirm their right to work in the UK. From 1 July 2021, an employer requires proof of immigration status which, for EU citizens, includes proof that they have applied for status under the EUSS or for a visa via the new (post-Brexit) immigration system.  

Individuals holding settled and pre-settled status will not get a paper document to prove their right to work in the UK. Instead, their immigration status will be recorded electronically and will be assessable as soon as a decision has been made on their application. The online profile can be used to prove their right to work in the UK. 

The important distinction for employers is that EEA nationals with settled status have a continuous right to work and do not require a follow-up check. EEA nationals with pre-settled status have a temporary right to work and require a follow-up check once their application for settled status has been made. 

Employers were not required to check that their pre-June 2021 EU workforce had applied for status under the EUSS. As long as they carried out a correct right to work check in line with the guidance before the employee started work, they would have a defence against any illegal working penalty. 

This does leave a situation where an EU citizen started working in the UK in 2021 who provided their employer correct right to work evidence (i.e., an EU passport) before work began, but who did not make an application under the EUSS before the deadline. In this situation the employee may not technically be here lawfully, but the employer will be able to defend any illegal working penalty. The Home Office is taking a lenient approach, however, and the guidance for employers who become aware of employees in this situation is to encourage them to make a late application under the EUSS. 

The situation is slightly different where, unbeknown to the employer, an employee’s immigration status is taken away. Again, the employer may not be liable for any illegal working up and until the point they become aware of the situation; in which case, they may need to take urgent steps to end the employment relationship. 


The recent reporting around the rejection of 141,000 residency claims from EU citizens has been condemned by the EU, and they have sought a response to the reports from the UK Government (who had previously advised that EU citizens making residency applications under the EUSS would be a formality more than anything else). The UK government reportedly commented that the digital status of those refused had been updated in line with the decision taken on their individual application and that this had already been communicated to those affected. These citizens will have already been told that their application had been refused, and they will not likely be in employment in the UKHowever, they will have been able to access benefits up until the time their status changed from ‘pending’ to ‘refused’ and in some cases may need to repay sums already received. 

This report flags the importance of employers understanding how to correctly check the right to work for EU citizens and, indeed, any employee, before work begins; and for employees to understand the importance of informing their employer of any changes to their immigration statusOnce an employer is on notice of potential illegal working (either because their employee has disclosed it to them, or because the circumstances are clear, i.e., they ‘ought to have known’) then they need to take swift action to avoid any illegal working penalties. 

For this reason, we recommend that employers review their template employment contracts to ensure that there is a notification requirement placed on employees to update their employer if there is a change to their immigration status.  

If we can help you with conducting right to work checks, immigration advice, review of your employment contracts, or otherwise review your exposure to risk, please get in touch with our Employment Team.