Illegal work and the consequences

Many to the people who do not have sponsor licences assume that they are protected from being fined if they do not knowingly employ those who do not have permission to work.  The fact is that new regulations which came into force in May 2014 (and apply to those employed on or after this date) have strengthened the hand of the UKVI and it is possible to incur a fine in circumstances in which information was withheld from you by the employee.
There have been some minimal changes made to the regulations to ease the burden of employers. One of the measures introduced is the removal of the automatic requirement to conduct checks every 12 months.  Instead, once the initial documents are checked, there is no longer a requirement to re-check these documents again during the currency of the visa.  
Where students are employed it is now necessary to take further steps to  obtain, check and copy evidence of the students education sponsor which must contain the term and vacation dates and must show the duration of the period of study.
If challenged or visited, you must be able to demonstrate that you carried out the appropriate checks and as a result have a ‘statutory excuse’. If you know that that a person is illegal this will not provide a statutory excuse.
For a continuous statutory excuse for British Citizens or those settled here you will need to check original documents from a specific list of documents. The best form of evidence is a passport showing that the person is a British Citizen or settled or at least 2 documents such as a birth certificate plus a National insurance number.  
For a limited statutory excuse (for non British / Settled persons) you need to check a current passport and biometric card or obtain a Positive Verification from the UKVI. For EU nationals, a Certification of Application is acceptable.  For asylum seekers an Application Registration Card plus a Positive Verification from the Home Office Checking service is necessary.
In the first scenario you will not need to re-check the documents again. In the second case, it covers the period of the visa and for 28 days afterwards by which time you are required to carry out checks with the Home Office Checking Service or have seen a valid visa on a biometric card. A Positive Verification protects you for up to 6 months by which time you should have obtained copies of the person’s passport. If not the check has to be repeated.  You should satisfy yourself that any application for an extension was made before the expiry of leave.
In terms of determining the level of the fine where the starting point is £20000 there are 2 processes:
1. Have you been found employing illegal workers in the 3 years before this?  If you have more than one site and recruitment takes place on each site, it will be treated as a separate site.  
2. Are there any mitigating factors which should reduce your fine for example active co-operation with the authorities or good recruitment practices generally. This has a whole host of scenarios as to what is active co-operation justifying a reduction by £5000.
The first stage is a form of potential liability where further information is sought and the second stage is the liability notice itself.    It is possible to object to the penalty within 28 days and if the decision is maintained appeal to the county court again within a further 28 days. There is a reduction in the fine if it is paid within a particular period.