From 29th February 2008, the penalties for employers who make use of workers who are in the UK in breach of their immigration requirements are substantially increased.
There is a criminal penalty against those who knowingly employ illegal immigrant workers: this amounts to an unlimited fine and / or a prison sentence. There is also a civil penalty relating to negligent recruitment practice: this is “limited to” a maximum of £10,000 for each offence or worker.
The following government web site may be of help:
Home Office site with details about preventing illegal working and how to comply to the law
Home Office Advisory Document