You may continue to employ an unregistered worker whilst their application is processed. During this period, you must retain your copy of their registration application until you receive notification that the worker has been registered. This will provide you with a statutory defence against a charge for employing an unregistered worker under the Accession (Immigration and Worker Registration) Regulations 2004.
If you continue to employ an unregistered A8 worker after one month and have not retained a copy of their Home Office application form, or they do not receive a certificate of registration, then you may commit a criminal offence under the regulations for employing A8 workers. This is separate from the section 8 offence. The maximum penalty on conviction is £5,000. Similarly, if the Home Office notifies you that your employee's application has been refused and you continue to employ that person, you may also commit an offence.
You will not commit an offence if you have obtained a defence by copying your worker's application form, retaining a copy of their registration certificate, or checking a document showing that your worker is exempt from the scheme, as long as you have not received a refusal notice from the Home Office. Equally, if you have established that your worker is exempt from registering and you have retained a copy of the evidence provided, then you will have established a defence.