Enforcement officers visited USA Nail Salon on Monaghan Street, Newry.
Three Vietnamese nationals, two men aged 24 and 26 and a 29-year-old woman, who were found working were arrested as they were in the UK illegally.
Two further Vietnamese men aged 36 and 23 found on the premises were held as they were also in the country illegally.
They have been transferred to immigration detention while steps are taken to remove them from the country.
USA Nail Salon was served with a notice warning that a financial penalty of up to £20,000 per illegal worker will be imposed unless the employer can demonstrate that appropriate right-to-work document checks were carried out, such as seeing a passport or Home Office document confirming permission to work. This is a potential total of £60,000.