Changes introduced on 1 October 2026 mean businesses could face significant financial penalties if illegal working is identified even where they are not the direct employer.
Employers have long been required to carry out right to work checks to ensure that individuals are legally entitled to work in the UK. However, changes to the rules from 1 October 2026 have widened the circumstances in which businesses may be held liable for illegal working.
The changes are particularly important for businesses operating in industries such as construction, demolition, facilities management and other sectors where agency workers and subcontractors are regularly used.
With civil penalties of up to £45,000 per illegal worker for a first breach and £60,000 for a repeat breach within three years, businesses should ensure they understand their responsibilities and have appropriate safeguards in place.
Previously, responsibility for carrying out right to work checks generally rested with the employer who directly engaged the worker.
Under the new extended liability provisions, businesses may also face civil penalties where illegal working is identified further down a contractual supply chain.
This does not mean that businesses automatically become responsible for carrying out right to work checks on every agency worker or subcontractor they use.
For example, where an employment agency has the direct contractual relationship with a worker, the agency remains responsible for carrying out the prescribed right to work check.
However, where a business has contracted to provide services to a client and engages an agency or subcontractor to deliver some or all of those services, the business may now face additional liability if someone within that contractual chain is found to be working illegally.
Importantly, this potential liability can extend across multiple tiers of subcontracting.
Consider a construction company that wins a contract to carry out building works for a client.
The company engages an employment agency to supply workers to assist with the project. Although the agency remains responsible for checking those workers’ right to work, the construction company could also face a civil penalty if an individual is found working illegally and the extended liability provisions apply.
The same risk could arise where the company subcontracts part of the project to another business, which then engages its own workers or further subcontractors.
By contrast, where a business contracts for services solely for its own internal use, this does not, by itself, bring the arrangement within the extended liability provisions.
The key consideration is the nature of the contractual arrangements and whether the workers are involved in delivering services that the business has agreed to provide to its own client.
Yes. The new framework provides for a statutory excuse, which can protect a business from liability for a civil penalty where the prescribed requirements have been met.
The Home Office guidance explains that, when illegal working is identified, it will first seek to establish which business has the direct contractual relationship with the individual and is responsible for carrying out the right to work check.
It will then consider whether liability should extend to other businesses within the contractual chain and, where relevant, whether those businesses have established a statutory excuse.
Crucially, businesses must be able to demonstrate that the required contractual provisions and practical safeguards were in place before the individual started work.
Simply relying on an agency’s assurance that it carries out right to work checks may not provide sufficient protection.
Businesses that engage agencies or subcontractors should review their existing arrangements and consider the following practical steps:
Identify the agencies and subcontractors involved in delivering services to clients, establish which business directly engages each worker and determine whether further subcontracting is permitted.
Ensure written agreements contain appropriate provisions requiring right to work checks, restricting unauthorised subcontracting, allowing compliance audits and requiring cooperation if illegal working is identified.
Consider obtaining written confirmation that the necessary checks have been completed before workers are assigned to a project. Records should identify the worker, the relevant project, when checks were completed and whether any follow-up checks are required.
Businesses should consider using existing induction procedures to verify that individuals attending work are those who have been authorised to do so.
This is good practice in any event to ensure that you are aware of who is working for you or your clients.
Keep evidence of contractual arrangements, compliance assurances, worker attendance and any concerns or unauthorised substitutions. These records could prove crucial if the Home Office investigates potential illegal working.
The changes do not increase the existing maximum civil penalties for employing illegal workers.
The penalties remain:
However, the extension of potential liability means that businesses previously outside the scope of a particular civil penalty may now face significant financial exposure.
The new contractual requirements apply to relevant arrangements entered into from 1 October 2026.
There is no blanket requirement to repeat every historic right to work check. Nevertheless, businesses should review their existing agency and subcontracting arrangements and ensure that any new or renewed contracts meet the applicable requirements.
The changes represent an important shift in the approach to illegal working enforcement.
Although agencies and subcontractors remain responsible for the right to work checks they are legally required to carry out, businesses higher up the contractual chain can no longer assume that this responsibility will necessarily protect them from financial penalties.
Having the right contractual protections, verification procedures and supporting records in place before work begins will be essential to managing this risk.
Businesses that regularly use agency workers or subcontractors should review their arrangements to ensure they are adequately protected.
We can assist employers with reviewing agency and subcontractor agreements, understanding their obligations under the new rules and implementing practical procedures to reduce the risk of civil penalties.
If your business uses agency workers or subcontractors and you would like advice on how these changes may affect you, please get in touch with our team on 01983 897003.
Appointments are available by telephone or via video call, so no matter where you are in England or Wales we can assist you.
The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.
The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.
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