UK employers are preparing for a significant overhaul of right-to-work (RTW) check regulations, with new Home Office plans set to widen liability across complex labour supply chains from 1 October 2026. The proposed "extended liability" framework, detailed in a recently published draft code of practice, threatens to impose what industry bodies describe as "needless legal burdens" on businesses already navigating a challenging economic landscape. This move marks a substantial shift in the responsibility for ensuring a legal workforce, moving beyond the direct employer to encompass a wider range of entities within the contractual chain.
The Genesis of Enhanced Controls: A Policy Imperative
The Home Office’s initiative to bolster RTW checks is rooted in the government’s broader strategy to combat illegal working, safeguard the integrity of the UK’s labour market, and deter irregular migration. For years, the UK has maintained a system requiring employers to verify the immigration status of their employees before they commence work, with severe penalties for non-compliance. This system has evolved from manual document checks to incorporating digital verification services, reflecting technological advancements and the increasing complexity of global migration patterns.
The impetus behind the latest expansion stems from a perceived need to close loopholes and enhance accountability, particularly in sectors where subcontracting and agency labour are prevalent. While the exact statistics on illegal working are fluid and challenging to quantify precisely, government estimates often highlight the significant economic and social costs associated with illicit employment, including exploitation of vulnerable individuals, unfair competition for legitimate businesses, and lost tax revenues. The Home Office argues that by extending liability, it aims to create a more robust deterrent against illegal working, ensuring that all parties benefiting from labour are equally invested in compliance.
A Deeper Dive into Extended Liability: The New Framework
The core of the upcoming changes lies in the concept of "extended liability," which fundamentally redefines who can be held responsible for inadequate RTW checks. Under the current regime, liability primarily rests with the direct employer who hires an individual. However, the new code of practice, slated for implementation on 1 October 2026, proposes that civil penalties for hiring illegal workers could extend beyond the immediate employer. This means that if the direct employer cannot be identified, or if they fail to comply with RTW regulations, liability could be passed up the contractual chain.
Specifically, this extended liability could ensnare end-hirers, main contractors, labour providers, and even digital platforms that facilitate work. For instance, an end-client engaging agency workers, or a main contractor overseeing a complex construction project, could find themselves liable for failures in RTW checks performed by their subcontractors or staffing agencies, even if they are not the direct employer of the illegal worker. This paradigm shift necessitates a re-evaluation of existing due diligence processes. End-clients, for example, would be compelled to establish their own identity verification processes, even if preliminary checks have already been conducted by an intermediary. This dual-layer verification, the Home Office believes, will strengthen the overall compliance framework and reduce opportunities for illegal working to proliferate within multi-tiered supply chains.
The Home Office draft code of practice outlines the operational specifics, detailing the types of documents acceptable for RTW checks, the circumstances under which an employer gains a statutory excuse against a civil penalty, and the processes for challenging penalties. It also underscores the importance of ongoing checks for individuals with time-limited permission to work in the UK.
Industry Sounds the Alarm: "Needless Legal Burdens"
The proposed changes have met with significant apprehension from business and recruitment sectors. The Recruitment and Employment Confederation (REC), a leading professional body for the UK recruitment industry, has been particularly vocal in its criticism, describing the plans as creating "needless legal burdens" for employers. Shazia Ejaz, REC’s director of campaigns, articulated the industry’s concerns, highlighting the substantial increase in complexity that businesses will face.
"In a slow-chugging economy, business can only cope with so much additional operating costs and bureaucracy," Ejaz stated, emphasising the precarious economic environment. She pointed out that contemporary labour supply chains are far more intricate and extended than in previous eras, making it increasingly difficult to pinpoint where the ultimate liability for these checks should reside. The REC’s primary argument is that while it is entirely reasonable to expect employers to verify the legality of their workforce, the expanded liability extends "way further" than justifiable, potentially penalising businesses that have taken reasonable steps to ensure their suppliers are compliant.
The REC fears that this will lead to a significant slowdown in onboarding processes and foster a more cautious hiring environment. At a time when businesses across the UK are grappling with acute talent shortages and struggling to access skilled labour quickly, any additional friction in the hiring process could exacerbate existing challenges. The UK labour market, already tight with an unemployment rate fluctuating around 4-5% in recent years and a persistent struggle for employers to fill vacancies, cannot afford further impediments to talent acquisition.
Targeted Impact: Industries with Complex Supply Chains
While the new regulations will have a broad impact, certain industries are expected to bear the brunt of the changes. The construction sector, notoriously characterised by its complex, multi-layered subcontracting models and reliance on a flexible workforce, is cited as a prime example. In construction, it is common for main contractors to engage numerous subcontractors, who in turn might employ their own subcontractors or rely heavily on agency workers. Tracing the full contractual chain and ensuring RTW compliance at every single link presents an immense logistical and administrative challenge.
Beyond construction, other sectors that frequently utilise agency workers or rely on intricate supply chains, such as logistics, manufacturing, hospitality, and even parts of the public sector, could face similar operational hurdles. These industries often depend on the agility and flexibility that agency labour provides to manage fluctuating demand and project-based work. The additional layers of checks and potential liability could disincentivise the use of such flexible labour models, leading to rigidity and inefficiency.
Economic and Operational Implications
The financial penalties for non-compliance are substantial, designed to act as a powerful deterrent. Employers found to be hiring workers without a legal right to work in the UK could face civil penalties of up to £45,000 per worker for a first breach, escalating to £60,000 for repeated infractions. These figures represent a significant increase from previous penalty levels and highlight the seriousness with which the Home Office views illegal working. For many small and medium-sized enterprises (SMEs), which form the backbone of the UK economy, such fines could be catastrophic, potentially leading to insolvency.
Beyond the direct financial penalties, the new regime introduces considerable operational costs. Businesses will need to invest in new processes, training for HR and management staff, and potentially technology solutions to manage the expanded verification requirements. For many employers, particularly those without in-house legal or dedicated compliance teams, understanding and implementing the nuances of "extended liability" will be a daunting task. The REC has pointed out that not all employers will have ready access to, or the financial means for, the advanced technology required to efficiently run these checks, further disadvantaging smaller businesses.
Furthermore, the expansion of civil liability is seen by the REC as yet another burden on the use of agency workers, compounding pressures already introduced by other legislative changes, such as the Employment Rights Act 2025 (as referenced by the REC). While the specifics of the 2025 Act are beyond the scope of this discussion, the cumulative effect of various regulations targeting flexible labour is a growing concern for an industry that provides crucial workforce agility to the UK economy.
Legal Perspectives and Due Diligence
Legal experts in employment and immigration law largely agree that the expanded liability will necessitate a fundamental review of contractual agreements and due diligence processes across all supply chains. Companies will need to scrutinise their contracts with labour providers and subcontractors to ensure robust indemnities and warranties regarding RTW compliance. Furthermore, they will likely need to implement more rigorous audit mechanisms to verify that their suppliers are indeed conducting proper checks.
The concept of "reasonable steps" will become paramount. While the Home Office’s code of practice will outline what constitutes a statutory excuse, businesses will need to demonstrate active engagement in preventing illegal working within their extended supply chains. This could involve regular checks on suppliers’ compliance procedures, requests for evidence of checks conducted, and proactive communication regarding changes in immigration law. The complexity lies in balancing the need for thoroughness with the practicalities of maintaining efficient business operations, especially when dealing with multiple tiers of suppliers.
Unintended Consequences and the Risk of Discrimination
A significant concern raised by the REC is the potential for the new code to inadvertently lead to discrimination. Ejaz warned that the increased complexity and liability could encourage some employers to favour job applicants whose right to work is perceived as "easier to identify." This could disproportionately affect individuals with complex immigration statuses, those from certain ethnic backgrounds, or those who rely on digital immigration documents, despite having a full legal right to work in the UK.
Such an outcome would run counter to the UK’s equality legislation and could lead to an increase in discrimination claims. Employers, in their attempt to mitigate liability risks, might adopt overly cautious or discriminatory hiring practices, creating barriers for legitimate job seekers and exacerbating existing inequalities in the labour market. This highlights the delicate balance between robust immigration enforcement and the protection of workers’ rights and equal opportunities.
A Call for Digital Solutions and Future Outlook
In light of these concerns, the REC is actively campaigning for the government to accelerate the implementation of comprehensive digital ID proposals. Ejaz firmly believes that a fully functional and widely adopted digital identity system would "significantly reduce the opportunity for illegal working" by streamlining the verification process, making it more secure, and reducing the administrative burden on employers. A robust digital ID framework could provide instant, reliable verification of an individual’s right to work, negating the need for complex, multi-layered checks across supply chains.
The UK government has made some strides towards digital identity, particularly with the introduction of digital share codes for individuals with certain immigration statuses. However, a universal, secure, and user-friendly digital ID system that covers all workers, including UK nationals, remains a future aspiration rather than a current reality. Industry advocates argue that prioritising such a system would be a more effective and less burdensome approach to tackling illegal working than expanding liability in its current form.
The Home Office has indicated its intention to publish more detailed guidance on the expanded RTW scheme before its effective date in October 2026. This forthcoming guidance will be crucial for businesses to fully understand their new obligations and to prepare their compliance strategies. However, the fundamental tension remains: the government’s drive for stricter immigration controls against the business community’s plea for manageable, proportionate regulation that supports economic growth and efficient labour markets. As the deadline approaches, employers across the UK face the challenge of adapting to a significantly altered landscape of right-to-work compliance, with profound implications for hiring practices, supply chain management, and overall business operations. The success of this new framework will ultimately be measured not just by its effectiveness in deterring illegal working, but also by its ability to do so without stifling legitimate economic activity or inadvertently fostering discrimination.
