Employers across the United Kingdom, particularly those leveraging agency staff, contractors, and complex labour supply chains, are facing an imperative to comprehensively review and overhaul their right to work processes. This urgent call to action follows the recent publication of updated draft guidance by the government, signaling major legislative changes slated to take effect in October 2026. The forthcoming reforms represent a significant broadening of employer responsibilities, extending well beyond traditional employment relationships and introducing new concepts of liability further up the contractual chain.
The Home Office released its revised draft code of practice on preventing illegal working on July 15, outlining the updated framework for employers to establish a "statutory excuse" against potential civil penalties. This guidance is not merely an update but a precursor to a transformative shift, aligning with provisions set to be enshrined in the Border Security, Asylum and Immigration Act 2025. The core implication for businesses is that right to work obligations will no longer be confined to directly employed staff but will encompass a significantly wider spectrum of working arrangements, demanding heightened vigilance and robust compliance mechanisms from organisations of all sizes.
The Evolving Landscape of Work and Compliance
The impetus behind these comprehensive changes stems from the evolving nature of the UK labour market, characterized by the exponential growth of the gig economy, increased reliance on flexible working models, and intricate global supply chains. For years, the traditional framework for right to work checks primarily focused on individuals directly employed by a company, leaving potential loopholes for illegal working within more opaque contractual arrangements. The government’s stated aim is to close these gaps, ensuring that all forms of labour engagement contribute to a lawful and compliant workforce, thereby strengthening immigration enforcement across the board.
Industry reports and economic analyses consistently highlight the burgeoning contingent workforce in the UK. Data from various sources, including the Office for National Statistics and independent labour market research, indicates a steady increase in the number of self-employed individuals, agency workers, and those engaged through platform-based services over the past decade. This shift has presented challenges for regulatory bodies seeking to apply consistent standards of compliance, particularly regarding immigration status and the right to work. The new guidance directly addresses these modern working realities, seeking to establish a more equitable and enforceable compliance environment across all engagement models.
Key Pillars of the New Framework
The most profound alteration introduced by the new framework is the expansion of right to work obligations. Historically, an employer’s duty typically ended at their direct payroll. Under the Border Security, Asylum and Immigration Act 2025 and its accompanying code of practice, this will no longer be the case. Organisations engaging workers through individual subcontracting arrangements, various types of contracts, and increasingly popular online matching services will all fall within the expanded scope.
The draft guidance provides explicit examples to illustrate the breadth of these changes. This includes, but is not limited to, temporary agency workers, individuals performing tasks for delivery platforms, and cleaners engaged through online marketplaces. This comprehensive inclusion signifies a fundamental redefinition of who is considered a "worker" for right to work purposes, placing a much greater onus on businesses to scrutinize their entire labour ecosystem. It is crucial to note, however, that genuinely self-employed individuals operating independent businesses and contracting directly with clients for services will remain outside the new regime, preserving the distinction for bona fide independent contractors. The challenge for businesses will be accurately differentiating between these categories, a task that often requires legal expertise.
Introduction of "Extended Liability"
Perhaps one of the most impactful and potentially disruptive aspects of the reforms is the introduction of "extended liability." This novel concept means that businesses situated higher up a labour supply chain could face significant civil penalties for illegal working, even in scenarios where they do not directly employ the individual in question. This represents a seismic shift from the previous model where liability predominantly rested solely with the direct employer.
Sajida Hussain, a legal director within Addleshaw Goddard’s distinguished immigration team, underscored the gravity of these reforms, stating, "The UK’s right to work regime is changing – and for employers operating through anything other than a directly employed workforce, the changes are significant." She elaborated on the implications of extended liability: "A new ‘extended liability’ concept means organisations can be exposed to penalties further up the contractual chain, rather than liability resting solely with the direct employer. In some cases, businesses may face exposure even where they do not directly employ the individual carrying out the work." This legal interpretation highlights the need for businesses to implement unprecedented levels of due diligence throughout their entire labour supply network.
Enhanced Verification Requirements
Beyond the expanded scope and extended liability, the draft guidance also places a substantially greater emphasis on the verification process itself. Employers will be expected to do more than simply check documentation; there will be a heightened requirement to verify that the individual actually carrying out the work is indeed the same person whose right to work has been checked and confirmed. This aims to counter identity fraud and ensure that the integrity of the checks is maintained throughout the engagement period. For businesses, this could translate into more rigorous onboarding procedures, ongoing identity checks, and potentially the adoption of advanced biometric or digital verification technologies.
A Chronology of Reform
The journey towards these significant reforms has been unfolding over time, reflecting a broader government agenda to strengthen immigration controls and combat illegal working.
- May 2024: Immigration law specialists in the UK welcomed a notable U-turn by the Home Office on guidance that had previously required employers sponsoring migrant workers to conduct right-to-work checks on anyone they "directly engage." This demonstrated a period of ongoing refinement and stakeholder consultation within the Home Office’s policy development.
- July 15, 2024: The Home Office published the revised draft code of practice on preventing illegal working. This key document serves as the operational blueprint for the upcoming legislative changes, providing businesses with an early look at their future obligations.
- October 1, 2026: This is the critical implementation date when the new guidance will officially come into force, coinciding with the activation of relevant provisions within the Border Security, Asylum and Immigration Act 2025. This timeline provides businesses with just over two years to prepare for the profound shifts in compliance requirements.
Proactive Preparation: An Urgent Imperative
Given the extensive nature of these changes and the severe penalties for non-compliance – which can include substantial civil penalties per illegal worker, criminal convictions, and reputational damage – legal experts are urging businesses to commence their preparatory work immediately. Sajida Hussain strongly advised that employers should not wait until the 2026 deadline. "We’re already advising clients to start reviewing their right to work arrangements and commercial contracts, and clients have started putting calls in the diary with us around this ahead of October," she confirmed.
Effective preparation will involve a multi-faceted approach:
- Auditing Existing Arrangements: Businesses must conduct a thorough audit of all their current working arrangements, identifying every individual or entity providing labour, regardless of their contractual classification. This includes direct employees, agency staff, individual contractors, consultants, and those engaged through platform services.
- Reviewing Commercial Contracts: All commercial contracts with agencies, labour providers, sub-contractors, and platform operators must be meticulously reviewed and updated. These contracts will need to include explicit clauses that provide appropriate right to work assurances, grant audit rights to the engaging business, and establish clear controls over substitution arrangements. This is particularly vital for mitigating extended liability risks.
- Enhancing Due Diligence: New robust due diligence processes will need to be implemented across the entire labour supply chain. This means not just checking the direct supplier, but understanding their processes for verifying the right to work of their workers.
- Training and Education: Comprehensive training programs will be essential for HR teams, procurement departments, and line managers who are involved in engaging any form of labour. They must understand the nuances of the new guidance and their individual responsibilities.
- Technological Solutions: Businesses may need to explore and invest in technological solutions for managing right to work checks, particularly for large, dynamic workforces, to ensure consistency and compliance.
Broader Impact and Sector-Specific Implications
The ramifications of these changes are expected to be far-reaching, impacting virtually all sectors that rely on contingent or flexible labour. Hussain specifically highlighted several industries likely to be hit particularly hard. "This will affect all sectors – essentially any business that retains or employs staff, or has commercial contracts in place for the provision of labour," she stated. "I’d expect it to hit the care and construction industries particularly hard, along with events businesses and others that run a changing workforce."
- Care Sector: Often relies heavily on agency staff and individual carers, making it highly susceptible to the new extended liability rules. Ensuring compliance across a transient workforce will be a significant challenge.
- Construction Industry: Known for its complex subcontracting chains and reliance on self-employed operatives and temporary labour. The new rules will demand unprecedented scrutiny of these multi-tiered arrangements.
- Events Industry: Characterized by fluctuating demands and a high volume of temporary, often short-term, workers engaged through agencies or directly. Managing compliance in this fast-paced environment will require robust systems.
- Logistics and Delivery Platforms: The core business model involves large numbers of independent contractors or platform workers. These companies will need to adapt their engagement models to align with the expanded scope of right to work checks.
- Hospitality: Another sector with high turnover and reliance on temporary and agency staff, facing similar challenges to the events industry.
Hussain further warned that the expanded obligations would inevitably lead to increased compliance costs for employers. This financial burden is part of what she described as "a wider compliance and accountability push by the Home Office" aimed at strengthening immigration enforcement across all labour supply chains. While the exact financial implications will vary by business size and sector, it is clear that significant investment in process, technology, and legal advice will be necessary to navigate the new landscape effectively.
Conclusion: A New Era of Accountability
The upcoming changes to the UK’s right to work regime mark a pivotal moment for employers. The government’s clear intent to broaden the scope of liability and enhance verification requirements signals a new era of heightened accountability for all organisations engaging labour, regardless of the direct employment relationship. The two-year lead time until October 2026 offers a critical window for businesses to conduct thorough reviews, update contracts, implement robust new processes, and educate their teams. Failure to do so risks not only substantial financial penalties and legal repercussions but also significant reputational damage in an increasingly scrutinized regulatory environment. Proactive engagement with these reforms is not merely a recommendation; it is an essential strategic imperative for business continuity and legal compliance.
