From 1 October 2026 the definition of organisations considered to be the “employer” of an illegal worker expanded significantly. This means there is now a much greater scope for organisations to be liable for a Civil Penalty – starting from £45,000. The following are the new Right to Work (RTW) rules (in brief!).
Direct RTW Checks
Carrying out the prescribed RTW check provides an organisation with a “statutory excuse” (defence) against a Civil Penalty.
From 1 October, to obtain a “statutory excuse” organisations must carry out a direct RTW check in relation to:
- Any individual employed under a contact of service or apprenticeship
- any individual engaged under a “worker’s contract”
- any individual engaged as a “sub-contractor”
Engaging self-employed contractors not included
The guidance provides:
“This guidance does not apply to individuals who are operating an independent business either in their own name or through their own company and who contract directly with clients or customers to provide goods or services.”
But….
“Consideration should be given to the substance of the arrangements and how they operate in practice. The contractual description or label adopted by the parties involved will not, by itself, determine what responsibilities may arise under the Scheme.”
For many organisations, this will be a danger area. The guidance explains the Home Office can look beyond the claimed status and decide the individual is engaged as a “worker” or “employee” and in scope for a direct RTW check. Consideration should be given to their status prior to and during employment.
Extended Liability to non-direct contractual arrangements
Liability for a civil penalty has been extended beyond the organisation considered the “direct” employer to other organisations. This will apply when there is:
- Subcontracting - where an organisation is under a contract to provide work/services to a third-party organisation and enters into a contract with another employer organisation who employs the workers to carry out all or part of the work or services.
Extended liability allows the upstream contractor to be treated as the “employer” of any individuals who personally carry out work/services throughout the relevant downstream contractual chain. - Substitution - where an employer employs an individual to provide work/services, and the contract permits that individual to substitute their work/services to be carried out by another individual.
Determining Liability
The Home Office will firstly seek to identify the employer who holds the direct contractual relationship with the illegal worker. Where the Home Office cannot identify the employer who holds the direct contractual relationship with the worker liability for a Civil Penalty may be imposed on an upstream contractor in relation to the work/services.
Subcontracting - prescribed requirements to obtain a “statutory excuse”
Contractual terms and conditions
The upstream contractor must have in place with the subcontractor a written statement before the work or service commences to include specific terms.
Arrangements to operate effectively in practice
The upstream contractor must have appropriate arrangements in place that are operating effectively in practice to satisfy themselves that RTW requirements are being met. The Guidance sets out types of evidence to show this.
Substitution - prescribed requirements to obtain a “statutory excuse”
Where a contractual arrangement between an employer and a worker permits substitution, the employer will only establish a “statutory excuse” where they’ve implemented, before the work or service commences, specific contractual terms and processes similar to those that apply in respect of sub-contracting arrangements.
Identity verification
Set out as a distinct requirement that applies to all organisations to whom extended liability applies is that they must maintain proportionate systems and processes to ensure that the individual carrying out the work or services is the same individual on whom a right to work check has been conducted.
Some potential comfort on how the changes may affect your organisation….
The new categories when direct RTW checks are required shouldn’t pose any major issue, aside from the self-employed contractor issue. The extended liability requirements are where the changes are most onerous by far.
The extent to which the changes will affect organisations will depend on the employment arrangements they enter into and nature of their activities.
What is clear is that when extended liability arises organisations must consider how the changes and requirements impact their activities and the steps they should take to comply.
How we can help
If you wish specific advice on the changes and how your organisation should prepare, please contact Mark Templeton.