Right to work checks: What the new rules from 1 October 2026 mean for employers

David: Hello and welcome to the MFMac Employment Podcast. I'm David Hossack, and I'm delighted to be joined today by our immigration expert, Stuart McWilliams.

Stuart: Hi, David

David: It's always a pleasure to have you on the podcast, Stuart, and it often points to some change that's coming up that employers need to know about. We had a series of podcasts recently looking at immigration from an employment perspective, but this is something new that wasn't covered there.

So what is it we need to know about, Stuart?

Stuart: Yes, as is often the case, immigration changes frequently, there are changes coming in from the first of October around right to work and what checks employers have to do to make sure they're protecting themselves from any potential fines for illegal working.

David: So what are those changes and what are the penalties involved if you don't comply ?

Stuart: Well, starting with the penalties, because I think that's quite important to focus the mind. Right to work penalties have increased dramatically over the last few years. They are now at the stage where if you have a first offence, so the very first time you accidentally employ someone who does not have the right to work, you are fined forty-five thousand pounds. And if you've been fined for it before and you have a second occasion, it goes up to sixty thousand pounds. So these fines can mount up very quickly for a business if they aren't paying attention to them.

David: And is that in any way related to the nature or size of the organisation?

Stuart: No, that's the starting fine. If the Home Office take the view that the business should have known these people did not have the right to work, they can actually remove the cap and fine an unlimited amount. But

David: it

Stuart: makes no difference if you are a or three-man business as opposed to a hundred-man business. It's still a forty-five thousand pound starting point.

David: That's the entry level fine, as I might put it

Stuart: Yes

David: So what's changing with these checks?

Stuart: So traditionally, these checks were a case of you checked everyone that you employed, that you didn't have to go out and check other people that were involved in the business, for example, independent contractors who you brought in. But perhaps over the last couple of years, there has been a lot of media attention on the issue of illegal working in the UK, and particulary around the gig economy and people who are self-employed but are doing jobs under the direction of someone else. So from the first of October, the Home Office are extending who you need to carry out right to work checks on. So it's now anyone under worker's contracts, so it's slightly wider than it was, but also individual subcontractors and anyone employed through an online matching service. Now, obviously, there's some high-profile ones everyone can think of, but these are becoming more and more prolific across different industries. You, might need an accountant for a particular job, and there's an online matching service for that. You now have to check their right to work as well.

David: What do you mean by an online matching service?

Stuart: So a situation where you have a particular job and you just put it onto an app and someone else is able to pick it up and say, "I will do this job." So quite common is sort of delivery apps are the ones that we most commonly think of where you order food from a restaurant and the restaurant has delivery. The restaurant contracts that out to an online matching service who then self-employed contractors can register on and say, "I'll take that delivery for you." So now in that situation, the online matching service have to go and do a right to work check on anyone registering on their platform

David: So potentially this is quite wide, but the Home Office have also mentioned examples about the construction industry. What might happen there in practical terms?

Stuart: So that's where the second change comes in where there is something called extended liability. So that will be cases where

David: the

Stuart: business does not have to check the right to work of somebody who is doing work for them because they're doing it through a different contractor or a different company, but they can still be held liable for the fine if somebody further down the supply chain essentially hasn't carried out the right to work check properly, and the Home Office can't find them for whatever reason. So the example given in construction in the guidance is is a property development case where somebody has got a contract to build twenty new houses, and they then subcontract the different parts of that construction work out to companies who then subcontract to someone else. So you end up with a situation on a site where there are ten or fifteen different companies doing work. If one of those subcontractors hasn't carried out the right to work check and one of their employees doesn't have the right to work or one of their contractors, if the Home Office can't find or identify their direct employer, extended liability gives them the right to start moving up the supply chain and just finding someone else and saying, "Well, this person was contracted from this company, this company contracted from that company," and moving up and eventually going, "Actually, this company has the property, has the contract for the whole site, so we're going to fine them."

David: So the person at the top of the pile could be responsible for something happening right down at the bottom.

Stuart: Yes, that's the theory behind it. A lot will depend how it applies in practice, but it is a very large chain.

David: I'm, just wondering about this, Stuart. On one view, you might think there's responsibility on behalf of the person at the top of the chain for everyone. So is there a need to check all subcontractors?

Stuart: So the Home Office guidance is that you don't need to carry out right-to-work checks on someone who's engaged in carrying out their own business. So say that you are a business, let's take the construction example, and you hire a plumbing company to come in and install all the plumbing. You don't need to go and carry out the right-to-work checks on the plumbers. But what the extended liability says is you should have contractual arrangements in place to make sure the plumbing company are doing what they're supposed to do on right-to-work checks. And if you have those contractual provisions in place, you are protected from any extended liability. So businesses will have to think about do they have to carry out a right-to-work check? And previously, it was a case of, okay, we don't employ this person, we don't have to carry out the check, and that's the end of the discussion. Now the discussion is, well, if we don't have to carry out a check, who does, and how do we make sure they're doing it properly?

David: How do you make sure they're doing it properly?

Stuart: So the Home Office have guidance now that says if you've got contractual arrangements in place that cover certain points, you can't be fined. So you have to start making sure these are in your contracts. So first of all, it is saying that your contractor agrees that they will carry out compliant right-to-work checks. That's part one of it. Part two is that that contract's also got to say if there's any subcontracting of the work that they will come and get your permission first before they use subcontractors and that they will make sure their subcontractors are carrying out proper right to work checks before they engage them.

David: So there has to be a contractual provision to the effect that, those that are doing work for you have to get your consent before they subcontract any element of their work

Stuart: Yes, exactly. So it's really about putting these measures in place. So businesses are gonna start to see this coming at them from both directions because they will be wanting to make sure that anyone doing work for them is carrying out the correct checks. But if they are also supplying services to someone else, they're probably going to get the person they're supplying services to coming to and asking them to put these clauses in their contract as well

David: This isn't very far off, Stuart, and I'm wondering here what, organisations can do now to try and protect their position in the fairly limited time that's available

Stuart: So the very first thing we recommend clients do is start reviewing who they actually contract with. Are they someone where there is now going to be an obligation to carry out the right to work check? They are officially self-employed, but they are really working for you and they're not operating an independent business. You have to carry out right to work check on them. The second is about understanding your supply chain and saying, "Well, who are we contracting with to supply us services? Do we have something that says they should be carrying out right to work checks? Do we have a right to audit that they're carrying out right to work checks?" Because that's also something you've got to have and to have the contractual protections in place, and you've got to have the right to be able to walk away if they're not. So you need to review your contracts and and work out, do we have enough protection? And if not, how do we amend their contracts to cover that? So it is a fairly big project. The changes will apply to any new assignments coming in from 1st of October, so it is something that does need to be taken care of quite urgently. I usually say with clients, the very first thing is start looking at your own contractors and can you right to work check them if you need to, or what provision do you have in place, and then go from there.

David: So you said new assignments with effect from the 1st of October. So if there isn't already in place a contractual arrangement with someone that's doing work for you for an ongoing project, is that caught or does it have to be something completely new?

Stuart: The guidance suggests it is something completely new. However let's say you have an existing contract and on the second of October there is subcontracting to that. That could potentially then be caught under the guidance depending how the Home Office apply it. So my recommendation of clients is you need to review your standard terms moving forward, but also review your existing contracts and you may need to amend those.

David: What if you're in this contractual situation where the other party said, "Well, we've already entered into this. We're not going to change the terms of it." How do you think an employer or a business could protect itself appropriately in those circumstances?

Stuart: I think it's about taking a risk-based approach then is to say, well, we're potentially covered by this. Can we have a discussion about what you do currently to make sure people have the right to work? Because the other thing that we talked about in previous podcasts with right to work is it's not just about the fines. There's reputational risks involved as well. The name of the companies are published, particularly when there's contractors or subcontractors involved. The press might run a story and they won't necessarily look at, well, who is the employer? They will look at who's the big name. So with that sort of remit, I think it's very important to have the discussions and push back on them.

David: Probably advice is required from a contractual lawyer as well as an immigration lawyer.

Stuart: Yes, this is an area where unfortunately we know nobody really likes it. You are probably speaking to an immigration lawyer, an employment lawyer to judge employment status, and then potentially a contract lawyer as well.

David: And if you're looking at it from the perspective of the contractor, what can they do to protect their position?

Stuart: I think from a commercial basis, understand that the person supplying them with work is under these obligations, so it's important to cooperate with them. And then also start thinking, well, if we are going to subcontract, what measures do we have in place around that, and what can we do now that will make that process much easier? In many cases, they will be able to say, well, we've got people that we subcontract to. We know they're reliable. We know they do right-to-work checks, so we just need to formalise that.

David: In thinking about this, it could take some time to vary contractual arrangements. In the meantime, is it as simple as writing to the contractors and saying, "We have a contractual arrangement in place. We will need to review this. but in the meantime, there are new, requirements that have come along as a result of the Home Office's changes. We require you to do the following." And it's not strictly speaking part of the contract, but at least it's setting out what you expect of them. Would that work?

Stuart: It could potentially do. It might not provide the full statutory defence that the Home Office guidance talks about. But again it allows you to make that risk-based approach, and you might then find, well, actually, we aren't overly concerned about this contract because the contractor's come back and told us everyone working on it is British citizens, and they provided with evidence of that. We don't need to look at changing the contract right now, but we can do it moving forward. But it might flag those contracts where there is a bigger risk, and you need to be thinking shorter term what to do.

David: So I suppose what you're saying is they need to look at the existing contractual terms of ongoing contracts and also to be looking at new terms for new contracts that are being entered into so that they're clearly fit for purpose and will cover this?

Stuart: Yes.

David: And who better to speak to about this, than yourself , Stuart?

Stuart: Yes, , come to us and we will happily, talk you through what changes you might need to make, and If you need to speak to a contract lawyer or an employment lawyer, obviously we've got plenty of them in the firm that we can introduce you to as well.

David: So I know that you do an immigration update on a quarterly basis, Stuart.

Stuart: Yes. The last one went out in July, so we should be doing one quite soon.

David: And so if people don't already subscribe to that, they should do so now, and we'll keep them up to date with not only this, but also other changes that will be coming along.

Stuart: Yes, this is an area that changes quite frequently, so subscribing to that's a really good way to stay up to date and also making sure you're subscribed to the employment bulletin if you aren't already, because the right to work information will usually appear there as well.

David: And to subscribe to the employment one, simply email us at employment@mfmac.com and we'll get you added to that list. But what about the immigration one, Stuart?

Stuart: The best way to do that is to email me at Stuart.mcwilliams@mfmac.com, or you can also go on our website. There's a link to it there.

David: Well, thanks so much, Stuart. Thanks everyone for listening, and please remember to subscribe to our podcast and leave reviews in the usual way.

Stuart: Thanks very much .