THE PROPOSED EXPANSION OF THE ILLEGAL WORKING CIVIL PENALTY REGIME: WHAT UK BUSINESSES NEED TO KNOW
The UK illegal working civil penalty regime is changing, and the expansion could significantly affect businesses that use flexible labour, subcontractors, self-employed individuals, agency staff, gig economy workers or online matching platforms.
For many years, right to work compliance has mainly been treated as an employer and employee issue. If a business employed someone, it needed to check that the individual had the right to work in the UK before employment started.
The Government is now looking beyond traditional employment. The aim is to widen the right to work regime so that organisations cannot avoid responsibility simply because the person carrying out the work is described as self-employed, a subcontractor, a casual worker, a gig economy worker or someone introduced through an online platform.
It means businesses across the UK may need to think much more carefully about who is actually carrying out work for them, how that work is arranged, and whether their right to work processes are strong enough for the way their labour model operates in practice.
WHAT IS THE GOVERNMENT TRYING TO ACHIEVE WITH THE RIGHT TO WORK CHANGES?
In simple terms, the Government is trying to close what it sees as a gap in the current system.
At the moment, the illegal working civil penalty regime has mainly focused on employees. However, many modern businesses do not rely solely on employees. They use self-employed contractors, individual subcontractors, casual labour, agency workers, gig economy workers, platform-based service providers, outsourced labour, supply chains and online matching or booking platforms.
The Government’s concern is that illegal working can take place within these arrangements without any one business accepting responsibility for checking the person’s right to work.
Put simply, the Government does not want businesses to be able to say, “We did not employ them directly, so this is not our problem.”
WHO COULD BE CAUGHT OUT BY THE EXPANDED ILLEGAL WORKING REGIME?
The main target of the proposed changes appears to be businesses and labour models where people are working in the UK but responsibility for right to work checks is unclear, avoided or pushed down the supply chain.
This is likely to include arrangements where:
a person is doing the work personally, even if they are labelled as self-employed;
a business relies on subcontracted labour but does not know who is actually attending site;
an intermediary supplies or introduces individuals to carry out work;
an online platform connects individuals with customers or businesses;
a business benefits from labour without having a direct employment contract with the person doing the work;
the contractual paperwork says one thing, but the practical working relationship looks very different.
The Government is particularly concerned with working arrangements that look and feel like employment, even if they are structured differently on paper.
WHAT DOES “PERFORM PERSONALLY WORK OR SERVICES” MEAN?
This phrase is important. In simple terms, it means the individual is expected to do the work themselves.
For example, if a business engages a named individual to provide cleaning, driving, delivery, construction, care, beauty, hospitality, warehouse, maintenance, or other services, and that person is personally expected to attend and do the work, the arrangement may fall closer to the type of working relationship the Government wants to regulate.
This is different from a situation where a genuine business is simply providing a service to a customer and can decide entirely for itself who carries out the work, how the work is done, and whether someone else can be sent instead.
The difficult area is the middle ground. Many businesses use individuals who are described as self-employed, but in reality the business expects that specific person to attend, follow instructions, complete the work, and operate as part of the wider workforce or service delivery model.
Those arrangements are likely to be higher risk.
WHY DOES THIS MATTER FOR UK BUSINESSES?
The financial and reputational risks are significant.
Illegal working civil penalties can be extremely serious. The current penalty framework includes penalties of up to £45,000 per illegal worker for a first breach and up to £60,000 per illegal worker for repeat breaches. But the penalty itself is only part of the risk.
A civil penalty can also lead to reputational damage, publication on the Home Office’s list of non-compliant employers, disruption following an Immigration Enforcement visit, problems with existing or future sponsor licence applications, possible sponsor licence suspension or revocation, issues with commercial contracts, director-level scrutiny, and a loss of confidence from clients, customers, contractors, or investors.
For sponsor licence holders, the risk is even more serious. A poor right to work compliance position can directly undermine the trust UKVI places in the organisation.
WHICH SECTORS ARE MOST LIKELY TO BE AFFECTED?
These changes are relevant to all UK businesses, but some sectors are likely to face greater exposure because of the way labour is commonly sourced, supplied or subcontracted.
Higher-risk sectors may include:
CONSTRUCTION
Construction businesses often work through layered subcontracting arrangements. A main contractor may appoint a subcontractor, who then uses another subcontractor, who then brings individuals onto site.
The key risk is that the business benefiting from the work may not have a clear view of who is physically attending site and whether right to work checks have been completed properly.
CARE
The care sector already faces significant immigration compliance pressure because of sponsor licence obligations, agency arrangements, high staff turnover, and reliance on flexible labour.
Businesses in the care sector may need to look closely at agency staff, bank staff, subcontracted services, overseas recruitment arrangements, and any third-party labour supply models.
HOSPITALITY AND FOOD SERVICES
Restaurants, hotels, takeaways, cleaning teams, event staffing and catering businesses are already frequent targets for Immigration Enforcement activity.
Where casual labour, trial shifts, informal work, or third-party labour are used, the risk of non-compliance can increase quickly.
DELIVERY, COURIER AND GIG ECONOMY PLATFORMS
The Government clearly appears to be targeting businesses where individuals provide services through app-based or platform-based models.
This could include delivery, courier, driving, logistics and other gig economy arrangements where the platform or business facilitates the work but may not currently treat the individual as an employee.
WAREHOUSING AND LOGISTICS
Warehousing and logistics businesses often rely on agency workers, temporary staff, outsourced providers and flexible labour. These arrangements may create risk if responsibility for right to work checks is not clearly allocated, evidenced and monitored.
BEAUTY, CLEANING, MAINTENANCE AND HOME SERVICES
Businesses that arrange individual service providers to attend homes, business premises or customer sites may need to assess whether they are simply introducing independent businesses, or whether they are arranging personal work or services by individuals.
This could be especially relevant where the platform, agency or business controls pricing, allocation of work, customer communication, standards, reviews, payment, uniforms, branding or access to future work.
WILL THE CHANGES ONLY AFFECT LARGE FOOD DELIVERY PLATFORMS?
No. Large gig economy platforms are likely to be a major focus, but the drafting may have wider consequences.
The real issue is not just whether a business is a well-known delivery app. The issue is how the working arrangement operates.
For example, a business may be at greater risk if it matches individual workers with customers, controls who receives work, sets payment and pricing, requires the individual to perform work personally, benefits commercially from the arrangement and presents the individual as part of its service offering.
This is why the changes may also be relevant to smaller platforms, agencies, lead-generation businesses, facilities management companies, construction contractors, care providers, and businesses using subcontracted labour.
COULD ONLINE MATCHING PLATFORMS BE CAUGHT UP IN THE NEW LEGISLATION?
Potentially, yes. One of the most difficult areas is the treatment of online matching services.
The Government appears to want to catch platforms that are not traditional employers but still play a meaningful role in connecting individuals with work opportunities.
This is relatively easy to understand in the context of food delivery or courier apps, where the platform may play a central role in allocating work, managing payment, setting standards and controlling access to future jobs.
It becomes more complicated with broader marketplace platforms.
For example, some platforms simply advertise tradespeople or allow customers to find independent businesses. Others are much more involved in the booking, payment, vetting, allocation, review and delivery of the service.
A platform that simply advertises independent businesses may be in a different position from a platform that effectively organises individuals to perform work personally for customers.
However, the risk is that the expanded regime may create uncertainty for platforms that sit somewhere between the two.
WHAT SHOULD BUSINESSES DO NOW?
Businesses should start preparing before the expanded regime comes fully into force on 01 October 2026. A sensible starting point is to complete an immigration compliance review focusing on three areas.
1. INTERNAL RIGHT TO WORK COMPLIANCE
Businesses should first check whether their existing employee right to work processes are correct.
There is little point expanding checks to wider labour arrangements if the core employee process is already weak.
2. SUBCONTRACTOR AND LABOUR SUPPLY CHAIN RISK
Businesses should then review how they use non-employee labour.
This should help identify where illegal working liability could arise and whether the business has enough contractual protection, evidence and practical oversight.
3. SPONSOR LICENCE COMPATIBILITY AND COMPLIANCE
For businesses that hold a sponsor licence, the expanded regime should be considered alongside sponsor compliance duties.
For businesses that do not yet hold a sponsor licence, the review may also identify whether sponsorship should form part of future workforce planning.
THE QUESTION IS NO LONGER JUST “ARE WE THE EMPLOYER?”
The illegal working civil penalty regime is moving into a new phase.
The question for businesses will no longer be limited to, “Have we checked our employees?”
The wider question will be, “Do we understand who is carrying out work for us, through us, or on our behalf and can we evidence that the right checks and controls are in place?”
For businesses using flexible labour, subcontractors, agency staff, gig economy workers, online platforms or complex supply chains, this is a major compliance issue.
The businesses most at risk are not necessarily those trying to break the rules. They may be businesses that have grown quickly, relied on informal labour arrangements, assumed subcontractors were dealing with checks, or failed to adapt their compliance systems to modern working models.
Now is the time to review the risk.
HOW WE CAN HELP WITH RIGHT TO WORK COMPLIANCE
We support UK businesses with practical immigration compliance reviews designed to identify risk before it becomes a Home Office problem.
If your business uses subcontractors, agency labour, self-employed individuals, casual workers, platform-based labour or any form of outsourced workforce, now is the time to check whether your compliance systems are ready.
Contact us today to arrange an immigration compliance review and understand how the expanded illegal working regime may affect your business.
