Draft illegal working legislation confirms proposals to extend the illegal working regime to non-employee workers, self-employed contractors and online job matching platforms. Liability for an illegal working civil penalty is also substantially widened. The potential impact of these changes on businesses is huge, and developments should be closely monitored.
A proposed clause was first published on 7 May 2025 as an amendment paper relating to the Border Security, Asylum and Immigration Bill. The clause may be amended before the Bill is passed, but provides a detailed insight into the Government's intentions to expand the working relationships within the scope of the illegal working regime, and for liability for an illegal working civil penalty to arise in a broader range of circumstances.
What are the expected impacts for businesses?
Broadly, we expect the proposed measures will:
- Require right to work checks to be carried out in a wider range of scenarios;
- Potentially require businesses to adapt their right to work checking processes (if these are revised by the Home Office);
- Significantly expand exposure to receiving an illegal working civil penalty, which may be up to £60,000 per illegal worker;
- Expand the working arrangements to which the illegal working criminal sanction may apply;
- Increase the risk of possible sponsor compliance action up to and including revocation, in cases where a sponsor receives civil penalties;
- Increase the risk of other illegal working-related sanctions including director disqualification, alcohol licence revocation, temporary business closure and the imposition of an illegal working compliance order; and
- Increase the risk of reputational damage arising from being associated with illegal working compliance action.
Details of proposal 1: Expanding the relationships caught by the illegal working regime
Currently, liability for an illegal working civil penalty and/or the crime of knowing, or having reasonable cause to believe an illegal worker is being employed only applies where the worker is an employee or apprentice. A draft clause in the Bill proposes to extend this liability to the following additional working arrangements:
- Non-employees/apprentices engaged under a 'worker's contract';
- Individuals engaged as sub-contractors; and
- Individuals engaged through a fee-charging online matching service business under which service providers are matched with clients/customers.
The Home Office's related impact assessment confirms an intention to bring businesses engaging 'gig economy' self-employed workers, including casual and zero hours workers, as well as the businesses benefiting from the work of agency workers within the scope of the illegal working regime.
The measures are also aimed at reducing the legal work opportunities for illegal workers (which are considered by the Government to be too extensive under modern labour market models), as well as the insecure or exploitative labour conditions and tax evasion that may occur where illegal workers are engaged.
Details of proposal 2: Extending liability for an illegal working civil penalty
Where this is not otherwise already the case, there will be liability for an illegal working civil penalty if a business engages an individual in the context of the below scenarios and that person personally provides work or services (or any part of them), including where:
- The business is not in a contractual relationship with the individual; or
- Does not know that the individual is providing the work or services.
The applicable scenarios are where:
- The business employs a worker – and presumably that worker delegates part or all of the work or services to someone else (otherwise liability for an illegal working civil penalty would already apply to the employed person under existing provisions);
- The business has a contract to provide work or services and enters into a contract under which another person is to provide, or to arrange for the provision of, part or all of the work or services – this would appear to cover the situation where a self-employed contractor delegates to a substitute, and where a business contracts with an agency to provide agency workers;
- An online matching service provides the details of a service provider, and the service provider enters into a contract with a client or customer to provide the work or services;
The draft provision also clarifies that:
- Liability will be present where a business is contracted to provide/arrange the provision of work or services, regardless of whether that contract is the first or other contract in a chain of contracts to provide some or all of the work or services – this appears to be aimed at sectors such as construction; and
- There can be liability for multiple businesses in relation to the same instance of illegal working.
What steps will need to be completed before the changes will impact businesses?
The proposed changes are wide-ranging, and will require substantial operational adjustments to comply, especially for the businesses and sectors the Government is targeting, such as technology-backed delivery and logistics businesses, matching platforms for task-based work and the construction industry.
One area of particular concern is how businesses can mitigate the risk of an illegal worker personally providing some or all of the work or services in circumstances where the business is not aware this is happening.
Another area for elaboration is how businesses can feasibly carry out right to work checks with minimal disruption to their business models. This will likely require modified right to work checks to be incorporated into secondary legislation.
The Government is aware of these issues, and has promised a formal consultation with business before the provisions are commenced, i.e. made effective.
The steps we therefore anticipate the process will require are as follows:
- Consideration of the clause, including debates, during the passage of the Bill;
- Royal Assent to the Bill (at which point the Bill will become an Act, but the illegal working provisions will not yet be commenced;
- Formal consultation with business;
- Publication of a draft revised Code of practice on illegal working civil penalties;
- Publication of draft amendments to the Immigration (Restrictions on Employment) Order 2007 – this Order sets out right to work checking processes businesses must follow to claim a statutory excuse against an illegal working civil penalty;
- Commencement of the expanded illegal working provisions, in coordination with the revised code of practice, 2007 Order and Employers' guide to right to work checks; and
- Monitoring/review of how the expanded illegal working regime works in practice and evaluation of whether it is effective and proportionate.
What should businesses do to respond to this development?
Businesses should be aware that illegal working compliance activity has already increased under the current Government. This, along with the proposed legislative changes, emphasises that combatting illegal working continues to be a high priority for the Home Office. We recommend that businesses ensure that risks under the existing illegal working regime are minimised as far as possible.
We would suggest the following actions for businesses over the coming months:
- Review your existing right to work checking processes and document keeping systems routinely (either internally or with the help of an external immigration adviser), to minimise your current exposure to illegal working civil penalties and other sanctions;
- Consider voluntarily widening the scope of right to work checks as recommended in the Employers' guide to right to work checks, to minimise the risk of reputational damage even in circumstances where your business is not at risk of receiving a civil penalty or criminal prosecution;
- Seek legal advice promptly if you identify instances of illegal working or weaknesses in your checking processes;
- Do an impact assessment on how the proposals may affect your business, including estimating the additional resources needed and budget to comply with the changes;
- Consider whether to engage an identity service provider (IDSP) for digital checks on holders of current British and Irish passports, or review any existing agreement if you anticipate an increased volume of digital checks;
- Engage with formal consultation opportunities, especially if you engage a high volume of workers under the expanded relationships and/or you have a high turnover of these workers;
- Monitor the release of updated guidance ahead of implementation;
- Formulate and execute a strategy to maximise compliance with the expanded regime; and
- Train your relevant People Team members on the new requirements and your corresponding adapted operational processes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
