Construction companies using subcontractors to deliver work for clients can now face civil penalties for illegal working further down their supply chain.
The changes took effect across the UK on 1 October. They also bring worker’s contracts, individual subcontractors and certain online matching services into the right-to-work regime.
Penalties can reach £60,000 per illegal worker where a business is liable and cannot demonstrate that it met the required checks or safeguards.
Supply chain responsibilities
The Home Office’s updated guidance uses a housebuilding contractor as an example: a company contracted to build homes engages other businesses to carry out parts of the project.
In that arrangement, liability can extend beyond the employer directly engaging a worker. It does not automatically apply to every company in the chain, and the direct employer remains responsible for the original right-to-work check.
To protect themselves against extended liability, contractors must have a written statement in place before work starts, setting out the required terms for subcontractors.
These include checking workers’ eligibility, obtaining written consent before further subcontracting, passing equivalent obligations down the chain and allowing compliance audits. Contracts must also provide for action where illegal working is found and co-operation with Home Office investigations.
The revised code requires proportionate systems to confirm that the person doing the work is the person who was checked. Contractors can rely on another firm’s systems where they take reasonable steps to establish that those systems work.
Existing contracts
Arrangements made before 1 October are not brought into the extension simply because work continues. Renewals and variations must be considered according to whether they create a new contractual arrangement.
Standard agency arrangements, where an agency supplies workers into a hirer’s own operations, do not require routine duplication of the agency’s checks.
The Home Office says there is no general grace period for the new rules. Whether an arrangement is covered depends on how it works in practice, rather than the label given to a worker or subcontractor.
