Beyond employees: what the 1 October 2026 right to work changes mean for businesses

Whose right-to-work needs to be checked?

It’s long been the case that right-to-work checks are required for employees and apprentices; however, businesses must now carry out checks on:

• workers who have a contract requiring personal service, such as casual or irregular workers;
• individual sub-contractors; and
• individuals engaged through an online matching service.

For these purposes, a “worker” has a different meaning from the usual definition in employment law; it is much wider in practice. Businesses should therefore look carefully at each arrangement, rather than the label the parties use, before determining who they need to carry out right to work checks on.

Are the changes retrospective?

No, the changes are not retrospective. For workers, individual sub-contractors, and online matching services, a penalty can be imposed only where the engagement began on or after 1 October 2026. The new extended liability rule (see below) also only applies to contracts entered into on or after that date. The existing rules for employees are unchanged.

What is extended liability?

Extended liability can arise in three main situations: contractual chains where a person or business is contracted to provide services to a third party and engages another business to deliver part or all of those services; online matching services; and arrangements that allow a worker to send a substitute. Extended liability is not limited to the first tier of a supply chain.

Importantly, extended liability doesn’t apply where a business engages services from another business solely for its own benefit. For example, a retailer hiring a cleaning firm for its own premises, or a manufacturer taking on temporary staff from an agency, is not caught. In standard agency arrangements, the agency remains responsible for the checks.

You may be wondering how this works in practice. The good news is that the direct employer remains responsible for the right-to-work check, and the Home Office will usually look at them first. However, if the direct employer can’t be identified and the Home Office’s requirements aren’t met, liability may move further up the chain. How the Home Office will apply these rules in practice remains to be seen, so a cautious approach is sensible.

Protecting your business: the statutory excuse

A “statutory excuse” is a legal defence to a civil penalty. Where extended liability applies, a business can establish a statutory excuse defence by meeting prescribed requirements before the work begins. Broadly, this requires:

• a written statement containing the prescribed right to work terms and conditions;
• appropriate controls where substitution is permitted, including checking substitutes before they start work; and
• identity verification processes, so the person carrying out the work is the person whose right to work was checked.

The written statement would, in practice, usually be contained in the commercial documentation such as the contract with the sub-contractor, supplier or service provider, but sometimes it may be in an outsourcing agreement, agency terms or consultancy agreement, for example. The key point is ensuring those documents include the terms and conditions prescribed by the legislation. Getting this right often involves legal, procurement, HR, and operational teams working together, and may require changes to supply-chain contracts, onboarding, and site-access processes.

Businesses should also keep appropriate evidence of these three points for inspection, if challenged. Having the right clauses on paper isn’t enough; the Home Office will look at whether the arrangements work in practice. Businesses can rely on assurances that checks have been done, provided they’ve taken reasonable steps to make sure those assurances are reliable.

What is at stake?

Where a business cannot rely on a statutory excuse, the current starting point for a civil penalty is £45,000 per worker for a first breach and up to £60,000 per worker for a repeat breach within three years. For businesses using significant numbers of contractors or subcontracted personnel, the exposure can be substantial, and there may also be consequences in relation to any sponsor licences that the business holds, a risk that future contracts may be jeopardised and risk to reputation.

What should businesses be doing now?

With the changes already in force, businesses should act promptly to:

• Review their supply chains and workforces: identify where work comes into the business and how it is actually performed. It should look beyond contractual labels to how arrangements operate in practice.
• Review contracts: check contractor and subcontractor agreements for the right to work obligations and substitution rights which have been entered into since 1 October 2026 as well as going forward. It should consider whether the prescribed right to work terms need to be added as well as any additional protections such as warranties, indemnities or the right to access documents.
• Update processes: make sure checks are completed before work starts, including for substitutes (this check can’t be left to the worker sending the substitute), and that identity verification is robust.
• Keep records: retain clear evidence of the checks carried out and steps taken to prevent illegal working in its supply chain, so that a statutory excuse can be demonstrated if challenged.
• Brief/train managers: ensure those who engage contractors or agree subcontracting arrangements understand the new requirements.

How can we help?

Our Employment team can help you understand what these changes mean for your business, assess who may be in scope, review contracts where substitution is permitted, and advise on onboarding processes.

Our Corporate and Commercial team can review your supply-chain contracts and ensure they include the prescribed right-to-work terms going forward, putting you in the best possible position should you need to rely on the statutory excuse.

Where immigration status questions arise, we can work alongside your existing immigration advisers or introduce you to our recommended immigration specialists.