Changes to the Right to Work Checks: Extended Liability
Our article on the changes to the right to work regime from 1st October 2026 referred to the legislative changes extending the scope of right to work checks beyond traditional employment arrangements.
This guide brings together our subsequent two-part series on extended liability. The original articles have been lightly adapted and restructured to provide a more detailed guide in one place, but the underlying content and analysis remain the same.
Who Will the New Right to Work Rules Apply To?
In summary, the new rules extend the scope of the regime to businesses that:
- engage an individual under a worker’s contract;
- engage an individual as a subcontractor; or
- operate an online matching service which provides the details of an individual who is a service provider to potential clients or customers.
As the new rules extend to workers and subcontractors, any reference to “employer” in this article should be read as including an “engager”, and references to “employ” should be construed accordingly.
Primary Responsibility for Right to Work Checks
Under the new rules, primary responsibility for carrying out the prescribed right to work checks remains with the direct contractual employer. Where an employer employs an individual illegally and has failed to carry out the prescribed checks, it may face sanctions, including a civil penalty of up to £60,000 per illegal worker.
At present, the business that directly employs the illegal worker would be the liable party. The new changes, however, introduce an extension of liability when it comes to illegal workers.
What Do We Mean by Extended Liability?
Extended liability simply means that, for the purposes of section 15 of the Immigration, Asylum and Nationality Act 2006 (“IANA 2006”), a person (“A”) can be treated as employing any individual (“B”) who personally provides the work or services.
This can apply even where A would not otherwise be regarded as B’s employer. It also applies where A has no contractual relationship with B or is unaware that B is providing the work or services.
Extended Liability Operates as a Deeming Provision
The extended liability rule therefore operates as a deeming provision and does not affect the liability of any other employer under section 15 of the IANA 2006.
In summary, the default position is that liability for employing an illegal worker rests with the worker’s direct employer. However, in certain circumstances, liability may also extend to a party further up the contractual chain.
When Would Extended Liability Apply?
Section 48 of the Border Security, Asylum and Immigration Act 2025, which amends the IANA 2006, provides the legislative framework for these changes. However, the legislation itself is best viewed as providing the “bones” of the new regime.
To understand how the extended liability provisions are intended to operate in practice, it is necessary to look to the most recent draft of the Employer’s Guide to Right to Work Checks, which provides greater detail on how the new provisions are expected to operate in practice.
Three Broad Situations Covered by Extended Liability
Looking at the guidance alongside the legislation helps to flesh out the “bones” of the statutory framework. According to the legislation, the extended liability rules apply to three broad situations:
- an employer employing an individual to provide work or services;
- a person is contracted to provide, or arrange for the provision of, work or services and enters into a contract under which another person is to provide, or arrange for the provision of, the work or services; and
- an online matching service connecting a service provider with a client or customer.
How Substitution Fits Into the Extended Liability Rules
Interestingly, although the guidance broadly reflects the categories set out in the legislation, it separately identifies arrangements involving substitution as an application of those existing categories. In particular, the extended liability rules apply where an individual is engaged to provide work or services under a contract that permits them to substitute another individual to perform those services.
The significance of substitution is that the statutory deeming provision applies by reference to the individual who actually performs the work or provides the services. Accordingly, where a substitute personally performs the relevant work, person A may be treated as the substitute’s deemed employer for the purposes of section 15 of the IANA 2006. The focus is therefore on the individual who ultimately performs the work, rather than necessarily the individual originally engaged, and ensuring that individual has the right to work in the UK.
Extended Liability Across Labour Supply Chains
Furthermore, when it comes to the labour supply sector, contractual chains can be complex and may involve multiple parties.
Person A in the supply chain may, for example, be three or four parties removed from the individual actually performing the work at the bottom of the chain.
Liability Can Extend Beyond the Direct Employer
The legislation expressly addresses this by providing that the extended liability rules apply where person A is contracted to provide, or arrange for the provision of, work or services. This applies regardless of whether that contract is the first, or any subsequent contract, in a chain of contracts for the provision, or arrangement for the provision, of that work or service. This is significant because it provides the statutory basis for liability to extend beyond the direct employer and allows the Home Office to impose a civil penalty on a party further up the contractual chain.
What Does Extended Liability Look Like in Practice?
Let’s bring all of this together by considering a common scenario that most of our clients will be familiar with, that is a traditional supply chain structured as follows:
Customer → End-Client → Agency → Subcontractor → Umbrella Company → Substitute
The Umbrella Company Would Usually Be the Direct Employer
The first point to note is that the Umbrella Company, as the employer of the Subcontractor, would ordinarily be the party responsible for carrying out the prescribed right to work check. If the Subcontractor was found to be an illegal worker and the required checks had not been carried out, the Umbrella Company could therefore be liable for a civil penalty.
The Agency Could Also Fall Within the Extended Liability Provisions
However, because the Agency has entered into a contract under which the Umbrella Company is to provide, or arrange for the provision of, the work or services, i.e. to supply the Subcontractor for onward supply by the Agency to the End-Client, the extended liability provisions may also become relevant.
The Agency would therefore need to consider whether it falls within the extended liability regime and, if so, whether it has established the necessary statutory excuse.
How the Rules Apply to End-Clients
Businesses acting purely as the client or customer, i.e. the End-User, of a service will generally fall outside the scope of the extended liability provisions. This applies provided they are not themselves supplying the work or services onwards to a third party as part of a contractual chain.
When an End-Client May Fall Within Scope
For example, where workers supplied by an Agency are used to support the End-Client’s own business, the End-Client will generally remain outside the scope of the extended liability provisions. However, where those workers are used to deliver services to the End-Client’s customers, the End-Client may itself form part of the contractual chain and therefore fall within the scope of the extended liability provisions.
End-Clients Need to Understand Their Position in the Chain
In practice, this may be a difficult distinction to establish for businesses that use agency workers. It will be necessary to determine whether the workers are being used as part of an arrangement to provide, or arrange for the provision of, work or services to the End-Client’s customers. If so, the End-Client should ensure that it has the necessary processes in place to establish a statutory excuse.
A Cautious Approach May Be Appropriate
Where an End-Client is uncertain as to its position within the contractual chain, we would recommend adopting a cautious approach. It should ensure that it has the necessary processes in place to obtain a statutory excuse. This will help to mitigate the risk of liability should it ultimately be determined that the End-Client falls within the scope of the extended liability provisions.
How the Rules Apply to Substitutes
Taking this one step further, if the Subcontractor sends a Substitute who is an illegal worker, the substitution point discussed above becomes relevant. As the Substitute is the individual who actually performs the work, the arrangements surrounding substitution become particularly important.
Substitution Can Create Additional Right to Work Risk
Where substitution is permitted, businesses need to understand who may actually perform the work, who is responsible for checking that person and how the identity of the individual carrying out the work will be verified. The appropriate contractual and practical controls therefore need to be in place before a Substitute commences work.
Could Multiple Parties Be Liable?
Under the legislation, extended liability can potentially reach beyond the party with the direct contractual relationship with the worker. However, this should not be interpreted as meaning that every party within a supply chain will automatically become liable whenever illegal working is identified.
The Home Office Will Consider the Contractual Arrangements
The Home Office guidance indicates that it will consider the contractual arrangements when determining responsibility. It will first consider the contractual relationship with the worker. Where no direct contractual relationship can be identified, it may look further into the arrangements between other parties in the supply chain to identify the relevant person.
Guidance and Legislation Do Not Appear to Be Identical
Notably, the circumstances identified in the guidance appear narrower than the statutory position, which does not expressly limit extended liability to cases where the direct employer cannot be identified. However, given the established reliance on Home Office guidance in relation to the right to work check regime, it is reasonable to regard the guidance as providing useful context as to how the statutory provisions are intended to operate in practice.
How Can Businesses Protect Themselves From Extended Liability?
Having considered how extended liability can operate, the next question is how businesses can protect themselves from liability. Importantly, the new regime provides a statutory excuse against extended liability where the relevant prescribed requirements have been met.
Establishing a Statutory Excuse Against Extended Liability
A statutory excuse provides protection from a civil penalty where the prescribed requirements have been correctly followed. The requirements for establishing a statutory excuse against extended liability differ from those applying where there is a direct contractual relationship with the worker.
For extended liability, businesses will need to consider three key areas:
- contractual terms and conditions;
- substitution controls; and
- identity verification systems and processes.
The Requirements Must Operate in Practice
Businesses should not assume that including the correct wording in a contract will, by itself, be sufficient. The Home Office may consider whether the arrangements have actually been implemented and maintained reasonably and proportionately in practice. These requirements should therefore form part of wider labour supply due diligence and compliance processes.
1. Contractual Terms and Conditions
Where a business contracts with another employer or service provider for the provision, or arrangement for the provision, of work or services, appropriate written contractual terms will need to be in place before the work or services commence.
Contracts Must Address Right to Work Compliance
The written terms should require the other employer or service provider to conduct the prescribed right to work checks on individuals engaged to perform the relevant work or services. This is particularly important for agencies and employment businesses that are already subject to wider obligations under the Conduct of Employment Agencies and Employment Businesses Regulations 2003.
Further Subcontracting Should Be Controlled
The contractual arrangements should prevent further subcontracting without prior written consent. Where further subcontracting is permitted, equivalent right to work obligations should be passed down the contractual chain.
Businesses Need the Ability to Audit Compliance
The contractual arrangements should enable the relevant business to carry out audits of the right to work compliance of the other employer or service provider. It is important that businesses can obtain sufficient information and assurances to satisfy themselves that the relevant obligations are being met in practice.
Contracts Should Allow Enforcement Action
The terms should also enable appropriate enforcement action where illegal working is identified and a statutory excuse has not been established. This may include suspension or termination of the relevant contractual arrangement.
Cooperation With Home Office Investigations
The contractual arrangements should require cooperation with Home Office investigations. This may include providing information about the purpose and make-up of the contractual chain, details of the employers or service providers involved and any other relevant information requested as part of the investigation.
Evidence of Compliance Should Be Retained
Businesses should retain evidence demonstrating that the prescribed requirements were in place and being followed. This could include contracts, compliance audits, supplier assurances, records of concerns raised and evidence showing how any identified issues were addressed.
2. Substitution Controls
Where a contractual arrangement permits an individual to substitute another person to carry out the work or services, additional controls will be required.
Right to Work Checks Must Be Completed Before a Substitute Starts
A prescribed right to work check must be carried out on any Substitute before that individual starts carrying out the work or services. No Substitute should therefore commence work before their right to work has been verified.
Responsibility for the Check Cannot Simply Be Delegated
Responsibility for conducting right to work checks on substitutes should not simply be delegated to the individual carrying out the work or services. This remains the case even where the contractual arrangements describe that individual as operating in business on their own account.
Contractual Controls Should Address Illegal Working
Appropriate contractual provisions should also be in place to allow action to be taken where the employer or worker knows, or has reasonable cause to believe, that a Substitute is working illegally. This could include suspension or termination of the contractual arrangement.
Processes Must Reflect What Happens in Practice
Importantly, the Home Office will consider whether the prescribed processes have been implemented and maintained reasonably and proportionately. It is therefore not sufficient for the necessary controls merely to appear within a written contract if the arrangements operate differently in practice.
What If Substitution Is Not Permitted but Happens Anyway?
The guidance also recognises that substitution may occur in breach of contractual requirements. This could happen where the employer has expressly prohibited substitution, but an individual nevertheless sends somebody else to carry out the work. Where substitution was not contractually permitted, the Home Office will consider whether the prescribed right to work check was carried out on the worker who was directly engaged.
Contracts Should Reflect the Real Working Arrangement
The distinction reinforces the importance of ensuring that contractual arrangements reflect how the working relationship actually operates.
3. Identity Verification Systems and Processes
The third element of establishing a statutory excuse against extended liability concerns identity verification. Businesses must maintain proportionate systems and processes to ensure that the individual actually carrying out the work or services is the same individual on whom the right to work check was conducted.
What Could Identity Verification Include?
The guidance is not prescriptive about the exact system that must be used. Depending on the business and working arrangements, identity verification systems could include:
- identity cards or workplace access passes;
- facial verification technology;
- biometric or attendance management systems;
- verification against training records, qualifications or licences relating to the role; or
- identity re-verification at appropriate intervals.
Identity Re-Verification May Need to Take Place Regularly
Where re-verification is used as part of the identity verification process, the Home Office guidance recommends that it takes place at least once in any 24-hour period or shift of work.
Businesses May Be Able to Rely on Another Party’s Systems
A business may be able to rely on identity verification systems and processes operated by another party in the contractual chain or by a third-party provider. However, it will need to take reasonable steps to satisfy itself that those systems and processes are effective and that the prescribed requirements are being met.
Follow-Up Right to Work Checks Remain Important
The extended liability regime does not replace the existing requirement for direct employers to carry out follow-up checks where a worker has time-limited permission to work. Where employment is continuing beyond the worker’s existing permission, the employer must carry out the required follow-up check on or before the relevant permission expires.
There Are Two Different Statutory Excuses to Consider
Businesses should therefore distinguish between the prescribed right to work checks and follow-up checks required of the direct employer, and the contractual, substitution and identity-verification requirements used by another party to establish a statutory excuse against extended liability.
What Should Businesses Do Before 1 October 2026?
There is a lot to digest when it comes to these new provisions. We strongly recommend that all businesses read the Home Office guidance in full and take the time to work through the various examples provided.
Map Your Contractual and Labour Supply Chains
Businesses should understand how individuals are engaged throughout their contractual and labour supply chains. In particular, they should identify circumstances where they provide, or arrange for the provision of, work or services to another party and then rely on another employer or service provider to deliver those services.
Review Your Agencies, Umbrellas and Other Suppliers
This review will be particularly important for businesses operating through employment agencies, umbrella companies, subcontractors and other outsourced service providers.
Review Contracts Before Work Commences
Businesses potentially exposed to extended liability should review the contractual arrangements they have with agencies, subcontractors, umbrella companies and other service providers. The prescribed contractual protections need to be in place before the relevant work or services commence if they are to form part of the statutory excuse.
Review Substitution Arrangements
Where contracts permit substitution, businesses should ensure that the arrangements they have in practice provide for right to work checks to be completed before a substitute starts work.
Review Identity Verification
Businesses should also consider how they establish that the individual actually carrying out work is the same person whose right to work has been checked. The systems used should be proportionate to the nature of the workforce and the working arrangements involved.
Keep Evidence of Your Compliance
The ability to demonstrate compliance will be important under the new regime. Contracts, audit reports, supplier assurances, right to work records, substitution records and identity-verification evidence should therefore form part of the wider compliance process.
Right to Work Compliance Is Becoming a Supply Chain Issue
The extension of the right to work regime from 1 October 2026 means that right to work compliance can no longer necessarily be considered solely in the context of the direct employer and employee relationship. For businesses operating within contractual and labour supply chains, understanding where extended liability may arise will be important. Equally important will be ensuring that the prescribed contractual terms, substitution controls and identity verification processes are in place where necessary to establish a statutory excuse.
Summary
The direct employer remains responsible for carrying out compliant right to work checks. However, businesses involved in wider contractual arrangements may also need to consider whether the extended liability provisions apply to them and, if so, whether they have established the separate statutory excuse available under the new regime.
This means businesses need to understand not only who has carried out the right to work check, but also whether the appropriate contractual terms, substitution controls and identity verification processes are genuinely operating in practice.
Speak to Chartergates About the Right to Work Changes
Businesses should consider reviewing their arrangements before the new regime comes into force. Chartergates can assist with reviewing contractual chains, existing right to work processes, supplier arrangements, contractual protections and wider regulatory compliance. If you would like to discuss the upcoming changes to right to work or arrange a call to discuss how they may affect your business, please contact us or view our right to work checks page here.
Disclaimer
Chartergate Legal Services Ltd originally published the material within this guide as a two-part article series on 14 and 21 August 2026. The two articles have been brought together and lightly adapted to provide a more detailed guide to the extended liability provisions. The underlying content and analysis remain substantially the same.
