Businesses Warned To Review Labour Supply Chains

Businesses relying on subcontractors, agency labour and complex workforce supply chains are being urged to review their compliance procedures now, with sweeping changes to Right to Work rules due to come into force on 1 October 2026.

The new rules, introduced under the Border Security, Asylum and Immigration Act 2025, will significantly expand Right to Work obligations beyond traditional employees and could expose firms to civil penalties of up to £60,000 per illegal worker if they fail to carry out the required checks.

The changes mean businesses may no longer be able to rely on the assumption that individuals classed as self-employed or engaged via subcontracting arrangements fall outside the regime.

Instead, liability could extend across labour supply chains, placing greater scrutiny on how workers are supplied, managed and verified to work.

Mandeep Khroud, Head of Immigration at Irwin Mitchell, said: "Many firms operate through subcontractor networks and flexible labour arrangements. From 1 October, businesses will need to look much more closely at who is actually carrying out work on site and whether appropriate Right to Work checks have been completed."

"The Home Office has made clear that it will focus on the reality of working arrangements rather than the labels used in contracts. Businesses that assume a worker is outside the regime simply because they are described as self-employed could be taking a significant risk."

Under the new framework, Right to Work obligations are expected to apply to a wider range of arrangements, including:

• Individual subcontractors

• Individuals engaged under worker contracts

• Certain outsourced labour arrangements

• Platform-based and online matching services

• Contracts containing substitution rights

Businesses could also find themselves exposed where they sit higher up the contractual chain and fail to implement the necessary compliance measures.

To establish a statutory excuse against liability, businesses are expected to need robust contractual controls, processes for verifying workers' identities, and measures to manage substitution arrangements.

Failure to comply could result in:

• Civil penalties of up to £60,000 per illegal worker

• Criminal sanctions in serious cases

• Suspension or revocation of sponsorship licences

• Public naming by the Home Office

Mandeep added: "With just one month until implementation, firms should be reviewing subcontractor arrangements, auditing onboarding processes and mapping their labour supply chains. Organisations that leave preparations until October may find themselves exposed to significant financial and reputational risks."

Experts are advising businesses to use the remaining weeks before the changes take effect to review contracts, assess workforce structures and ensure they have appropriate systems in place to verify the immigration status of anyone carrying out work on their projects.