The changes take effect from 1 October 2026. Businesses should begin preparing now, particularly those with complex labour supply chains or high volumes of non-employee workers. We would suggest the following actions:<\/p>\n\n\n\n
- Map all categories of labour<\/strong> used by the business;<\/li>
- Identify which arrangements could be in scope<\/strong> from 1 October 2026 and prioritise high-volume or high-risk areas;<\/li>
- Review and update right to work policies<\/strong>, onboarding procedures, repeat-check processes and document retention processes so they reflect the requirements of the draft Code;<\/li>
- Review and update contracts<\/strong> with agencies, subcontractors and service providers;<\/li>
- Check RtW DVSP registration<\/strong>, confirming whether existing or prospective DVSPs are registered on the relevant OFDIA register and have a note confirming they can provide right to work checks;<\/li>
- Assess identity verification options<\/strong> where extended liability applies;<\/li>
- Train relevant teams<\/strong> \u2013 HR, procurement, contract management, operations and line managers will all need to understand the new requirements;<\/li>
- Build an evidence pack approach<\/strong> so the business can demonstrate compliance quickly in the event of a Home Office information request \u2013 the Code emphasises that persons seeking to rely on a statutory excuse must retain sufficient evidence of the steps taken and provide evidence of compliance on request; and<\/li>
- Seek specialist advice promptly<\/strong>, particularly for complex supply chains, online matching services, arrangements where substitution is allowed and\/or where there are known weaknesses in current right to work checking processes.<\/li><\/ul>\n\n\n\n
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\n\n\n\nKey new definitions in the Code<\/strong><\/h3>\n\n\n\n
The Code introduces several new definitions for the purposes of the right to work scheme:<\/p>\n\n\n\n
\u2018Employer\u2019<\/strong> which, as noted above, means a person who employs an individual under a contract of employment (contract of service or apprenticeship), under a worker\u2019s contract, as an individual sub-contractor, or when operating as an online matching service providing details of an individual service provider to potential clients or customers. References to \u2018employment\u2019 in the Code of practice include all of these working arrangements, and references to a \u2018contract\u2019 includes express or implied contracts, whether oral or written.<\/p>\n\n\n\n
\u2018Individual sub-contractor\u2019<\/strong> which means an individual who has entered into a contract with a \u2018person\u2019 to provide work or services, in circumstances where the other person has entered into a contract with a third party to provide, or arrange for the provision of, the work or services, but the individual has not.<\/p>\n\n\n\n
We anticipate the \u2018individual sub-contractor\u2019 definition may prove complex for businesses to apply in practice (especially whether an individual\u2019s work or services are provided for the purposes of fulfilling a third party contract) and could present a significant new risk area for compliance.<\/p>\n\n\n\n
\u2018Online matching service\u2019<\/strong> which means a \u2018person\u2019 who, in the course of their business, keeps a register of \u2018service providers\u2019 in order to match them with potential clients\/customers via an online service, and who charges a fee or commission when a match is made.<\/p>\n\n\n\n
\u2018Person\u2019<\/strong> which means a company, organisation, business or other entity \u2013 it doesn\u2019t mean an individual worker unless the Code expressly states so.<\/p>\n\n\n\n
\u2018Service provider\u2019<\/strong> which, in the context of an online matching service, means a \u2018person\u2019 providing, or seeking to provide work or services for payment.<\/p>\n\n\n\n
\u2018Substitution\u2019<\/strong> which refers to where a worker is permitted to substitute their work or services to another individual, including through a contractual clause allowing the worker to be replaced by another individual to perform the same work or services.<\/p>\n\n\n\n
In practice, a right of substitution will exist where the individual engaged is self-employed and the contract involved is a contract for services.<\/p>\n\n\n\n
\u2018Worker\u2019 or \u2018individual\u2019<\/strong> which means an individual engaged to carry out work or provide services under a contract of employment (employee), under a \u2018worker\u2019s contract\u2019, as an \u2018individual sub-contractor\u2019, or through an \u2018online matching service\u2019.<\/p>\n\n\n\n
\u2018Worker\u2019s contract\u2019<\/strong> which means any non-employee contract whereby the individual undertakes to perform work or services personally for another person (whether or not that person is mentioned in the contract), and where that person is not a client or customer of any profession or business undertaking carried on by the individual.<\/p>\n\n\n\n
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\n\n\n\nHow a statutory excuse works in the context of non-direct contractual arrangements<\/strong><\/h3>\n\n\n\n
Where an \u2018employer\u2019 may be potentially liable for an illegal working civil penalty, it can protect itself from liability by completing \u2018prescribed requirements\u2019 to obtain a statutory excuse.<\/p>\n\n\n\n
Currently, this generally means completing and evidencing a manual, online or Digital Verification Service (DVS) right to work check before employment begins, as well as completing and evidencing follow-up right to work checks before any time-limited statutory excuse expires.<\/p>\n\n\n\n
Section 3 of the Code addresses the extended liability that will arise for \u2018employers\u2019 engaged in non-direct contractual arrangements from 1 October 2026, i.e. where an individual who doesn\u2019t have the right to work in the UK personally provides work or services in the following contexts:<\/p>\n\n\n\n
- Where a \u2018person\u2019 is under contract to provide work or services to a third party and in turn contracts with another employer who employs the individual to carry out some or all of the work or services required to fulfil the third party contract;<\/li>
- Where a \u2018person\u2019 is an online matching service and a registered service provider is engaged by a user of the online platform to carry out a job; or<\/li>
- Where a \u2018person\u2019 engages an individual under a contract that includes a right of substitution.<\/li><\/ul>\n\n\n\n
In each of these circumstances, the \u2018person\u2019 may be treated as employing the individual who personally provides the work or services, irrespective of how long the chain of contracts is between them and that individual.<\/p>\n\n\n\n
The Code makes it clear however that end-users\/clients\/customers of a service who commission or buy work or services for their own benefit (and are not under a contract to provide those services onwards to a third party) are not within scope of the extended liability provisions.<\/p>\n\n\n\n
The Home Office\u2019s states its objective will continue to be identifying the employer in the direct contractual relationship with the individual worker. However, where the direct \u2018employer\u2019 can\u2019t be identified or another \u2018person\u2019 in a chain of contracts isn\u2019t able to show sufficient evidence that they have complied with the \u2018prescribed requirements\u2019 discussed below (i.e. contractual terms and conditions, substitution controls and identity verification), that \u2018person\u2019 may be liable for an illegal working civil penalty.<\/p>\n\n\n\n
The Home Office states it will \u2018have regard to the nature of the contractual arrangements and the extent to which each party has complied with the prescribed requirements\u2019 when deciding whether to apply liability to each relevant person in a chain of contracts. What this means in practice is that relevant persons should not be complacent about satisfying the prescribed requirements, even where a direct employer is identifiable, and even if the contractual arrangement they are a party to is multiple contracts removed from the one under which the illegal worker is engaged.<\/p>\n\n\n\n
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- Identify which arrangements could be in scope<\/strong> from 1 October 2026 and prioritise high-volume or high-risk areas;<\/li>