All employers in the UK, including those in the construction industry, have a legal duty to prevent illegal working. The consequences of non-compliance are serious: civil penalties of up to £60,000 per illegal worker, and in severe cases, criminal prosecution with a potential five-year prison sentence and unlimited fines.

Construction businesses must ensure that right to work checks are carried out correctly and in line with current Home Office guidance. This applies not only to direct employees but also raises questions around contractors, subcontractors, and labour supplied through third parties - common practice in the sector.

Understanding the scope

In the UK, right to work checks are only legally required for individuals who are employed. This means that checks do not need to be carried out on those who are genuinely self-employed. However, in the construction industry, where the workforce often includes a mix of employees; contractors, subcontractors, and sole traders, the distinction between employment types can be complex.

What about contractors and subcontractors?

The Home Office guidance encourages employers to ensure that contractors and labour providers are conducting right to work checks on the individuals they supply or engage. This includes anyone in the supply chain using substitutes to carry out work.

According to the Employer’s guide to right to work checks:

“you are strongly encouraged to check that your contractors and labour providers carry out right to work checks in accordance with this guidance on people they employ, engage or supply (or carry out these checks yourself). This includes anyone in your supply chain using a substitute to perform work on their behalf”.

However, this does not create a legal obligation to check every external worker’s right to work. Still, construction firms should take proactive steps to ensure that checks are being done properly by their suppliers. Failing to do so could lead to:

    • Project delays if illegal workers are removed from site.
    • Reputational damage from media exposure.
    • Insurance and health & safety risks if worker identities or qualifications are misrepresented.

Why the confusion?

The line between employee, worker, self-employed person, and contractor is not always clear-cut. Recent changes in tax legislation, particularly under IR35, have highlighted the challenges in determining employment status. This uncertainty can expose construction businesses to risk if right to work checks are overlooked based on incorrect assumptions about a person’s status.

What happens if a contractor is found working illegally?

If a contractor is found to be working illegally on your site, it won’t currently result in a civil penalty in the same way as it would for an employee. However, the operational and reputational consequences can be just as damaging, especially in high-profile or safety-critical projects.

Practical steps for construction employers

Given the complexity, it is good practice for construction firms to adopt a comprehensive right to work checking policy. There has been substantial increase in Home Office compliance activity, including more frequent site inspections. Also, the UK government is proposing to extend right to work checks to contractors and self-employed individuals as part of the Border Security, Asylum and Immigration Bill. This initiative would require companies to verify that self-employed and gig economy workers have the legal right to work in the UK. In light of this, construction employers should:

• Verify that labour suppliers and subcontractors have robust right to work policies and processes.
• Request confirmation or evidence that checks have been carried out on individuals 
• Include right to work compliance in contractual agreements.
• Conduct spot audits or checks where appropriate.

Taking these steps helps protect your business from disruption, reputational harm, and potential legal exposure.

Commercial considerations

If your business engages a team of tradespeople on a long-term basis who are essential to service delivery, it makes commercial sense to ensure they have the legal right to work. 

If these individuals are later found to be working illegally, the disruption to operations, reputational damage, and potential compliance issues could be significant, even if no civil penalty applies.

Summary for construction employers

    • Legal duty: Only applies to employees, but the risks extend beyond that.
    • Grey areas: Employment status can be unclear, especially under IR35.
    • Recommended approach: Adopt a broad policy and ensure suppliers and contractors are compliant.
    • Protect your business: Avoid disruption, reputational harm and compliance risks by being proactive.

Carolyn Bowie is a partner at BTO Solicitors LLP