With almost one in five UK employees now migrants, according to the Migration Observatory, construction businesses are likely to encounter foreign nationals working across their organisations and supply chains. With immigration remaining a major political issue, employers need to ensure they are carrying out the correct checks to avoid the potentially serious consequences of illegal working.
As the government searches for ways to tackle illegal migration and illegal working, it has toughened the civil penalty regime for businesses that hire individuals who do not have the correct immigration permission to work. Further changes will come into force on 1 October.
The range of ways in which individuals may work and be contracted in the construction industry means the sector could be particularly exposed to the changes.
Financial penalties
Illegal working is often inadvertent and accidental, but can result in fines of tens of thousands of pounds, potentially causing serious financial damage to a business. A civil penalty for a first offence of illegal working can be up to £45,000, rising to £60,000 for subsequent offences.
Some businesses may have several workers who do not have the right to work in the UK, putting them at risk of an enormous fine. For large, multi-site businesses, maintaining oversight of such matters can be particularly challenging.
The current, pre-1 October regime has been relatively straightforward. It has focused on employees and requires employers to check immigration permission before they start work. The new law extends the regime to some workers who are not employees but have been engaged by a business, either directly or indirectly. This significantly increases the circumstances in which a civil penalty for illegal working might be issued.
Who’s in scope for checks?
As a result of the changes, those who will be in scope for right to work checks will include individuals in direct contractual relationships, including:
- under a contract of employment, as is currently the case;
- under a worker’s contract – meaning any other type of contract under which the individual undertakes to perform work or services personally for you, and you are not their customer or client;
- as an individual subcontractor – where the individual has a contract with you to provide work or services, and you have a contract to provide those services to a third party; and
- where you operate an online matching service and the individual is a service provider – meaning you have a register of service providers and provide an online service through which potential customers can submit enquiries to be matched with suitable service providers, and you charge a fee or commission for this service.
The new rules will also include indirect contractual relationships, which are predictably more nebulous and potentially more significant for the construction sector. These cover:
- Supply chains – you have a contract to provide work or services to a third party; you contract another company to provide or arrange the work or services, and that company provides an individual to carry them out.
- Online matching services – you operate an online matching service, match a service provider with a client or customer to provide work or services, and that service provider provides an individual to carry out the work or services.
- Substitution – you have a contract with an individual to carry out work or services for you and the contract permits that individual to substitute a different individual to carry out the work or services in their place.
What businesses should do
To get ahead of the changes and mitigate the risks, businesses should:
1. Be sure to follow correct right to work procedures
Businesses should confirm the immigration permission of employees and other workers who might fall within the new regime. This includes checking passports and, for migrant workers, checking online confirmation of immigration permission and retaining copies of these documents. UKVI’s draft right to work guidance is available here.
2. Review contractual arrangements
If a business will be in scope of the indirect contractual relationship rules, it should review its contractual arrangements with any company it has contracted to provide work or services to a client or customer, including individual workers.
It may consider amending contracts or, for example, agreeing addendums. Further guidance on this is available here.
Robert Houchill is a senior associate at Kingsley Napley LLP
