Illegal Worker Crackdown Set to Shift Liability Up the Construction Supply Chain

Main contractors could face substantial fines for immigration breaches committed by subcontractors under sweeping new right-to-work rules due to take effect this autumn, prompting legal experts to urge firms to review labour supply chains now.

Construction businesses are being urged to tighten oversight of their labour supply chains after the Government unveiled plans that could make principal contractors responsible for illegal workers employed several tiers below them.

The proposed changes, published in draft Home Office guidance, represent one of the most significant reforms to right-to-work enforcement in recent years and could fundamentally alter how contractors manage subcontractors, agency labour and self-employed workers.

If implemented as planned, the new regime will come into force on 1 October 2026.

Liability No Longer Stops with the Employer

Until now, responsibility for employing someone without the legal right to work has largely rested with the direct employer.

Under the proposed reforms, however, liability could extend much further up the contractual chain.

Main contractors that fail to demonstrate appropriate due diligence may find themselves facing civil penalties, even where the worker has been recruited by a subcontractor or labour supplier.

The Home Office says businesses will need to show they have undertaken the required right-to-work checks or risk losing their statutory defence against enforcement action.

Construction Faces Greatest Exposure

Legal specialists believe the reforms will have a particularly significant impact on construction because of the industry's complex procurement models and heavy reliance on subcontracting.

Sajida Hussain, Legal Director in the Immigration Team at Addleshaw Goddard, said the sector would be among those most affected.

She warned that contractors would need far greater visibility of who is actually working on their sites and how immigration checks are being carried out throughout their supply chains.

According to Hussain, the additional compliance requirements are likely to create significant administrative and financial pressures for contractors already managing increasingly complex delivery programmes.

She said businesses are already seeking legal advice ahead of the October implementation date, with many beginning to review both their contractual arrangements and internal compliance procedures.

Industry Told to Prepare Now

Law firm Howes Percival has also advised businesses not to wait for the guidance to be formally adopted before taking action.

Although the Home Office document remains in draft form, the firm says the direction of travel is clear and companies should begin preparing on the assumption that the expanded enforcement regime will be introduced on schedule.

That preparation is expected to include reviewing subcontractor agreements, strengthening audit procedures and ensuring robust right-to-work verification processes are embedded throughout supply chains.

Recent Enforcement Highlights the Risk

The warning comes against the backdrop of continued Home Office enforcement activity.

Figures covering the final quarter of last year show that nine construction companies were collectively issued with £545,000 in civil penalties after being found to have employed individuals without the legal right to work in the UK.

Under existing legislation, employers can already receive substantial financial penalties where illegal working is identified.

In more serious cases, where businesses knowingly employ someone or have reasonable grounds to suspect they are not entitled to work in the UK, directors can face unlimited fines and prison sentences of up to five years.

Due Diligence Becomes Critical

The Home Office has made clear that organisations carrying out the prescribed right-to-work checks will continue to benefit from a statutory defence against civil penalties.

However, under the proposed reforms, that protection will depend upon businesses being able to demonstrate that appropriate checks have been carried out throughout the relevant contractual chain.

For contractors operating large frameworks or managing multiple specialist subcontractors, the reforms are likely to place far greater emphasis on governance, supplier assurance and labour transparency than ever before.

As the October deadline approaches, immigration compliance is rapidly becoming another critical risk area for construction businesses—alongside health and safety, tax compliance and modern slavery obligations—with failures carrying potentially severe financial and reputational consequences.