Right to work changes from October 2026: are construction businesses ready?

The UK’s right to work regime is set to undergo a significant expansion from 1 October 2026. Changes introduced by the Border Security, Asylum and Immigration Act 2025, together with the Home Office’s draft Code of Practice on Preventing Illegal Working published on 30 June 2026, indicate a widening of the circumstances in which organisations may be held responsible for preventing illegal working. For construction businesses that rely on subcontractors, labour suppliers, and complex supply chains, the changes could have significant practical implications.

Why construction could be particularly affected

On most construction projects, workers arrive on site through a complex chain of contractors, subcontractors, labour providers, and recruitment agencies. Yet right to work compliance often receives little attention until a problem arises.

Construction projects rarely involve a straightforward employer-employee relationship. A principal contractor may appoint a specialist subcontractor, who in turn uses labour-only subcontractors, agency workers, or self-employed tradespeople to complete part of the works. On larger projects, several layers of contracting can sit between the client and the individual carrying out work on site.

One of the most significant changes taking effect from October 2026 is the expansion of the categories of individuals and organisations falling within the right to work regime. The revised framework extends beyond traditional employment relationships to cover individuals working under worker contracts and certain individual subcontractors. Correspondingly, the definition of “employer” is broadened so that responsibility is not limited to those engaging individuals under conventional contracts of employment.

Where an organisation directly engages an individual who falls within scope, it will generally be responsible for carrying out the appropriate right to work checks.

The more complex issue for the construction sector concerns labour supply chains. The revised Code introduces circumstances in which liability may extend beyond the organisation with the direct contractual relationship with the worker. However, this does not mean that principal contractors automatically become responsible for non-compliance occurring lower down the chain. Whether liability arises will depend on the contractual arrangements, the way the arrangements operate in practice, and whether the prescribed requirements for establishing a statutory excuse have been satisfied.

For businesses operating through multiple tiers of subcontractors, the key message is that it may no longer be sufficient to assume responsibility sits solely with the organisation directly supplying labour.

The self-employed question

Many construction businesses make extensive use of self-employed tradespeople and labour-only subcontractors. One of the key messages emerging from the Home Office’s draft guidance is that organisations should focus on the reality of an arrangement rather than the label attached to it. Simply describing an individual as self-employed will not necessarily determine whether the revised right to work provisions apply. Construction businesses should therefore look carefully at how labour is engaged and supplied in practice.

That said, the reforms are not intended to capture genuinely self-employed individuals operating an independent business and providing services directly to their own customers. For example, a self-employed electrician, surveyor, or consultant who contracts directly with clients in the course of their own business may fall outside the scope of the extended provisions.

The position may be less straightforward where individuals are supplied through subcontracting arrangements, labour-only arrangements, or other workforce supply models commonly used within the construction sector. For SMEs in particular, this creates an important compliance question: do you know who is carrying out work for you, how they have been engaged, and whether the appropriate checks have been completed?

A site issue, not just an HR issue

Historically, right to work compliance has often been viewed as part of recruitment and onboarding. For many construction businesses, the October changes are likely to require a broader approach.

Commercial teams negotiating subcontract agreements, procurement teams appointing labour suppliers, site managers controlling access to projects, and HR teams responsible for onboarding may all need to understand how right to work compliance is managed and where responsibility sits within the supply chain.

The revised framework also places increased emphasis on verifying that the individual carrying out work is the same individual whose right to work has been checked. Businesses that permit workers to send substitutes or replacements may need additional processes to ensure substitute workers are appropriately verified before being allowed on site.

What happens if things go wrong?

For construction businesses, the consequences of getting right to work compliance wrong can extend far beyond an administrative issue.

Organisations that fail to establish a statutory excuse may face civil penalties. Under the current civil penalty regime, penalties can reach up to £60,000 per illegal worker for repeat breaches. The Home Office may also take enforcement action against sponsor licence holders, including suspension or revocation of a sponsor licence where appropriate.

In more serious cases, businesses and individuals may face criminal sanctions where illegal working is knowingly facilitated. The Home Office may also publish details of enforcement action, creating potential reputational consequences alongside any financial penalties.

For contractors and subcontractors operating on tight margins and fixed project timetables, the disruption caused by an investigation, enforcement action, or the loss of key workers can be as significant as any financial penalty.

What construction businesses should be doing now

The construction sector depends on flexible labour and specialist subcontracting. That is unlikely to change. What may change from October 2026 is the level of visibility and oversight businesses require across their labour supply chains.

Construction businesses should use the period before 1 October 2026 to review labour supply arrangements, subcontractor relationships, onboarding processes, and site access procedures. As part of that review, construction businesses should ask:

• Do we know exactly how labour is supplied across our projects?
• Which subcontractors rely on agency workers, labour-only subcontractors, or further tiers of subcontracting?
• Have we identified arrangements that may fall within the expanded right to work regime?
• Do our contracts ensure that:
  • subcontractors are required to comply with equivalent right to work obligations throughout the supply chain?
  • contracts can be suspended or terminated if illegal working is discovered or suspected?
  • subcontractors are required to co-operate with Home Office enquiries and investigations?
• How are substitute workers managed when they arrive on site?
• Can we verify that the individual carrying out work on site is the same individual whose right to work has been checked?

In addition to reviewing contracts, construction businesses should consider whether their operational processes support compliance in practice. Contractual protections alone are unlikely to be sufficient if procedures on site do not ensure that workers are properly identified, verified, and monitored.

Businesses should also ensure that compliance obligations are passed down through each tier of the supply chain and that any information-sharing arrangements are implemented in a manner consistent with UK GDPR requirements.

If you would like to discuss how the right to work changes could affect your construction business, including subcontracting structures, labour-only arrangements, or supply chain compliance, please contact Employment lawyer Marie van der Zyl OBE and Construction lawyer Neave Maguire.