Illegal Working Crackdown in the UK: Compliance Essentials for Employers

The gig economy is characterised by flexible working arrangements. While this model offers significant economic benefits, it also creates vulnerabilities:

• Decentralised Workforce: Gig economy workers are typically not based in a central location, making it harder for businesses to monitor compliance with right-to-work requirements.
• High Turnover: The transient nature of gig work means that employers must conduct frequent right-to-work checks, increasing the risk of errors or oversights.
• Complex Employment Relationships: Many gig workers are classified as self-employed or independent contractors, which can blur the lines of responsibility for right-to-work compliance.

These factors, coupled with the Home Office's commitment to cracking down on illegal working, mean that companies operating in the gig economy face heightened scrutiny.  The Home Office recently advised that businesses were strongly encouraged to check that their contractors and labour providers carry out right to work checks in accordance with the Home Office Right to Work Guidance on people they employ, engage or supply. This includes anyone in the business’ supply chain using a substitute to perform work on their behalf.  To ensure compliance with this, the Home Office has stepped up its enforcement activities, including unannounced compliance visits and audits. Anyone found to be employing/using individuals without the right to work can face significant penalties, including civil penalties, criminal prosecution, reputational damage and a risk to their sponsor licence.

To mitigate risks, businesses must implement robust compliance systems. Key steps include:

• Conducting Right-to-Work Checks: Verifying an individual’s right to work before they start employment or work for them. 
• Training and Awareness: Providing regular training to HR and recruitment teams to ensure they understand their obligations relating to right to work.
• Ongoing Monitoring: Conducting follow-up checks for individuals with time-limited permission to work in the UK. This is particularly important in the gig economy, where workers may have varying immigration statuses.
• Reviewing arrangements with third parties – Reviewing the commercial arrangements with any third parties (for example, agencies) to ensure that they too are complying with the immigration requirements for any individual being sent to the business and ensuring that there is indemnity cover in place in the event of any breaches.

When an organisation holds a sponsor licence, it assumes a range of responsibilities. These include:

• Reporting Duties: Sponsors must report certain changes in circumstances to the Home Office within specific timeframes. For example, if a sponsored employee resigns, changes roles, or is absent without permission for 10 or more consecutive days, the employer must notify the Home Office via the Sponsor Management System (SMS).
• Record-Keeping Duties: Employers must retain accurate records for all sponsored workers, including evidence of right-to-work checks. These records must be readily available for inspection by the Home Office.
• Compliance with Immigration Rules: Sponsors must ensure that sponsored workers meet the requirements of their visa category and are performing the job described in their Certificate of Sponsorship (CoS). Any deviation could result in allegations of non-compliance.
• Preventing Illegal Working: Sponsors are required to conduct right-to-work checks for all employees, not just sponsored workers, to ensure no one is employed unlawfully.

Failure to comply with these duties can lead to severe consequences, including financial penalties, reputational damage, and disruption to business operations. A suspended or revoked sponsor licence can leave businesses unable to recruit or retain skilled workers from overseas, which can have a devastating impact, particularly in sectors facing skills shortages.

Proactive compliance measures, such as mock audits and sponsor licence health checks, are increasingly important. These audits help organisations identify gaps in compliance, rectify issues, and prepare for potential Home Office inspections. For example, a mock audit may uncover inconsistencies in record-keeping or highlight areas where reporting duties have been overlooked. Addressing these issues in advance can protect businesses from penalties and ensure they remain compliant.