The government has enacted a significant change to the illegal working enforcement regime through the Border Security, Asylum and Immigration Act 2025 (the “Act“), which received Royal Assent on 2 December 2025. The change will impact you if you engage any part of your workforce outside the traditional employer/employee model.

Section 48 of the Act considerably extends the illegal working regime, which currently only applies to employees working under a contract of employment or apprenticeship. Under this expansion, you’ll be responsible for right to work checks not only for employees, but also for workers, self‑employed individuals, individual subcontractors, agency workers and individuals engaged through online matching platforms.

For PE-backed businesses that rely on flexible labour pools, outsourced service models or contingent workforces, this significantly broadens compliance obligations. You’ll now be required to carry out right to work checks across these categories of your workforce or risk facing illegal‑working penalties if workers in these categories are founder not to have the correct immigration permission to work in the UK.

This change may necessitate updates to onboarding processes, investment‑level compliance monitoring, and post‑acquisition integration activities across the portfolio.

When will the changes come into effect?

Although the Act has received Royal Assent, the official implementation date hasn’t yet been confirmed, and the changes will only take effect once set out in future commencement regulations. However, with the reforms expected to come into force during 2026, now is the time for you to understand what’s changing and consider how the new requirements will impact your current right to work check processes.

Background

Currently, you only face civil and criminal illegal working penalties in relation to your employees and apprentices. You cannot be penalised for illegal working by casual workers, self‑employed individuals or subcontractors, although Home Office guidance has long strongly recommended that you verify the right to work of anyone providing services on your behalf.

You can avoid civil penalties by carrying out compliant right to work checks before an individual starts work, following the Home Office’s prescribed procedures. If you complete the check correctly and keep evidence that it was done before work began, you’ll have a statutory defence if the individual is later found to be working illegally, for example, if their immigration status changes without your knowledge, or the document they provided was fraudulent but not reasonably identifiable as such at the time. This defence does not apply if you knew, or had reasonable cause to believe, that illegal working was taking place.

Penalties

The existing civil and criminal sanctions under the illegal working regime will remain in force, but they will now extend beyond employees and apply to the wider categories of the workforce outlined above. Under the expanded regime, penalties will now apply if a worker you engage delegates work to someone else (a substitute) or if you subcontract services to another individual.

If you fail to carry out the required right to work checks, you could face fines of up to £45,000 for a first breach within a three‑year period and up to £60,000 per illegal worker for repeat offences. You also risk reputational damage through Home Office ‘naming and shaming’ practices, temporary business closures, director disqualification, and, in extremely serious cases where a criminal offence is established, prison sentences of up to five years and unlimited fines.

If you hold a Home Office sponsor licence, receiving an illegal working penalty puts you at risk of compliance action up to and including licence revocation. That would prevent you from continuing to employ your sponsored workers. If you don’t currently hold a sponsor licence, receiving a penalty would trigger a 12‑month bar on applying for one, which may stop you from recruiting business critical migrant talent.

The Home Office significantly ramped up its illegal working enforcement action during 2025, and we expect that this is likely to continue once the new regime is in place to catch out organisations which haven’t adapted their procedures.

Implications of the extended regime for businesses

Once implemented, these changes could have significant implications for all PE-backed businesses, including those operating in the gig economy, including:

• Increased compliance obligations: If you operate in high-turnover or seasonal industries, you’ll face greater administrative burdens. You’ll need to review onboarding processes and train recruitment personnel to avoid exposure to fines, criminal liability, and reputational damage.
• Updating internal processes: You’ll need to update and adapt your procedures for conducting right to work checks to ensure compliance with the new requirements.
• Training and policy changes: Your internal policies on right to work must be revised, and relevant staff trained to understand and implement the extended obligations.
• Operational challenges: Gig platforms may need to integrate verification systems into onboarding processes, which could require significant investment in technology and training.
• Risk of penalties: Non-compliance could result in severe civil penalties and reputational harm.

Practical steps you should take now

You should begin preparing for the extended regime by:

• Reviewing your existing right to work check and onboarding processes: Ensure current procedures comply with existing requirements and identify additional obligations that will arise as a result of the new legislation once it is officially implemented.
• Assessing your workforce composition: each company within the portfolio should understand how many casual workers, self‑employed individuals and subcontractors you engage and what checks you currently carry out. For example, you may need to amend contracts that allow substitution so that no substitute can carry out work until you’ve checked their right to work. Contracts with self‑employed individuals should also be conditional on positive verification.
• Investing in technology: Explore digital verification systems or providers to streamline right to work checks on British / Irish nationals and improve efficiency.
• Staying informed: Monitor the progress of these reforms and any guidance issued by the Home Office, and make sure the relevant people in your organisation are briefed on upcoming changes.
• Training personnel: Train all staff involved in the right to work check process on the expanded requirements, both at fund and portfolio level.

How we can help you

The extension of the right to work scheme marks a significant shift in your compliance responsibilities. Portfolio companies should begin preparing now to mitigate regulatory, operational and reputational risks across their workforce and supply chains. This is also an ideal time to conduct internal right to work audits across the portfolio, update or implement right to work policies, and provide training to staff on the new requirements.

Strengthening these processes not only reduces the risk of illegal working penalties but also supports smoother buy‑and‑build integration, enhances exit readiness and aligns with investor‑level governance expectations. Our Business Immigration team is available to support you with these steps.

Our Business Immigration team is available to support both funds and portfolio companies with these steps.

In addition to the changes to the illegal working regime, the government has also introduced updates to the UK’s settlement rules and the framework governing business visitors. Further detail on these developments can be found in the following articles:

• Changes to Settlement Rules Article
• Electronic Travel Authorisation Article