Extended liability for right to work checks: the impact on commercial contracts

From 1 October 2026, the Border Security, Asylum and Immigration Act 2025 (the BSAI) will significantly expand the scope of the UK's right to work (RTW) regime. One of the measures it introduces is the concept of “extended liability” which extends the potential liability for illegal working beyond the typical employment relationship under the current rules. 

Traditionally, RTW checks have been treated as an onboarding and HR issue. Extended liability now brings a wider range of stakeholders into the process, including legal and procurement.

For the first time, under the extended liability rules, certain organisations higher up a contractual chain may be liable for illegal working in contractual arrangements, even where they do not have a direct contractual relationship with the worker. 

End users and customers purchasing work or services for their own internal operations are not generally affected. However, if a service provider contracts with another business to provide services, and workers engaged by a third party are used to deliver those services, the service provider will be potentially liable for illegal working, even though there is no contract between the service provider and the workers. The first step is therefore to check whether the arrangement is in scope.

If the rules apply, the organisation can avoid supply chain liability by establishing a statutory excuse which includes a written statement in the contract with the supplier and by taking further prescribed steps. 

Existing commercial contractual arrangements which deal with RTW arrangements for workers will need to be updated. The consequences of non-compliance are significant: employers face civil penalties of £45,000 per worker for a first breach, rising to £60,000 per worker for a repeat breach within three years.

In this legal update we explain the scope of the new extended liability provisions, what this means for commercial contracts and the steps necessary at this stage to prepare. 

Arrangements in scope

There are three situations where the new extended liability rules apply: 

Situation 1 - arrangements where an organisation who is contracted to provide work or services to a third-party then subcontracts work to another organisation to fulfil that contract;  

Situation 2 - online matching services which match service providers to a client or customer; and 

Situation 3 - arrangements where an individual is contracted to provide work or services and the individual is permitted to subcontract this to another individual (substitution).

The Draft Employer's guide to right to work checks (the draft guide), updated on 11 September 2026, does not make any material changes to the previous version of the guide but provides additional clarification on what arrangements are in scope. The extended liability rules will apply in the following situations:

• Subcontracted services: a construction company wins a contract to build new homes. It engages other businesses through a chain of contracts to provide workers required to complete elements of the project, including laying foundations and bricklaying. The construction company is contractually responsible for delivering the work to a third party. It may be treated as the employer of individuals working through the contractual chain and could be liable if an individual is found to be working illegally. 
• Online matching service: a homeowner needs electrical work carried out at their property and uses an online matching service to find an electrician. The online matching service provides details of an electrical services business, and the homeowner enters into a contract directly with that business. The electrical services business sends one of its workers to carry out the work at the property. In that situation, the online matching service could be responsible if illegal working was found.
• Substitution arrangements: An individual works through a food delivery platform as an independent contractor. They are permitted to use a substitute, so they may ask a friend to complete deliveries when they are unavailable. For the purposes of the RTW scheme, the food delivery platform may be treated as the employer of the independent contractor and any substitute, and the platform could be liable if that individual is found to be working illegally.  

Not in scope

As mentioned above, the regime does not apply where a company is solely buying services for its own requirements and is not supplying those services onwards as part of a chain of contracts.  

The draft guide explains: “A retailer enters into a contract with a facilities management company to provide cleaning services at its supermarket premises across a geographical region of the UK. The facilities management company employs the cleaners who carry out the work.” In that situation the retailer would not be liable, as it is purchasing those cleaning services for its own use. If illegal working was found, the facilities management company would be liable.

If a contract is purely for the supply of goods, then such arrangements would not be in scope. In addition, genuinely self-employed contractors are not in scope, including where they are operating through a personal services company. However, it is important to look at the arrangement in practice rather than the label that is applied.

Establishing the statutory excuse

Organisations can avoid liability if they can establish a statutory excuse. This is made up of three categories of prescribed requirements: 

• The written statement;
• Substitution controls; and
• Identity verification.

What the written statement must cover

The statement must be included in situations 1 and 2 above and set out the terms and conditions requiring the employer or service provider to:

• conduct prescribed right to work checks on all individuals employed to perform the relevant work or services;
• not further subcontract without prior written consent, and replicate equivalent right to work obligations in any permitted subcontracting;
• permit an audit of compliance with right to work checks;
• allow enforcement action, including suspension or termination, where illegal working is identified and no statutory excuse has been established; and
• co-operate with any Home Office investigation, including by providing details of the contractual chain, each employer or service provider involved, and their company details.

Commercial contracts involving the supply of workers are likely to already have existing clauses relating to the need to ensure that sub-contractors comply with all applicable laws. However, the new rules are prescriptive so the wording must cover the points listed above.  The written statement must be in place before the work or service begins. 

Substitution controls

In relation to situation 3 above, where a contractual arrangement between an employer and an individual permits substitution, the employer will only establish a statutory excuse against extended liability where they have implemented, before the work or service commences, processes ensuring that: 

• a prescribed right to work check is carried out on any substitute;
• responsibility for the check is not delegated to individuals carrying out the work or services;
• no individual may carry out work or services as a substitute before their right to work has been verified;
• contractual provisions are in place between the employer and the worker where the employer or the worker knows, or has reasonable cause to believe, that a substitute is working illegally; and
• for the duration of employment, the employer ensures that the worker and their registered substitute are the same individuals whose right to work has been checked. 

Part of complying with this requirement includes retaining detailed evidence of these steps, such as records of right to work checks, and meeting the other detailed requirements set out in the draft guide. 

Identity verification

Proportionate systems must be in place to verify that the individual carrying out the work or services is the same person whose right to work has been checked. This requirement applies to all three situations - where there are contractual chain arrangements to provide work or services, an online matching service or an employer in the case of a substitution clause. These systems should reflect the nature of the work, the level of risk and the relevant contractual arrangements. Identity verification systems may include identity cards or workplace passes, and re-verification of identity at set intervals. 

Steps to take

• Assess which commercial contracts are affected, looking at supply chain situations, online matching and substitution arrangements.
• Review and update wording in the relevant contracts to include the written statement and consider whether additional indemnities are required.  
• Identify all relevant contracts that permit substitution, and consider what controls are required. If substitutes are used, then ensure that the appropriate substitution controls are implemented and right to work checks are carried out and evidence retained. 
• Work with other areas of the business to ensure that proportionate identity-verification controls operate when workers are onboarded, allocated work or given access to workplaces, including the proportionate level of re-verification of identity.
• Carry out training for those involved in the new processes. 

For more information, please contact one of your usual CMS team contacts or a member of our Employment team. This legal update focuses on the extended liability provisions. Additional changes to RTW checks are also being introduced on 1 October 2026 as discussed in our recent Business Immigration Update.

Co-authored by Chloe Atkins, Trainee Solicitor CMS UK.