REC Insight Pass: Your July legal need to know

Each month, your REC Insight Pass brings you the essential legal updates that matter most to recruiters. Summarised and simplified. From regulatory changes and case law to compliance tips and industry guidance, cut through the complexity so you can focus on running your business with confidence.

The UK's right to work regime is set for a significant shift. While the process of carrying out checks remains largely the same, the organisations responsible for ensuring checks are completed, and the potential liability for getting it wrong, are expanding significantly from 1 October 2026. For recruitment businesses, this is a labour supply chain issue and businesses who prepare now will be in a much stronger position when the new rules arrive.

What is actually changing?

The changes are being introduced under the Border Security, Asylum and Immigration Act 2025, which expands the right to work regime beyond traditional employees. From 1 October 2026, obligations will apply to a wider range of working arrangements, including agency workers, individuals engaged under worker contracts, individual subcontractors and some workers engaged via online matching platforms.

In simple terms, organisations can no longer assume that right to work compliance only applies to the company who has directly engaged the worker.

Do recruiters need to carry out checks differently?

No. The approved methods for conducting checks remain unchanged. Businesses can still use:

• manual document checks,
• Home Office online checks,
• Identity Service Provider (IDSP) checks for eligible individuals.

The key change is not how checks are completed, but who may be held responsible if they are not completed correctly.

What is "extended liability"?

This is arguably the most significant change for recruitment businesses.

Under the current framework, liability typically sits with the organisation directly employing the worker. From October 2026, responsibility may extend further up the labour supply chain in certain circumstances. This means employment businesses, master vendors, umbrella companies and potentially end clients could face civil penalties if appropriate right to work checks have not been carried out.

The Home Office has included worked examples in its draft guidance to demonstrate how liability may be allocated across different labour supply models.

What should recruitment businesses be doing now?

Recruitment businesses might consider rethinking their approach to right to work checks and start treating it as a supply chain risk, rather than an onboarding task.

Consider the following actions:

• review contracts with labour suppliers, umbrella companies and subcontractors,
• clarify who is responsible for carrying out and retaining evidence of right to work checks,
• strengthen due diligence processes when engaging new suppliers,
• audit existing compliance procedures and record-keeping,
• ensure operational teams understand where responsibility sits across different engagement models,
• review indemnities, warranties and compliance obligations within commercial agreements.

Are there any other risks to be aware of?

As businesses increase their focus on compliance, it is important not to create discriminatory recruitment practices. The Home Office has also updated draft guidance on avoiding unlawful discrimination when conducting right to work checks. Checks should be carried out consistently for all workers, regardless of nationality or background.

Why this matters

Many recruitment businesses have well-established right to work processes for employed workers. However, the October 2026 changes reflect the reality of today's labour market, where agency workers, contractors, umbrella company employees and other contingent workers form a significant part of workforce supply.

With upcoming changes, right to work compliance becomes a shared supply chain responsibility. Recruitment businesses that review their contracts, processes and supplier relationships now will be far better placed to manage risk, maintain client confidence and avoid potentially significant civil penalties in the future.