Right to work in a Gig economy

Roxanne Buckley, associate solicitor, looks into the government’s latest move to tighten regulations around illegal working and rogue employers in the gig economy, including proposed new laws aimed at restoring order to the asylum and immigration system.

What legal consequences could employers face if they fail to carry out right-to-work checks on gig workers? How might these risks differ between small businesses and larger platforms?

It is an offence to employ an adult subject to immigration control in the UK if they do not have the appropriate permission to undertake the employment in question. An employer will also commit a criminal offence if it employs someone who, it either knows or has reasonable cause to believe, does not have the right to work in the UK.

Whilst the current requirement to check right to work relates to those who are employed, the Home Office’s recent announcement seeks to extend the regime to companies hiring in the gig economy or on zero-hours contracts.

Consequences for failing to conduct appropriate right to work checks can be costly for businesses; civil and criminal penalties can be imposed. Furthermore, if a business is a registered sponsor, any compliance issue or failure to conduct appropriate right to work checks could lead to sanctions from the Home Office in respect of their licence, including suspension, downgrading and even revocation of the licence itself.

Any sanction against a sponsor in respect of the licence may adversely affect its ability to recruit or retain key staff employed via a sponsored route.

To what extent could non-compliance with the new regulations expose employers to fines or criminal prosecution, and what steps should businesses take to mitigate these risks?

The Home Office can impose civil penalties of £45,000 for a first offence and up to £60,000 for a repeat breach per illegal worker. In addition, if a business has knowingly engaged someone who does not have the appropriate right to work, the cap on the civil penalty is removed, meaning an unlimited fine can be imposed and/or criminal sanctions of prison sentences being imposed for up to five years.

As a starting point, it is imperative that businesses have robust right to work checking policies in place to ensure that an individual’s status is determined prior to the commencement of any engagement.

Businesses should upskill any staff involved in the recruitment process on how to conduct and determine right to work status to minimise the risk of a penalty and adverse reputational damage 

Could this crackdown shift the dynamics of the employer-worker relationship in the gig economy, potentially nudging businesses toward more traditional employment models?

The use of short-term contracts or freelance work as opposed to permanent jobs is likely to continue despite the government’s proposals to extend the obligation of conducting right to work checks to the gig economy.

Certain sectors, for example courier services and the food industry, require a large degree of flexibility in its operations to meet evolving demand, especially with the rapid growth of digital platforms and the way consumers shop today.

As such, it is unlikely that we will see an immediate shift to a traditional employment model in sectors where gig-economy workers are used, however, the recent proposals may make businesses think more about how they engage with their workers and operate with the risks associated with the recruitment of such workers.

Could the new rules lead to labour shortages for gig economy employers?

As above, there will still be a place for gig-economy workers owing to the flexible nature of the arrangement. The proposals add an additional legal consideration for gig-economy employers in the recruitment for positions to meet fluctuating demand, however, some employers already voluntarily check the status of those engaged under such contracts (e.g. Just Eat, Deliveroo).

The need to verify right to work has a larger purpose than just avoiding a penalty; it also assists to limit the ability of individuals being exploited and/or becoming destitute in the UK due to fear of repercussion.

What steps should HR teams take in response to these changes?

Businesses may wish to review their current right to work policies and the utilisation of gig-economy workers throughout the business.

It may also be beneficial to conduct an audit on right to work across the business (including any self-employed contractors and zero hours workers) and the documentation currently held in preparation for the extension of the prevention of illegal working regime.

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