Research and analysis

Employer immigration checks

Published 1 April 2025

Executive summary

In summer 2023, the Home Office commissioned IFF Research to study what employer immigration checks look like under different contractual work models. This research project was designed to provide a greater understanding of businesses that use contractual work models as opposed to a contract of employment. This includes employment models using work performed under a contract for services, which are becoming more common in parts of the UK labour market.

The research investigated the rationale and implementation of different employment models used by businesses, focusing on:

• ‘gig economy’ employers: that exchange money for labour (usually but not always via digital platforms that link workers with short-term tasks), paid on a per task basis
• employers of self-employed contractors in the construction, warehousing and delivery, care, and hospitality sectors
• employment intermediaries, such as employment agencies, who link workers and employers, often on a short-term or individual task basis

The research covered the rationale for using a self-employment contractual model, use of different employment statuses, what pre-employment checks are carried out, business understanding of immigration statuses and the Right to Work (RTW) Scheme, and potential risks of illegal working. The findings will inform the Home Office’s approach to ensuring that only those with a right to work in the UK are able to do so and feed in to the Home Office’s wider evidence base on the RTW Scheme.

Findings

Most businesses interviewed used a variety of employment models, including a mix of employees and self-employed workers. For the majority, this was not necessarily a deliberate choice or business strategy, but reflected common practice in their sector, recruitment challenges, as well as fluctuating need for workers.

The exception was gig economy businesses who use inhouse digital platforms. Central to their business model, they used a payment by task approach (rather than a contract of employment). Those businesses spoken to were highly aware of employment law and their responsibilities. By using self-employed workers, they felt they offered complete flexibility to workers, by putting a work agreement in place allowing workers to accept and decline work as they wished.

In terms of understanding the different employment statuses used, businesses using self-employed contractors had varying degrees of awareness of worker status and related legal obligations.

Employment intermediaries were highly aware of their responsibilities under employment law. Providing expert advice and workers with the right to work was a key part of their business model and the service that they provide.

Gig economy businesses, employment agencies/intermediaries and employers of self-employed contractors formed 3 distinct groups in their understanding of and approach to pre-employment checks. Most carried out some form of pre-employment due diligence checks, although these were sometimes limited in scope.

Gig economy businesses tended to check ID (and, if relevant, any licences held) at the onboarding stage. Employment agencies/intermediaries had high levels of awareness of employment legislation, types of worker contract and the principles underpinning employment status and RTW legislation, and tended to conduct relatively stringent checks including ID and RTW checks.

Individual employer practice varied hugely. Most checked worker ID and, in some cases, the right to live and work in the UK. However, self-employed contractors were typically not subjected to pre-employment checks, including ID checks, by businesses. Individual businesses were less likely than agencies to be aware of the full range of legal obligations around ensuring the right to work (with variation by size and sector). The reasons for better compliance varied, as did reasons for non-compliance.

On the whole, businesses perceived self-employed, gig economy and agency workers to be aware of the implications and limitations of their employment status. However, some businesses flagged that some workers did not seem to fully understand the implications of being self-employed, such as being responsible for their own taxes and not qualifying for paid holiday or sick pay. As a result, they may not comply with their obligations as expected – awareness was sometimes lower among those new to work or to working in the UK.

Self-employed workers have the legal right to undertake substitution, for example, where a worker who has agreed to undertake a piece of work sends another worker to complete the task in their place. When this occurs, it is the responsibility of the original worker to check their substitute’s right to work. If they do not do so, an unchecked worker may be completing work for a business. Businesses who used self-employed contractors were not always aware that substitution was a legal right for self-employed workers. Where digital platforms permitted substitution, approaches regarding use of account varied. some firms allowed substitutes to share the main user’s account while others required the substitutes to have their own account, with separate checks required.

Businesses referred to instances of illegal working within their sectors, as well as awareness of enforcement action or fines against other businesses. Agencies and platforms were highly aware of potential reputational damage around illegal working. Some businesses recognised the potential risk of illegal working by self-employed workers, but did not see this as their responsibility. In addition, while employers objected to illegal working on the whole, they felt that illegal working sat on a spectrum. Some saw working more hours than allowed as a less serious infraction than fraudulent use of identification, or falsifying documentation. The same perception applied to the difference between making a mistake, as opposed to deliberate non-compliance with employment legislation. This suggests that there is a potential risk of illegal working in self-employment, and how best to ensure that self-employed workers have the right to work in the UK.

Home Office guidance on pre-employment checks felt overwhelming to some employers, who felt that more tailored guidance would be helpful. This could include sector-specific information, highlighting what checks were required across different roles and addressing specific sector concerns. There was also a desire for information to be broken down into more easily digestible parts.

Compliance and risk

Businesses’ use of self-employed workers poses a potential risk of illegal working as the responsibility for conducting RTW checks for this group is outside of the scope of current RTW legislation (Immigration Act 2016; chapter 2). The workers could be at risk of prosecution for a criminal offense if found to be working illegally, but there is no requirement for businesses to check a worker’s status.

1. Introduction

1.1 Background

The labour market in the UK has been subject to significant changes in the last decade, in particular the rise in using temporary staff, sub-contractors and zero-hours contracts. The COVID-19 pandemic provided impetus for a boom in remote and flexible work, with online labour platforms in particular growing in popularity amongst workers seeking alternatives to traditional employment contracts (as part of the ‘gig economy’). There are also some industries which traditionally have been reliant on the services of sub-contractors, such as the construction sector and the care sector.

The ‘traditional’ model of businesses employing workers through a contract of employment, with associated rights and responsibilities, is becoming more complex and varied. There has been an increase in businesses which use contractual work models other than contracts of employment. These include employment models using work performed under a contract for services, which are becoming more common in parts of the UK labour market. This poses several challenges to ensure worker rights are respected, and that using self-employed workers does not allow illegal working, either intentionally or inadvertently.

This report uses the term employer in its broadest sense to refer to a business hiring staff to work for them regardless of the contractual model.

1.2 Employment status

In July 2022, the Department for Business and Trade (then the Department for Business, Energy and Industrial strategy) published guidance on employment statuses for workers and businesses, clarifying the rights of gig economy workers, alongside responses to a consultation exercise which highlighted stakeholders’ views on issues with the current employment status regime. These commonly included that employment statuses are “open to interpretation” (that is, can be ambiguous), are “complex” (with exceptions due to unique circumstances or a lack of clarity between statuses) and where there are disputes about employment status, these can be “difficult to resolve” and costly for all parties involved.

This new guidance clarified that there are 3 main employment statuses that determine staff employment rights and protections:

• employee
• worker^{[footnote 1]}
• self-employed individual

These statuses are defined by the nature of the relationship they have with the employer, including the degree of autonomy they have over the tasks they take on, their working hours and location, and their level of pay or remuneration for work completed. Although contract type is not by itself sufficient to determine employment status, an ‘employee’ will hold a ‘contract of employment’, whereas a ‘worker’ will hold another form of contract to perform work or services in exchange for remuneration.

Employers are required to follow the employer’s guidance to right to work checks and a code of practice to prevent illegal working, and to protect themselves from civil liability should they be found to have employees who do not hold the right to work in the UK. However, this code of practice does not apply to those who undertake work for an employer who are not under a contract of employment (defined in the 2006 Immigration, Asylum and Nationality Act; section 25b as “a contract of service or apprenticeship, whether express or implied and whether oral or written”. Therefore, employers do not have a legal duty to check a worker’s or self-employed individual’s right to work in the UK. Such workers may, however, face criminal sanctions should they be found to be working illegally in the UK.

1.3 Research aims

The Home Office has commissioned a series of research projects to help understand business planning and practice regarding employment. These projects will inform the department’s approach to measures regulating access to work. This research project was designed to provide a greater understanding of businesses which use contractual work models other than contracts of employment; how and why self-employment is used by businesses; and the implications for ensuring that access to the labour market is preserved for those with a right to work in the UK. Specifically, the research investigated the rationale and implementation of models used by businesses in 3 areas:

• gig economy employers: those who exchange money for labour via digital platforms that link workers with short-term tasks, paid on a per task basis
• businesses that use self-employed contractors: construction, warehousing and delivery, care, and hospitality sectors, as industries that have established histories of using sub-contractors in their supply chains and were therefore of particular interest
• employment intermediaries, such as employment agencies that provide payroll services to them; these do not directly hire workers, but link workers and employers, often on a short-term or individual task basis

The research covered:

• the contractual models that businesses in scope use, and why
• the employment statuses used within the businesses and their understanding of them
• businesses’ experience of conducting pre-employment checks on their workforce and the rationale behind it
• businesses’ understanding of the significance of a worker’s immigration status
• businesses’ familiarity with practices such as substitution, the use of intermediaries, and sub-contracting of work
• businesses’ views of illegal working within their sector
• businesses’ thoughts on the role of third parties regarding pre-employment checks

The full research questions are provided in Appendix A.

1.4 Methodology

Project scoping

The project scoping stage included a review of documents, including relating to pre-employment checks. This informed the design of the research tools. A bibliography of the reviewed documents is provided in Appendix C.

As a qualitative study, the findings were not designed to represent all businesses, but rather to provide a detailed and contextualised picture of employment practice within certain sectors of interest because of their widespread use of subcontracting and self-employed workers. We conducted scoping interviews with employer representative bodies, so that their expert views and experience could inform the topic guide design, ensure the questions were relevant, and that each topic guide was appropriately tailored to the relevant employer grouping. We identified employer representative bodies through existing contacts and desk research, as well as suggestions from the Home Office.

Qualitative recruitment

The research adopted a purposive sampling approach to the depth interviews. Mojo Fieldwork, a specialist recruitment partner, was used to facilitate business recruitment.

There were challenges in recruiting gig economy businesses given the fluid and sometimes ambiguous interpretations of what constitutes the gig economy. Some businesses identified as gig economy employers when, in reality, they used self-employed contractors or agency staff.

A key focus of the research was to learn more about gig economy businesses that use their own digital platform. Recruitment proved challenging, because the number of companies using this business model is small, and they tend to be large companies with limited time. We identified the digital platform employers interviewed through desk research and contacted them by email and through social media to request participation. There were 35 interview participants (see Appendix B for breakdown).

1.5 Qualitative fieldwork

We developed 3 topic guides to ensure that interview questions were appropriate for each audience: one for the gig economy employers; one for employers of self-employed contractors; and one for intermediaries (that is, recruitment agencies). The main areas covered by the topic guides were:

• introductory questions about the business model and contracts currently used
• how these relate to working relationships within the business and the use of different employment statuses (employees, workers and the self-employed)
• practices around pre-employment checks and rationale for conducting these
• knowledge and understanding of right to work legislation and the impact of an individual’s immigration status
• breaches of regulation (including illegal working) within their sector including reasons for (inadvertent non-compliance), responsibilities of third parties and their roles in practice

We conducted the interviews online and they lasted between 45 and 60 minutes. We interviewed 35 respondents in total^{[footnote 2]}.

This report presents the findings by research question. Where subgroup differences are notable, these are considered individually.

As a relatively small-scale qualitative study, the findings are not necessarily representative of employment across the UK and should be seen as indicative.

1.6 Report structure

The remainder of the report is structured as follows:

• use of self-employed workers
• business rationale for and understanding of worker statuses
• employment checks
• experiences of substitution
• illegal working
• compliance and risk mapping
• conclusions

2. Use of self-employed workers

The research investigated the rationale and implementation of different employment models used by businesses, focusing on:

• gig economy employers: employers that exchange money for labour (usually but not always via digital platforms that link workers with short-term tasks), paid on a per task basis
• employers of self-employed contractors in the construction, warehousing and delivery, care, and hospitality sectors
• employment intermediaries, such as employment agencies, who link workers and employers, often on a short-term or individual task basis

Apart from digital platforms, which use a very specific model fundamental to how their business operates, most businesses interviewed tended to use a mix of different employment models. This chapter summarises the main ways in which each of these 3 groups tend to use self-employed workers, and their rationale for doing so.

2.1 Gig economy employers

For this research, we used the following definition for gig economy employers:

Employers that exchange money for labour (usually but not always via digital platforms that link workers with short-term tasks), paid on a per task basis.

This definition was used in the recruitment materials and we only conducted interviews with those who agreed that they fitted this definition. While conducting the interviews, it became apparent that some employers did not fit this model; while they identified as gig economy employers and spoke about the gig economy, they, in fact, used other models of employment.

“More recently, it’s supported us more to use gig economy than short-term staff because you can adapt easier to demand. A few years ago we did contracts but demand is fluctuating so much and we need to be mindful so much of cost, it’s just better to use gig economy… we use agencies mostly.” Gig economy

Across these interviews we saw employers using ‘gig economy’ as a term to refer to workers employed casually rather than through a permanent contract, and this tended to be a mixture of contracted employers and short-term, casual recruitment through an agency. Some also recruited through a digital platform app but were not themselves the owners or managers of that app. These employers tended to have good awareness of their responsibilities as employers but were lacking in some nuanced, detailed awareness, as evidenced by their understanding of the gig economy term.

2.2 Digital platforms

The digital platforms, on the other hand, all met the definition of gig economy employers above. These platforms all used the same employment model, whereby they would onboard workers onto a proprietary digital app from where workers would be presented with tasks, typically delivery or offering transport that they could accept or deny, and would receive a one-off payment accordingly. Payment was generally transferred weekly but could be taken on demand for an administrative fee.

For these digital platforms, the use of self-employed workers was central to their business model. These were high-profile companies who were aware they were making use of an innovative new model that would draw attention and scrutiny. As a result, they tended to have large, skilled legal teams who were highly aware of employment law and their responsibilities.

“We know that we’re new and high profile. It’s quote [sic] an innovative model so we know we need to get it right and be on top of our responsibilities.” Gig economy

All platforms were aware they were under no legal obligation to conduct RTW checks.

They were also aware their workers were entitled to substitute (provide an alternative worker to replace them on duty) as part of their working status, and substitution was therefore permitted. A few raised concerns over substitution and the difficulties of managing it in relation to illegal working, which they were keen to try to combat (even though they stressed that this wasn’t their responsibility as workers were self-employed).

Some digital platforms were also keen to provide more for their workers in terms of insurance or added benefits, such as maternity leave, but knew that doing so might mean workers were considered employees rather than self-employed workers.

2.3 Employers of self-employed contractors

Employers of self-employed contractors were interviewed across 4 different sectors:

• construction
• warehousing
• care
• hotels

The model was the same across all sectors: businesses would hire workers, usually on a short-term basis to deliver specific tasks or outputs. The reasons given for using this model were:

• it was financially efficient because they only employ a worker for the specific time needed and no more
• it allowed them to be flexible
• they did not need to manage tax and National Insurance for that worker
• it could allow them to access a wider range of specialist skills

There were, however, some nuances in how these sectors used self-employed contractors.

2.4 Construction

The model of using self-employed workers was an industry standard within the construction sector. It could be used to gain extra workers for a specific project to meet a deadline or to gain access to a specific skill required only for a small part of a project, such as an electrician.

“It’s better for them and better for us – they are in charge as they may have multiple jobs and multiple roles. It just keeps it cleaner for us on the tax side, and enables us to manage overheads” Employer of self-employed contractors

Respondents reported they commonly conduct checks to ensure safety and certification. Workers need a CSCS card^{[footnote 3]} and businesses sometimes required them to provide proof of more specialised skills. Word-of-mouth is an important recruitment tool in the industry, and recommendations and reputation are sometimes seen as eliminating the need for formal checks. However, respondents noted that the lack of formal checks could lead to an increased risk of illegal working.

Substitution can be used, but this often depends on the role and tends to happen at the discretion of a foreman rather than through any more formal means.

2.5 Warehousing

Warehousing and delivery tend to have a lot of seasonal work and therefore used a lot of short-term contracts, normally recruiting workers for short-term tasks through a recruitment agency. Much of the work can be menial and not highly skilled, meaning substitution often takes place.

“Being a small business we have peaks and troughs, sometimes we’ve had a need to bring in agency staff. We’re getting near to Christmas so it’s a busy time.” Employer of self-employed contractors

Respondents reported using the same checks as for permanent staff, but the onus for these checks was normally on the recruitment agency.

Self-employed contractors normally undertake specialised tasks such as maintenance or repair of machinery and because this involves skilled expertise, checks are done to ensure the worker is sufficiently skilled and trained. However, as with the construction sector, checks were sometimes over-ridden by reputation and personal recommendation.

Care

Checks are of the utmost importance in the care sector. As workers would be around and caring for vulnerable people, they need to be vetted for security reasons and also to prove that they can offer care safely. These checks can be time consuming and for this reason care homes do not directly recruit self-employed contractors often. They are more likely to use agencies, but for staffing crises contractors have sometimes been used (as a last resort).

Care homes discouraged substitution for the same reasons.

“We would want some kind of consistency, a number of months if possible. We work with vulnerable people, so we can’t have strangers showing up all the time.” Employer of self-employed contractors

Care homes ideally make use of salaried staff because their work is not seasonal and they know the resources they need to cover the care need of their residents. They also like to keep consistency for their residents and allow relationships with carers to build and be familiar but found, particularly in recent years, this is not a viable option with recruitment and retention challenges.

Respondents expressed this urgent need for staff cover can introduce a risk when it comes to illegal working because there may not be time to conduct the necessary checks.

Hotels

Hotels will occasionally use contracted staff over a busy period. They may hire workers over busy periods, such as summer, on a fixed-term, shorter contract, although they were more likely to use agency staff for this purpose.

Hotels most commonly use contractors for maintenance or repair work to the property and estate.

2.6 Employment intermediaries

Employment intermediaries had very good awareness of employment law and pre-employment checks. As specialists in employment and providing workers, intermediaries demonstrated good knowledge of employment legislation and stringent processes in place in the interviews.

They appreciated that handling these administrative practices is a key part of their business and core to the service that they provide to their clients. They therefore train their staff to understand employment statuses, what checks need to be made and how. They would also do bespoke sector checks where necessary, such as Disclosure and Barring Service (DBS) or financial solvency checks where appropriate:

“We can do everything from background checks. We can do credit checks. We can do criminal checks. We can do the reference checks so we can put together full packages.” Employment intermediary

They were also aware that clients rely on them to complete pre-employment checks.

Being able to access workers who can legally work in the UK, at short notice, is an important part for employers across many sectors and intermediaries felt that this was a crucial part of the services they offered, perhaps even more so than simply finding workers.

While the intermediaries themselves had a very strong grasp of employment statuses and RTW, workers can sometimes be confused about employment status, particularly where there are language barriers.

While intermediaries are stringent in carrying out the correct checks, there is reliance on individual sites or employers to ensure that the ‘right’ person has reported to work. There was anecdotal evidence of a different worker turning up to the work site. Their relative had undergone the appropriate checks and this worker, who had not been checked, claimed to be that relative.

3. Business rationale for and understanding of worker statuses

This chapter focuses on the level of awareness and understanding, among different employers interviewed, of the employment status of their workers and the implications and responsibilities for each. This chapter also covers workers’ understanding of their own employment status and rights (as perceived by employers).

3.1 Business rationale for and understanding of worker statuses

Respondents generally differentiated easily between the different types of employment models they use. Many use a combination of contractual models, either using different models for different job roles and levels, or in some cases even having different employment models for the same job roles. This use of multiple employment models is often in response to the circumstances within which the business operates, rather than an active strategic choice based on internal plans and interests.

For gig economy platforms, using self-employed workers paid on a task basis is integral to the business model of the organisation. Platforms saw themselves as trying to evolve the traditional model of supplying services, and the gig economy model is central to their entire mode of operating.

For some employers, wider practices in their sector guide and dictate the employment models used. For example, in sectors such as construction, where almost all workers are self-employed and contracted on a project-by-project basis, employers tend to use the dominant sector model.

In other cases, the use of alternative employment models was a matter of convenience for employers. Working with self-employed, agency or gig economy workers provides employers with the flexibility necessary to follow the seasonal ebbs and flow of their business or respond to one-off needs. For example, for warehousing and logistics and transport sectors, employers could increase their workforce in periods of high demand (such as, around Christmas or in the summer) and reduce their workforce accordingly in the off-season. This flexibility was seen as a positive feature for both employers and workers. Some employment intermediaries confirmed workers seeking flexibility as a reason for using self-employed worker, noting that in some sectors people tend to want as much flexibility as possible and tend to go for shorter contracts as much as they can.

“It’s very seasonal for things like bricklaying. A lot of them disappear in the winter and they don’t come back.” Employer of self-employed contractors

“We’d end up in a redundancy situation which costs a lot of money, but this way they are employed on a weekly basis and we can say when their work will be stopping. We always give them notice but it’s a lot more beneficial to us as there’s a predictable downturn in business each year.” Employer of self-employed contractors

“Being a small business we have peaks and troughs, sometimes we’ve had a need to bring in agency staff. We’re getting near to Christmas so it’s a busy time.” Employer of self-employed contractors

“If I need an electrician on Monday morning, I can make a phone call in the next hour and get some work done with them…it’s flexible. We can do the basics internally but with electrics or gas you have to have a qualification and be specialised in that area, a few of my lads can do a bit of drainage and pipes, but if it’s gas or electrics you need the qualified certificates in for the sign-off.” Employer of self-employed contractors

An added benefit identified by respondents for using these self-employed contractors and gig economy workers was the fact that they were relieved of the responsibility of offering and accounting for PAYE and other tax contributions, annual and sick leave, insurance and pension contributions, and other additional administrative and cost burdens associated with traditional employment models.

“It’s better for them and better for us. They are in charge as they may have multiple jobs and multiple roles. It just keeps it cleaner for us on the tax side, and enables us to manage overheads.” Employer of self-employed contractors

“The status between self-employed and employed is a very fine line, and the Inland Revenue [HMRC] won’t look at it well if we control what the self-employed workers do on a daily basis.” Employer of self-employed contractors

However, in terms of understanding their responsibilities around each of the worker statuses used, there were some variations among respondents.

Smaller businesses were less likely to fully understand their responsibilities and the legal and regulatory requirements around different types of employment model. This was mostly due to not having the resource to keep up to date with all regulatory changes and criteria. Such businesses tended not to have a dedicated human resources (HR) or legal team, but often had just one person dealing with all recruitment and workforce management. Businesses without a dedicated HR specialist or legal team found it difficult to have more than a basic understanding of requirements and to stay up to date.

Respondents reported that they tended to act in good faith and try to cover the important legal basis, and assumed that if they did anything wrong in terms of pre-employment checks or wider practices around their use of self-employed workers, it would get flagged. Some opted to source the responsibility externally to third-party HR platforms and consultancies.

3.2 Workers’ understanding of employment status

According to the employers interviewed, self-employed, gig economy and agency workers tended to be aware of the implications and limitations of their employment status. A few exceptions could be seen among workers who were new to being self-employed or working in the UK (often younger or international workers). Areas with lower levels of understanding included visa-related limitations, around different types of contracts and hours worked.

Almost all respondents reported that self-employed workers understand their rights and obligations, for example, what they are and are not entitled to, their employment status and their tax status. Occasionally, employers need to explain the implications of being self-employed in more detail, if people are new to self-employment and do not understand that they are no longer entitled to holiday or sick pay. This information tends to be included in contracts, if in place.

“Most of them know the rules, some have their own contracts so they’re pretty au fait with the whole thing, how they have to pay their own tax and declare what they earn, and that they aren’t entitled to certain benefits.” – Employer of self-employed contractors

“They are probably more informed than people give them credit for.” – Employer of self-employed contractors

Some respondents also mentioned sending information about tax responsibilities, as well as holiday or sick pay, to new ‘hires’.

“We let them know, immediately via correspondence, that they are in charge of their own taxation, whether that be self-assessment in the UK or W-1 status in the US^{[footnote 4]}.” Gig economy employer, Energy-marketing

However, some respondents flagged areas where they perceived that workers did not fully understand the implications of being self-employed. For example, one construction employer noted that some self-employed workers were unaware that they had to provide a unique tax reference (UTR) at the start of their contract. If they did not register as self-employed (and so obtain a UTR), the business has to initially withhold tax at the full 40% rate, rather than the rate specific for their working time and payment. Similarly, not all workers in the sector were aware if they worked over a certain threshold number of hours for one business, that business had to deduct their tax at source and pay HMRC on their behalf. Some workers were reluctant to agree to work where tax was deducted at source.

Workers from outside the UK were less likely to be aware of employment legislation and requirements. One care provider mentioned overseas applicants requesting visa sponsorship, which is not something they could offer.

“They are still asking about sponsorship and it’s something that they need to understand, it’s clear in the recruitment process that we don’t do it.” – Employer of self-employed contractors

An employment agency flagged that some international students are unaware of the limited hours of work allowed by their student visa.

“We get about half of students calling saying that they will leave their studies, but they don’t realise their visa means they still can’t work more than 20 hours. It’s time consuming, and it’s frustrating for them as well because they want to work.” Employment intermediary

Employment agencies and intermediaries also mentioned that non-UK workers were less likely to understand their employment status fully and were less aware of the different types of contracts that they can work under.

“Some didn’t understand what a temporary contract meant, what the difference was between that and a fixed-term contract.” Employment intermediary

3.3 Business understanding of immigration statuses

There was also a difference between larger and smaller businesses in terms of familiarity with and understanding of implications of different immigration statuses, the associated pre-employment checks required, and related risks of illegal working.

Larger businesses were more familiar with different immigration statuses and their limitations. They tended to have a dedicated HR staff member (if not a team) who had the responsibility and time to keep up to date with legislation. Gig economy platforms usually had a legal team dedicated to keeping on top of any updates around immigration status regulation and to make sure they comply with changing requirements.

Smaller organisations were less familiar with the range of immigration statuses, but most knew how to, for example, check someone’s right to work online via a share code^{[footnote 5]}. However, this lack of confidence around knowing the full implications of different immigration statuses did impact on some organisations’ practices. Some small organisations, especially in the care sector, avoided using any people with hourly limitations due to not having the resource to track them accordingly.

One potential risk point, raised by several respondents, is where workers work for more than one platform or organisation. In such cases, respondents reported not being able to track the total number of hours worked by that person, especially for international workers.

“They worked at another business and had just come off a 12-hour shift and then try to drive with us, they can’t do that. We had it happen that purely somebody thought we wouldn’t check it – really it should be checked every time.” Employer of self-employed contractors

4. Employment checks

This chapter covers businesses’ use and understanding of pre-employment checks, focusing on their motivations for conducting them, and which checks are done and how. It also explores their perceptions of the risk of illegal working, and their responsibility for ensuring that self-employed workers are not working illegally.

4.1 Motivations for conducting pre-employment checks

There were 4 main reasons given by the respondents for why they conducted pre-employment checks.

Businesses wanted to know who was working for them, even if this was on a casual or short-term basis as self-employed workers. In sectors such as care, construction and warehousing there was a safety and security consideration when conducting checks. There are risks in these sectors, including working with vulnerable people, working with machinery (health and safety risks), and transportation of high-value items. This was also the case with anyone employing drivers of heavy goods vehicles (HGVs), and the reason why tachograph cards were checked to ensure that individuals were not driving for longer than the legal number of hours (9 per day, 56 per week).

Therefore, it is hugely important to ensure that employees have the qualifications required to handle any heavy machinery or HGVs, or are cleared to care for people to prevent anything from going wrong.

“There’s a safety factor for the vulnerable people, safety for the other staff, and the reputation of the organisation. Also, because the laws are changing all the time, we want to stay on top of things.” Employer of self-employed contractors

“We need to know who is working for us. We could give a lorry to someone and if we don’t know who they are they could drive away with half a million pounds of tech and not come back. If they take it, it’s a big loss for the company. You have to plan for the worst and expect the best.” Employer of self-employed contractors

“I’m massive on health and safety because I don’t want to phone up someone’s partner and say they’ve been injured at work, I couldn’t live with that. Personally I’m very over the top because of that reason. I’ve seen accidents happen in the workplace and it’s not nice.” Employer of self-employed contractors

Businesses also wanted to maintain their reputation by ensuring compliance with the spirit and letter of employment legislation. If found to have staff without the right to live and/or work in the UK, they felt this could jeopardise their reputation as a ‘good’ business, and therefore impact future work streams. Respondents expressed concern about either no longer having contractors come to work for them/sign up to their platform, or clients no longer using them for work due to the associated risk. This was particularly important in sectors such as construction, where word-of-mouth was a key recruitment method.

“The last thing I would want is to send someone out and if the driver had an accident and isn’t who he says he is, isn’t allowed here legally, it affects our reputation as a business, and we would incur penalties.” Employer of self-employed contractors

A third reason was to avoid potential penalties (for example, if staff were required to hold specific certifications, or if agencies were placing workers). Some respondents, who were more senior in their organisation, felt that they would be personally responsible for any breach of compliance with legislation, and may lose their job if they were to be found breaking the law.

“No person is worth a 10k fine. For a 5-minute check, you would rather say no – until you give me what I need, we can’t give you the job.” Employment intermediary

“I could lose my job so it’s massively important to the employer and the employee that we get it right first time.” Employer of self-employed contractors

Lastly, there was also a moral element whereby employers felt they were ‘doing the right thing’ by checking employees’ statuses, and ensuring that individuals had a right to live and work in the UK.

4.2 Which checks are done

All employers interviewed reported that they check at least one form of documentation from prospective workers, whether employed by the business, self-employed, or recruited for short-term work through an agency.

There were some standard checks conducted by (almost) all employers including:

• a form of photo identification (for example, a passport or driver’s licence)
• proof of address (some required 2)
• National Insurance numbers
• UK bank details
• references

Additional checks conducted were more likely to be undertaken in particular sectors, or for specific roles. Checks often pertained to an individual’s ability to perform specific tasks, and guard against potential risk of harm or poor-quality work, rather than reflecting legal requirements or to mitigate against illegal working per se.

DBS checks were more commonly required in sectors such as care, where the presence of vulnerable individuals led to increased risk for their clients if someone was not who they said they were. Checking UTR numbers and CSCS cards was common in construction, where self-employed workers were more common. Some construction businesses also reported checking Companies House information for self-employed contractors.

Agencies reported that the financial and legal industries required the most detailed checks, including a full employment history and additional credit checks.

“Financial services are heavily audited, so they are heavily reliant on the people that we are supplying being checked correctly…we have our own due diligence internally.” Employment intermediary

For non-UK nationals, this list also extended to checking visas, and share codes to confirm the individual had the right to work in the UK. Most employers interviewed had not recruited directly from abroad, so overall familiarity with different types of visas was low as individuals either had British passports or a standard work visa for their sector. The other type of visa that some employers were familiar with was a student visa (which limited working hours to 20 per week). One respondent felt that it was particularly hard checking documents from abroad as it was difficult to tell whether they were legitimate or not. Some employers were more familiar with how to check settled status, or student visas, and the implications of these on working capabilities. Among the 3 groups, recruitment agencies were the most familiar with checking share codes and visas.

The relatively new digital production share codes (introduced in January 2019) appeared to cause confusion with those looking for work. Respondents felt that the workers were unaware that they needed to generate the share codes themselves; in some cases they thought the employer created the share code for them, and, in others. they did not think they needed one at all, and felt they could rely on other documentation.

“We have to [generate the share codes], as the workers don’t understand what the website is, or what the share codes are, so we sit with them and generate them for them.” Employment intermediary

“The share code has been the issue as it’s not transparent – from an employer perspective we are aware of it, but for carers, if they have their remain to leave card or visa documents they assume that’s enough.” Employer of self-employed contractors

“I haven’t come across any visas yet… but I’m expecting to have to check visas in future. Construction is growing and growing, but I don’t think we have enough British people to cover the jobs we’ve got and the workloads.” Employer of self-employed contractors

The level of detail when conducting checks into potential candidates for work also varied by group:

Gig economy employers were aware they are not legally required to conduct any checks on self-employed workers. Despite this, most did some level of checks. These centred particularly around checking identification to prevent account sharing on their platform. One employer asked for DBS and UTR numbers on their application form, but this was only a deterrent – they were not checked after being inputted.

“I have the information, but I can’t check everybody as it’s just me. It gives the impression that it’s checked to discourage people from being dishonest.” Gig economy

Employers of self-employed contractors did different checks depending on the length of the contract and the sector. If work was ad -hoc or short-term, employers often considered checks as less important. In construction particularly, employers had a lot of trust in staff referred to them and would not necessarily check details. We saw a similar pattern in other sectors when bringing in maintenance staff for more ad -hoc work.

One respondent commented specifically on the nature of recruitment from group chats or online spaces, where individuals are recommended. They mentioned it was unlikely that checks would be done on the individual referred, likely linked to the high level of trust within the sector.

“When it’s self-employed it’s much more ad- hoc and we won’t do right to work checks on them. If you’re in a group chat, and you ask does anybody know a good painter, decorator […] I can’t imagine anyone on those chats does checks of these people.” Employer of self-employed contractors

Employment intermediaries were the most stringent and informed regarding conducting checks on potential workers. This was partly because they felt employers assumed that anyone referred to them would have already undergone full checks by the agency, and partly because they were sometimes directly asked to carry out checks by the employers. As with self-employed contractors, a similar pattern was noted by agencies relating to length of employment, and contract type, who felt that temporary to permanent contracts tended to require more in-depth checks.

“Employers didn’t always ask for these [DBS checks and credit checks]… some employers when they ring in for temporary staff just assume that we do them. If it’s financial services or regulated company, they do affirm that we’ve done the checks.” Employment intermediary

“With temp to perm, the employer likes to know a bit more about the person, they tend to be a bit more switched on, have a bit more experience.” Employment intermediary

4.3 How checks are done

Most businesses conducted checks in-house and kept a record of the documentation, though a small number used agencies to conduct checks on their behalf. Most felt that they knew enough about the process (particularly where checks were limited to checking ID and perhaps references), and it was simple enough that they could keep it in-house.

However, there were specific cases where employers felt they needed more support with pre-employment checks. Some were concerned that they may not have complete knowledge of Home Office regulations and wanted reassurance that they were not at risk of unintentionally breaching such regulations.

Employers and intermediaries felt there is an enhanced focus on RTW checks, potentially due to changes to guidance regarding employing European workers resulting from the UK’s departure from the EU (Brexit).

“Because it’s become such a big topic, all the companies have jumped on it because they are audited. We’ve gone from 5 years ago when nobody asked for them, to the past year where everyone does.” Employment intermediary

There were no noticeable issues or changes in approach regarding differentiating between EU nationals, those with EU Settlement Scheme statuses or long-term UK residents. In addition, some smaller companies which were growing felt that they may need to use agencies to support them in carrying out pre-employment checks.

“I do believe we’re going to have to ask someone to do these for us at some stage because it is a full-time job, to have a company to do that for us would be much easier. It takes the onus off us and frees up our time to do other things.” Self-employed contractors

4.4 Use of third parties

A few respondents (in the hotels and hospitality industry) reported that they used an HR company, who advised on which pre-employment checks were required for their self-employed contractors.

One employment intermediary reported using an identity service provider (IDSP) to assist with conducting digital identity verification on prospective workers. This service provides identity documentation validation technology (IDVT) to confirm that the person’s identity matches the British or Irish passport that they have provided in their application. Another who worked in the gig economy space reported using an IDSP that offered identity document validation technology to verify the identity of users signing up to their platform, at a cost of £1 per check.

Those who used agency staff were likely to presume that the agency had conducted the checks on these staff members thoroughly themselves, and were unlikely to do any further checks or confirmation on whether the information provided to them was correct. Further detail on employers’ perceptions of responsibility can be found later in this chapter.

4.5 Manual vs. digital checks

Prior to the COVID-19 pandemic, most employers conducted their checks on physical, paper copies. However, during the pandemic, it became necessary to use digital or scanned copies for checks, which has continued for some. For qualifications on CSCS cards or DBS checks, employers felt digital information to be ‘safe’ and correct, and unable to be tampered with. Digital checks also allowed for a wider reach, including people who were not from the local area without the requirement for individuals to bring in their documentation.

“Passports and driving licences, people do forge those, so I go online to check the CSCS cards. When you see them put to work and on the card it says what level they are, and then I see that they can’t do the task that will raise questions.” Employer of self-employed contractors

“We work with a lot of companies who are far away, so there’s no point doing hard checks. We do it over email as it’s easier for them to see if the worker comes in the day after.” Employment intermediary

However, some respondents felt that documents could be more easily faked if they were scanned and emailed in – particularly when sent in black and white which can obscure detail.

Checking non-UK nationals’ right to work (visas and share codes) was done through the GOV.UK website by entering the individual’s unique 9-digit share code, which respondents generally felt to be quick and easy. However, employers and agencies had mixed opinions about conducting other checks manually or digitally. One employer mentioned needing to do manual checks for expired documents, which cannot be checked online. Employers are not legally required to do manual document checks rather than digital checks, but some preferred the manual approach from a safety perspective.

“Last summer we had a lot of [nationality] come through to work in factories, but I had to make sure they had their share codes before putting them in place. They will try to give you other people’s share codes, but when you get it, it will print off and have the photo of the person with their full name.” Employment intermediary

4.6 Responsibility for conducting pre-employment checks

Employers using self-employed workers

Employers that used agency workers were heavily reliant on the agency to conduct the checks on their behalf. The majority would not double check any information provided by the agency, and assume that checks had been done correctly. Employment agencies reiterated this point, and felt there was an expectation for them to do the checks, even if the employer has not asked.

“Employers didn’t always ask for [the checks]…some employers when they ring in for temporary staff just assume that we do them. If it’s financial services or regulated company they do affirm that we’ve done the checks.” Employment intermediary

The main perceived weakness in the checking process came with the use of subcontractors. This occurred frequently in the construction sector, but was also seen in other sectors in their use of maintenance or cleaning staff due to high turnover. In these cases, almost all respondents reported trusting that the maintenance or cleaning agency would have done their own checks on the workers. Further detail surrounding checks done for substitutes can be found in the next chapter of this report.

Some respondents trusted other checks to count as evidence that an individual had the right to work in the UK, and so was not working illegally. For example, a few respondents felt that if an individual had a UK bank account, or a National Insurance number, then ‘someone else’ must have checked them. Rather than checking anything further themselves in these cases, they would assume the individual had the right to live and work in the UK.

“If they’ve got a bank account… the banks have already done their due diligence, so they can check it, and then you know that they’re legit.” Employer of self-employed contractors

One gig economy business mentioned that the responsibility for checking is highlighted on their site, and it is up to the client to do the checks, rather than themselves.

“It’s just a platform where people connect, and it’s never been promoted as anything else. I do ID and that’s it. We’re constantly stressing the importance of thorough checks… everyone’s client profile specified that they are the ones to do the checks.” Gig economy

4.7 Agencies

Employment intermediaries had a good understanding of who the responsibility lay with to ensure that checks are done correctly, and to minimise the risk of illegal working. For example, for those technically employed by the agency, or on temporary contracts, it was the responsibility of the agency to conduct pre-employment checks. However, for those on permanent placements, while the employer is responsible, agencies still felt somewhat responsible for checking the candidates were ‘above board’. The reliance of employers on their checks heightened this feeling of responsibility.

“If it’s a temporary position and they are our employee as an agency, we would be responsible for the checks. Technically, if it’s a permanent placement we have made, and that person is the end employer of a client, it would be them that would be responsible if anything was untoward, but as a supplier we would have a duty of care to do due diligence.” Employment intermediary

“They are our employees. I would be legally liable if anything went wrong. We’ve been doing it for so long, you get an inkling or feeling if something is wrong… but 9 times out of 10 if a person has been paying PAYE for the last 5 years, they will be compliant.” Employment intermediary

5. Experiences of substitution

This chapter presents findings on employers’ understanding and experience of substitution, defined as where a worker who has agreed to undertake a piece of work sends another worker to complete the task in their place. Self-employed workers have the legal right to undertake this practice, but it can create situations where an unchecked worker is completing work for a business. The worker substituting has the responsibility of conducting employment checks on the person they are sending in their place, and this is generally a contractual requirement in their working agreement (where a written agreement exists). Substitution is therefore a potential risk area for illegal working, as pre-employment checks may not have been carried out on the substitute and the place of work is then not responsible for conducting checks.

This chapter outlines the potential risks with substitution, then looks at the 3 most common approaches to substitution: not allowing it, selectively allowing it and universally allowing it.

5.1 Understanding of substitution

There were differing levels of awareness of substitution. In line with their general strong comprehension of employment legislation and policies to minimise the risk of illegal working, employment intermediaries and some gig economy businesses had a good understanding of what substitution was and the rules around it. Other employers, typically those who misidentified as gig economy employers or those that used contractors, were less familiar with the concept.

In some interviews respondents asked what substitution was, while others declared that they could infer from the name what it related to but that it was not a term that they were familiar with (nor were they familiar with its nuances).

The digital platforms were highly familiar with the term and aware that substitution a legal right for self-employed workers. It was factored into their working agreements.

“Carriers have unfettered rights to substitutions. So at any point they’re able to provide that app to another worker. They are responsible for ensuring that that carrier has hit the minimum criteria to be allowed to work.” Gig economy

However, some other respondents were unaware that this was a legal right and would not permit it. They felt that substitution was bad practice, viewing it as a “short cut” and evidence of “shady or underhand” work practices, rather than recognising it as a legal right.

“We wouldn’t even entertain it [substitution] because it would affect our reputation by taking those shortcuts.” Self-employed contractors

Respondents were also unsure of the differences between substitution and account sharing, Those who allowed substitution questioned the need for account sharing, thinking that it was a more complicated process that offered additional work for no additional benefit. Those who did not allow substitution also did not allow account sharing.

5.2 Potential risks with substitution

Employers noted that there were potential risks with substitution, and or some these were sufficient that they would not consider permitting it. The main risks mentioned were:

Poor-quality work
Employers felt that a lack of control over workers on their sites meant a greater risk of poor-quality work. This might be because workers did not have the skills or experience to deliver work to the right level, or that a lack of accountability meant they knew they were unlikely to face repercussions for poor-quality work.

Safety and security risks
With less stringent checks in place on substituted workers, respondents felt that there could be more risk of theft from unchecked employees who would only be with them in the short term. There were also potential safety concerns over workers whose certification and skills had only been checked second hand, if at all.

“If it’s a one-off job there’s no motivation to follow the rules, I need to get something done, how quickly and how cheaply and how well can I do that?” Self-employed contractor

Illegal working
While respondents interviewed reported very limited direct experience with illegal working, they were aware that it could happen and felt that substitution is a likely way in which illegal working could occur. Where responsibility for pre-employment checks moved away from the employer, there was a feeling that checks may not happen, or be robust enough. Respondents that did not want to use it also felt that substitution made it easier for a worker to turn up to work and not be who they claim to be. Working through a substituted account on a digital app would allow a worker to accept jobs with no way of conveying who had done the work.

“It can be very hard to know who the carrier is on any given job, and there are reports of some accounts being sold.” Gig economy

5.3 Substitution practices

No substitution

Some respondents stated they do not allow substitution at all because they are concerned about potential risks in highly skilled tasks. They dislike not having complete control over or awareness of who is undertaking skilled or potentially dangerous tasks. A few misconceived that substitution is illegal. Across sectors, a driver for not allowing substitution was safety or security risks, as well as fear that there may be poor performance from a worker not personally vetted. In care, for example, there was concern that residents could be put at risk if their carer is to some degree an unknown entity, or if the carer does not have the requisite skills to administer specific care. In other sectors, ensuring safety is critical and respondents wanted the certainty of knowing who is carrying out specific tasks.

“Our gas safety checks, we’d want the right man to do it – we have old boilers and our gas fitter knows them like the back of his hand. If someone else was coming in… it’s the same with our fire system, we have 550 detectors, so a guy coming in who didn’t know anything would be a nightmare.” Employer of self-employed contractors

In warehousing, construction and hotels, respondents also reported concerns over security. Worries over theft or damage meant that employers wanted greater control over those who are on their sites.

“If the staff members don’t have correct checks or DBS checks, they could really be anyone. Things could go missing, accidents could happen and then it could be really serious.” Employer of self-employed contractors

Selective substitution

Other respondents stated they would allow substitution but only in certain circumstances. This was most common in construction, where employers would allow for substitution in lower skilled roles but not in higher. They also might allow substitution for a short period of time, such as one day. In such short stints, they may forgo any checks.

“If it was just one day we probably wouldn’t do any further checks, if it happened on a regular basis we would want to do our own checks as well.” Employer of self-employed contractors

Substitution may also be permitted depending on the contractor. As mentioned elsewhere, word-of-mouth and reputation play a large role in recruitment within the construction industry and, as a result, some contractors are trusted to provide appropriately skilled workers to complete their contracted work. Other, less familiar contractors may be placed under greater scrutiny in terms of the workers they use or substitute.

“Our electrician, for instance, now knows our site and building really well, if he was sending someone else to fit something, say an extractor fan, we’d allow it.” Employer of self-employed contractors

Another reason for sometimes using substitution was through need. Care sector employers tend to use substitution only as a last resort. They would rather have familiar workers known to residents, and only want workers that have been fully checked. However, some reported that in some instances staff shortages leave them with little choice but to take a substituted worker, even though they perceive this as a risk.

“I’m sure it happens. It’s the night before a shift and you need bodies so you don’t have a choice but to take someone on, I’m sure.” Employer of self-employed contractors

Whether checks are undertaken on substituted workers was also related to the perceived importance and risk related to a role. In construction, for example, an entry level, non-skilled role would frequently not be subjected to pre-employment checks, particularly if substituted by a known and trusted party. If the role was something highly skilled with safety risks, checks are made but these are more likely to prove they have the appropriate skills and training, rather than employment status within the UK.

Similarly, where substitution is being used to solve a staffing problem, particularly in the care sector, checks are made where possible. However, on occasion, time constraints allow only for an ID check to make sure the worker is who they purport to be.

Full substitution

Allowing substitution without caveat was common among the digital platforms, as self-employed workers have the right to substitute. Respondents stated they did not conduct checks on substituted workers, and feel that it would be too difficult to do so.

“With substitutions on the network, we don’t have full control of that [that is, if right to work checks carried out], but have the basic legal ability to try and [sic] ensure we have the best, most responsible people on the network at the point of onboarding.” Gig economy

Some gig economy businesses allow substitution, but there is a detailed process by which substituted workers needed to be logged through the app. They reported this process was almost never used.

Others made clear in their terms that substitution is allowed. They were unable to monitor how accounts are used and flagged this as a potential risk for illegal working (though they stressed they are not at fault or responsible for this).

A couple of gig economy platforms stated they have mitigations in place. They used facial recognition to ensure that the account on their platform was verified by the account holder. This would typically happen a few times a month to ensure that the account holder was still in control of the account, but they do not track who is working on each job accepted through the app.

In addition, digital platforms said they would not want to increase the frequency for fear of inconveniencing their workers and compromising the ease of the employment model from the workers’ perspective.

Platforms take action against non-compliance. They can, and have, removed workers on their platforms for breaking the terms of agreement, but they then cannot share this information with other platforms. The assumption, therefore, is that workers will move to another platform or work as a substitute for somebody else that they know with an account.

6. Illegal working

This chapter covers businesses’ and agencies’ concerns surrounding illegal working, including where it may be more likely to occur and how. It also touches upon how sectors are regulated and audited to prevent illegal working, and whether employers understand how to avoid illegal working. Lastly, it focuses on employers’ perspectives of ways of mitigating the risk of illegal working.

An illegal worker is someone subject to immigration control, who is aged 16 and over and who is not allowed to do the work in question. This may be because they:

• do not have the right to work in the UK
• would be in breach of their visa conditions if they were employed by the employer to do the work
• work above 20 hours on a student visa
• work outside the job description defined for their skilled worker visa; see ‘Summary guide for employers on preventing illegal working in the UK’

6.1 Primary concerns

Illegal working was a concern for employers and intermediaries, who wanted to avoid allowing illegal working as well as the potential legal repercussions. Concern was generally highest in the most highly regulated sectors who tended to be more risk averse due to this regulation (for example, financial and legal services), and perceived as lower in sectors such as construction and warehousing. For example, in the financial sector, illegal working could have serious consequences due to employees having access to customer accounts. In construction in particular, the reliance on word-of-mouth and trusted local networks was believed to contribute to a higher risk of illegal working.

“If we were working with construction companies, they weren’t overly fussed around right to work checks they just wanted people in quite quickly… in the financial sector it was huge.” Employment intermediary

6.2 Where illegal working is believed to happen

While most employers interviewed had not personally come across illegal working, they commented on areas they perceived to be more likely to experience it.

Jobs that paid cash-in-hand were perceived as high-risk, or a ‘red flag’ for illegal working, as they were off the books. This affected areas such as labouring jobs where individuals come to a warehouse or construction site and ask if any additional help was required, as well as self-employed workers who may be attempting to avoid paying taxes.

“If you had a car garage with a mechanic who is paid cash in hand they wouldn’t be checked.” Employment intermediary

“They are more concerned with logistics than what is going on behind the scenes with that person. They might be a friend of someone else that’s worked for the company and then they pay them cash in hand. They aren’t aware of the implications behind it.” Employment intermediary

“If it’s a one off job there’s no motivation to follow the rules, I need to get something done, how quickly and how cheaply and how well can I do that?” Self-employed contractors

Some employers felt that smaller companies would be more susceptible to illegal working, as they do not have specific personnel (or an HR department) who are employed to conduct checks in detail, instead doing this as part of their wider job role. They were therefore perceived to have a lower knowledge base, and so potentially less familiar with legislation.

Illegal working was also felt to be more likely in lower-skilled roles, including labouring, or those that do not require qualifications to undertake. For example, entry-level roles in factory work, or in care, tend not to require any qualifications, and therefore there are fewer checks to do.

“It could happen in warehouses too, but I don’t know any business owners who would do that. Generally, it is the manual handling and manual work that people can get away with cash in hand.” Employer of self-employed contractors

“It’s probably more common in the care sector now as they see it as an easy job as you don’t need any qualifications. I have seen quite a rise myself of employees that are coming from out of the country and things like that to try to get a job.” Employer of self-employed contractors

A few employers also reported that arrangements with a higher level of risk occur in the private sector, where an individual is bringing in workers for jobs such as housing extensions, driveways, or those in private one-to-one care arrangements. Respondents felt this is due to the people paying these individuals being unaware of the need to check right to work, or, if they are aware, not necessarily knowing how to check.

“They work privately for people who don’t understand the right to work documentation, it’s not through organisations but through individuals.” Employer of self-employed contractors

There was also some suggestion that lesser regulated sectors with less oversight are at greater risk of illegal working. For example, construction was often seen as a high risk sector given its reliance on self-employed contractors, while those in some parts of the care sector thought the risk is lower given the nature of the work and reliance on checks in recruitment.

“While it would not be impossible, it would be very difficult in this type of care work.” Employer of self-employed contractors

6.3 Why illegal working is believed to happen

In most cases, respondents felt that illegal working occurs when an employer does not have the requisite understanding of legislation. For example, as previously referenced in the employment checks chapter of this report, some are not confident checking foreign identification documents, and do not have a full understanding of the different visa types. A few respondents felt not everyone has a full grasp on how to avoid all types of illegal working.

“I don’t think that a lot of employers understand how to avoid illegal working, we’re quite a big organisation, but I imagine a lot don’t, and don’t care.” Self-employed contractors

However, there were a few scenarios reported by respondents where more deliberate non-compliance may occur, the most common of which was when organisations were short-staffed. They felt that this situation could lead to desperation, and therefore bringing people onboard without completing thorough checks. For example, in the care sector, employers are often short of staff last minute and needing individuals to provide cover for night shifts.

“I couldn’t say for sure how much it happens, but if somebody is desperate and can’t find somebody, but need someone now… they either can’t get out of bed, eat or drink, or they employ someone that they know can help them but might not have the right to work. It’s a very fine balance, it’s almost a matter of life or death.” Gig economy

Employers also felt that an individual working illegally in the UK would be a cheaper resource than those with the right to work. This was because illegal workers have less choice, and have to take the work that they are offered. Therefore, if an employer is looking to cut costs, using individuals without the right to work may be cheaper, and also links to paying cash (and therefore evading tax implications).

“People might turn a blind eye to it if they’re going to get cheap labour for the day. If you can get someone to work for you for £100 a day but the tradesman wants £180, people turn a blind eye. People get greedy and want to make money so get cheap labour.” Employer of self-employed contractors

It was also noted that employers often presume that if someone ‘looks British’ or speaks good English, that they automatically have the right to work. Relying on this understanding of the English language is a potential area of downfall for employers, particularly when bringing people in on short notice and assuming right to work based on characteristics, rather than checks.

“As long as you have basic English, they won’t question you. That’s why it’s risky and now employers ask for right to work checks first with their pictures.” Employment intermediary

6.4 Accounts of illegal working

A few employers reported instances of illegal working, all of which occurred when an individual had tried to use a family member’s identification to gain employment. Two of these instances had occurred in the warehousing sector, whereby the person who had arrived on site was not who the checks had been carried out on, and was instead a family member (for example, a sibling or a cousin). Those who had used IDSPs felt they are an effective method to avoid this type of situation.

One employer in the hospitality sector reported that an agency had sent 2 people who later admitted they did not have a working visa, and were subsequently reported to the Home Office. Overall, it was felt that when illegal working occurred, it was difficult to report this and track an individual down, and therefore no further steps could be taken.

“If we ring the person to find out what happens they just lie, you try to ring them again and they block you. We found out before that one of the individuals who turned up was their sister, but we didn’t have any details for the sister. The sister disappeared and we didn’t even have a name, so it was impossible to track her down, so we didn’t speak to the Home Office.” Employment intermediary

Another warehousing employer reported an instance when a driver arrived to distribute goods in an HGV, and had taken the risk that their tachograph card would not be checked. The company did check the digital card, and the driver would have surpassed the legal limit if they were to complete the drive, therefore they were unable to complete the job.

6.5 Attitudes towards illegal working

While employers objected to illegal working on the whole, they felt illegal working sits on a spectrum. For example, employers perceived that working more hours than allowed on a student visa, or driving over the number of hours permitted on their tachograph card, was less of a serious infraction than fraudulent use of identification, or falsifying documentation. The same perception applied to the difference between making a mistake as an employer (such as not tracking documentation properly, or a misunderstanding of a visa), as opposed to deliberate non-compliance with RTW legislation, that is, knowingly employing someone without the right to work.

Although the rules were followed by employers, a few respondents felt the rules surrounding illegal working were too stringent in places. For example, one employer working in construction felt the checks were important to ensure that individuals have the right to work, and those with many years of experience abroad still have to pass the basic tests, and another was unsure of the purpose of making it illegal for people to work in the UK. One employer also felt that while the illegal working checks could be completed at the time, they would not know if any circumstances would later change, making the checks redundant.

“If they’ve been a builder for over 10 years, it could just be one check. I had a stonemason have to do a CIS [Construction Industry Scheme] test to see if he could be on a building site, but he’s been a builder for 60 years. It’s crazy.” Employer of self-employed contractors

“I’d like to know why it’s illegal, I think everyone should have a right to earn money… One of the things that would annoy me is if they didn’t pay tax.” Employer of self-employed contractors

“The DBS in my opinion is a piece of paper, the following day you could be done for something so it’s null and void and they won’t know.” Self-employed contractors

Although experiences of illegal working were rare across the interviewees, they felt illegal working is a risk, and they want to avoid the repercussions including financial penalties and a damaged reputation. The risk was felt to be particularly high in the financial services sector, where employees have access to customer account details, as well as the care sector, where employees were looking after vulnerable individuals. However, as the potential risk is so great, it was generally felt to be well mitigated in these sectors.

To avoid the consequences of illegal working, employers reported they followed Home Office guidance, alongside any frameworks within their sector authority (for example, the Quality Care Commission, or the Construction Industry Training Body). Some employers also used further support such as the Good Employment Charter, having retained lawyers, or using external HR support such as Acas. Employers generally felt that the guidance worked well, for example the introduction of the CSCS cards meant that no one could enter a construction site without one, which has mitigated some of the risk around site work.

“The construction sector has had a bad name over the last few years with cash in hand and things like that. That’s why they brought in the CSCS cards and training to stop these. You have to have qualified people who have been vetted, you can’t just get anyone in who says that they can wire a plug as an electrician.” Employer of self-employed contractors

However, most respondents had never had to produce any documentation to confirm that they were following legislation. It was felt that there was a lack of input from these organisations in terms of checking that employers were following the guidelines, with only a few employers reporting that they had ever experienced an external audit from a regulatory body.

One construction employer mentioned an audit by a Home Office representative had occurred on site to check the IDs of their workers. In addition, a warehousing employer mentioned an annual audit checking RTW documentation, contracts and payroll information, though this did not focus on self-employed workers. The rest commented that they had never experienced an external audit, particularly in relation to their sector body.

Instead, audits were more likely to occur internally (for example, by their Head Office department), or as requested by a client. A few reported that their external HR support company audits their paperwork to ensure that they are up to date with legislation and have the required paper trail if asked to produce this at any point.

“Certain customers that want to work with us, especially in food and aerospace, the big industries, ask to see the data we hold and the information we store on everyone that works with us. We follow a very structured list to make sure that the information is all there when requested.” Employer of self-employed contractors

6.6 Ways to mitigate risk of illegal working

Clearer guidance

Employers felt that clearer guidance could support them to navigate the risks of illegal working. While some understood their basic duties and responsibilities under right to work legislation, most did not have a full understanding of the rules. The in-depth Home Office guidance felt overwhelming to employers, leading to a reactive approach from employers as they could not dedicate the time to read and understand all the guidance. Instead, they reported being more likely to refer to the guidance when they come across or experience a situation which they feel unsure how to handle. Even in these cases, some struggled to know what legislation applied to their situation.

“I knew I needed to read up on this because we’re employing more foreigners, but I’ve had a look on the internet, and it’s absolutely mind boggling. I think the Home Office has got a document all about it and it was reams of paper, who would sit and read that?” Employer of self-employed contractors

“If you asked me [sic], do you know everything you need to know about, I probably don’t, you don’t proactively look for certain information or support. The availability and accessibility of the information is a problem, no 2 business are the same.” Employer of self-employed contractors

Most agencies felt comfortable and familiar with their responsibilities, however there were a few that were concerned regarding the level of responsibility placed upon them, and keeping up with changing legislation. One agency reported having a lawyer retained to keep them informed on any changes, to ensure that they adhere to any updates to legislation.

“It is a bit scary when you mention the Home Office… I haven’t had the correct training, I’m going by research and because it changes all the time it’s difficult. You’re keeping yourself updated but you feel responsible for it as well. If you send an illegal worker out it’s a 20k fine, the company wouldn’t be happy with me.” Employment intermediary

Employers felt that guidance would be more accessible if it were more tailored to them. This included a desire for sector specific information, highlighting what checks are required across different roles and addressing specific sector concerns. There was also a desire for information to be broken down into more easily digestible parts, as it was currently felt to be too long and too difficult to understand.

Guidance could be used to highlight specific areas to look out for, by detailing recent case studies to inform employers on areas of legislation which may have recently changed and impact upon their processes. Alongside this, employers suggested that webinars could be provided to keep them up to date with changes to legislation, and key topics of interest.

Enhancing data sharing capabilities

Some gig economy employers felt that better data sharing could help to prevent illegal working. Currently, employers felt that they were limited by data protection concerns regarding sharing of people’s personal data, including information such as the number of hours that they have worked, or whether any complaints have been filed against them. For example, if an individual was removed from one digital platform following a breach of code, they could sign up to another digital platform without issue. The same could be said for the number of hours worked, as this is not monitored across organisations.

One suggestion was to develop a national database or worker registries (similar to that held by the Security Industry Authority) to track individuals and mark if they have any infringements. Another is including a clause in the UK General Data Protection Regulation agreements, specifying that if they remove a worker from one platform due to any non-compliance with rules, this information could be shared with other platforms.

7. Compliance and risk mapping

The findings from this research have been used to develop an employer compliance typology, based on knowledge of employment legislation, and employer behaviour. This provides a potential framework within which the Home Office can explore future approaches to mapping and addressing compliance and risk points.

Knowledge levels around rules and regulations range from zero to very high. We selected employer behaviour rather than intent, because employers may have positive intent regarding employment legislation, but not put this into practice. Conversely, an employer may have negative intent (they may wish not to comply with the requirements), but it is their actual behaviour that matters.

7.1 Employer compliance typology

The typology, by definition, includes a wide range of employers and practices within each group. It identifies 5 broad groups of employers highlighting different levels of compliance:

• highly compliant employers
• a deliberate non-compliance group
• a selective non-compliance group
• an inadvertent non-compliance group (‘considerers’).
• an unaware group

Each group is discussed in detail below.

Figure 1: Employer compliance typology

7.2 Highly compliant employers

Highly compliant employers are compliant with employment legislation across the board. They have high levels of awareness of legislation, and clear policies and practices for ensuring all workers are working legally. They will often have dedicated members of staff (for example a member of the HR team) whose responsibility it is to ensure compliance.

These employers may have penalties in place for members of staff who do not follow their policies (for example, if a site manager does not check the identify of workers who turn up on site, they could be subject to disciplinary action up to and including dismissal).

These employers also tend to be aware of issues around bogus self-employment, and avoid this.

Reasons for compliance may include:

• maintaining a good reputation
• needing to show compliance to win contracts or work in regulated areas
• seeing compliance with regulation as a requirement for doing business
• fear of sanctions
• maintaining wider sector practice
• wanting to ‘do the right thing’

Many large employers fall into this category, but it includes employers of a wide range of sizes and in different sectors.

7.3 Deliberate non-compliance

The deliberate non-compliance group would include employers with both high and low knowledge of employment legislation. Some may be almost totally non-compliant with rules. They may make a deliberate choice to employ workers without the right to live or work in the UK. They may also be non-compliant with wider employment legislation, including non-payment of tax / employers’ National Insurance Contributions, deliberate health and safety violations, or forcing workers into bogus self-employment for the benefit of the employer.

Other employers in this group could be partially compliant with employment legislation, but deliberately non-compliant with some areas (as a business choice).

This group are unlikely to amend their behaviour in response to additional information or support for compliance. They are unlikely to opt in to research, and so will be more likely to be identified through enforcement action or whistleblowing. They are most likely to amend their behaviour as a response to (the fear of) legal or other enforcement action.

7.4 Selective non-compliance

The selective non-compliance group may have some pre-employment checks in place but may not be implementing them consistently. They may follow common sector practice rather than best practice. In other cases, they may perceive personal connections or recommendations to over-ride the need for checks.

They differ from the (partial) deliberate non-compliance group in that non-compliance may be because of business challenges which they perceive as more pressing. For example, they may choose not to check if someone is working legally because they face recruitment challenges, or because they see it as too high an administrative burden.

This group may amend their behaviour in response to additional information or support for compliance.

7.5 Inadvertent non-compliance

The inadvertent non-compliance group (‘considerers’) tend to have pre-employment checks in place, and think they are complying with employment legislation. However, they may not be aware of all the requirements or how to implement them, or make simple mistakes.

This group includes many smaller employers, who may not have much experience of employing workers, or who may do so only on an ad hoc basis. They generally do not see themselves as non-compliant, and intend to comply with requirements (that is, their intent is positive, even if their behaviour is not always sufficient to meet legal requirements).

Other employers in this group are likely to be aware of the key legislative requirements, but may not see them as a priority. Some seek to do the legal minimum.

They are likely to be receptive to awareness-raising, and information provided about their obligations. They may need additional support to understand what these obligations are in practice and how to meet them consistently.

7.6 Zero awareness

The unaware group includes employers who do not realise that they need to carry out pre-employment checks at all (we did not speak to any such employers). These are likely to be small employers, some of whom may struggle to access information online or understand how to interpret complex or technical written information and apply it to their business.

This group may be very difficult to reach, but receptive to information. They are likely to need significant support.

8. Conclusions

This chapter summarises the study findings.

8.1 Employment models

Businesses had not necessarily made a conscious choice to adopt particular types of contractual models or worker contracts.

For online platforms, the self-employment ‘gig’ model was critical to their offer. However, employers often adopted a more pragmatic approach, using multiple types of employment models or worker contracts based on what was most prevalent in their sector or area, or what was the most cost-effective option.

Smaller employers, in particular, tended to be relatively reactive, rather than adopting a proactive business strategy.

8.2 Pre-employment checks

Online platforms, employment agencies/intermediaries, and individual employers formed 3 distinct groups in their understanding of and approach to pre-employment checks.

Online platforms tended to check ID and Right To Work in the UK at onboarding stage. Employment agencies/intermediaries had high levels of awareness of employment legislation, types of worker contract and the principles underpinning employment status and employment legislation. They had detailed check procedures which were implemented consistently.

Individual employer practice varied hugely. Some were aware of the need for pre-employment checks (including RTW) for certain groups of workers and understood the legal requirements in detail. Others were aware that they were required to conduct RTW checks, but did not always do so in full compliance with requirements. A third group reported that they did not need to conduct pre-employment checks as the people they work with are self-employed or sub-contractors. Employers relatively commonly reported that once work was sub-contracted, they did not carry out further pre-employment checks.

Individual businesses were less likely than agencies to be aware of the full range of legal obligations around ensuring the right to work (with variation by size and sector). Drivers of compliance varied, as did reasons for non-compliance.

There were some variations in practice. The employers and online platforms we spoke to tended to comply with legislation, but there were gaps or loopholes which could result in increased risk points for illegal working. Some would like to increase worker protections (for example, insurance), but were unwilling as this could blur the line between employment and self-employment statuses.

8.3 Substitution

Respondents often used substitution and account sharing interchangeably, particularly for platform work. Platforms rarely allowed account sharing, but this is not linked to employment legislation.

8.4 Illegal working

Businesses referred to instances of illegal working within their sectors, as well as awareness of enforcement action or fines against other businesses. Agencies and platforms were highly aware of potential reputation damage around illegal working.

However, individual (smaller) employers did not tend to view minor breaches of legislation as illegal; nor did they necessarily feel they had a responsibility to ‘police’ workers’ right to live and work in the UK.

Sub-contracting is a potential risk area for illegal working. Respondents tended not to see themselves as bearing any responsibility for checking who was carrying out the work (this was not specific to the gig economy and was also a longstanding feature of some industry sectors).

While respondents objected to illegal working on the whole, they felt that illegal working sat on a spectrum. Some saw working more hours than allowed as less of a serious infraction than fraudulent use of identification, or falsifying documentation. The same perception applied to the difference between making a genuine mistake as an employer, and deliberately not complying with employment legislation.

8.5 Risk points

The risk of non-compliance varies depending on business model and employment contracts used.

The analysis also considered where the ‘risk points’ were for non-compliant behaviour for online platforms, employment agencies/intermediaries, and individual employers. Potential risk points were identified at different stages, including at the point of choosing an employment model; recruitment/onboarding; and when undertaking tasks.

8.6 Online platforms

Gig economy employers using online platforms only used self-employed workers to deliver services. Employers not using online platforms relied on others to do the checks.

When onboarding workers, online platforms tended to have stringent processes in place and requirements for checks. Many checked ID, RTW (even though this check was not legally required), and proof of insurance, including work use of vehicle.

Respondents raised several risk points for when workers had been onboarded and were undertaking tasks:

1. It is difficult for the platforms to determine who is using the account, with few or no checks after the onboarding stage.
2. Substitution is generally allowed (as it is a legal right for self-employed people). However, while there are formal rules around substitution, it means accounts can be used by more than one person, making checks on users more complex. Over all, multiple people using the same accounts may create the risk of illegal working.
3. Hours worked are not generally policed, except for passenger hire drivers, and account holders tend to work across multiple platforms. There is a risk that some visa-holders might work over permitted hours (although, as student visa-holders are not permitted to be self-employed, this risk should be largely theoretical)

8.7 Employment agencies / intermediaries

Employment agencies and intermediaries have stringent processes in place and requirements for checks. They check ID, RTW, and maximum working hours allowed. Employers show high levels of trust in agencies/intermediaries, and do not tend to carry out their own checks

Potential risk points tend to arise after the initial recruitment of workers:

Allocation of shifts: Where workers work for different employers each shift/week, it can be challenging to ensure worker is the person registered with the agency. There is potential for illegal working (with registered worker awareness).

Substitution: From the employer perspective, agency staff are largely substitutable (that is, they want a worker with specific skills/accreditations, rather than a named worker). However, agencies do not generally allow (informal) substitution, but may not be aware if it happens.

Hours worked: Agencies are aware of workers’ visa statuses and restrictions on working hours. However, workers can sign up with multiple agencies, or potentially mix agency and platform work, and work over permitted hours

8.8 Individual employers

Individual employers may use multiple employment models, and this is often ad hoc rather than a strategic choice. Models used may reflect the dominant model for some sectors, such as self-employed contractors. Employers may rely on checks carried out by other parties, or assume that because someone has been recommended to them that they are working legally. There also is a potential risk of bogus self-employment:

• recruitment: smaller employers (in particular) may not have stringent processes for checks; checks are also not always carried out for personal contacts; documents are more likely to be checked for PAYE staff and in regulated sectors
• ongoing compliance with employment legislation: there can be limited awareness of requirements (especially among smaller employers), and some employers assume that workers are responsible for compliance with legislation
• substitution is generally not allowed, except for self-employed workers /sub-contractors; there is a potential risk of illegal working (with or without ‘prime’ employer awareness)
• hours worked are not generally ‘policed’, except for those of PAYE staff; again, student visa-holders might work over permitted hours if they are working for more than one employer

8.9 Compliance grouping and risk points

Risk points, and their extent, vary by employer type and sector. Combining the employer typology with the analysis of risk points suggests that activity to increase compliance with employment legislation needs to take account of the wider context, be targeted at specific groups, and focus on key risk points.

Activity could include awareness-raising, information sharing, additional support, and sanctions/enforcement actions.

The Home Office guidance felt overwhelming to some employers, who felt that more tailored guidance on pre-employment checks would be helpful. This could include sector specific information, highlighting what checks were required across different roles and addressing specific sector concerns. There was also a desire for information to be broken down into more easily digestible parts. Employers also felt that the Home Office could play a key part in driving legislation that enabled data sharing about workers.

8.10 Compliance and risks

The research findings were used to develop an employer compliance typology, based on knowledge of employment legislation and requirements, and employer behaviour in relation to these. The typology, by definition, includes a wide range of employers and practices within each group. It identifies 5 broad groups of employers:

• highly compliant employers
• a deliberate non-compliance group
• a selective non-compliance group
• an inadvertent non-compliance group (‘considerers’)
• an unaware group

Appendices

Appendix A – Research questions

What contractual models to business in scope utilise, and why? In particular, what defines the contracts of workers who do not hold “contacts of employment”, specifically those who are self-employed or limb (b) workers?

What employment statuses are used within the businesses; what is their understanding of the meaning of these employment statuses and how/why do they use them?

What experience do employers have of carrying out pre-employment checks on their workforce, and how does this differ by the employment status? What is their rationale for conducting these checks?

What understanding do different employers have of the significance of a worker’s immigration status? What do they perceive to be their responsibilities under Right To Work legislation?

How familiar are employers with practices such as substitution, the use of intermediaries, and sub-contracting of work, and what influence do these have on employers’ understanding of their responsibilities under Right To Work?

What are employers’ views of illegal working within their sector? How does this align with their own experience?

What do employers think is the role of third parties with regards to right to work checks? How may these differ from those of employment intermediaries, and what are the consequences of this?

Appendix B – Breakdown of interview respondents

Employer type	Number of interviews
‘Gig economy’ employers	8
Digital platforms	4
Self-employed/contractor employers, of which:	18
Care	4
Construction	6
Warehousing/delivery	6
Hotels	2
Employment intermediaries	5
Total	35

Appendix C – Bibliography of reviewed documents

CIPD, (2020) Reforming employment status: Building a stronger foundation for employment rights

CIPD, (2017) To gig or not to gig? Stories from the modern economy

Citizens Advice Bureau (2015) Neither one thing nor the other: how reducing bogus self-employment could benefit workers, business and the Exchequer

House of Commons Work and Pensions Committee (2017) Self-employment and the gig economy

Johnes, G. (2019) The gig economy in the UK: a regional perspective

Jones, R. (2019) Right To Work status of workers, contractors and agency staff

McKinsey Global Institute (2016) Independent work: choice, necessity, and the gig economy

Office of Tax Simplification (2016) The ‘Gig’ Economy

Online Labour Observatory (2020) The Online Labour Index

1. Also referred to as limb (b) worker, this type of worker has fewer rights and obligations. The status extends coverage of certain employment rights to a wider group of individuals than employees. ↩

2. One employer offered 2 respondents, one at a strategic level and one at an operational level. A breakdown of interview respondents can be found in Appendix B. ↩

3. The Construction Industry Training Board issues Construction Skills Certification Scheme cards to construction workers in the UK and is a means of showing employers running construction sites that an individual has the correct qualifications and training in order to undertake work. ↩

4. The W-1 tax status was replaced by W-2 in 2018. The respondent was referring to the practice by which US employers who pay an employee annual remuneration (cash and/or non-cash) of $600 or more for services performed must file a Form W-2 for each such employee - see About Form W-2, wage and tax statement. ↩

5. A share code is an online code used by non-UK nationals to verify their right to work, which denotes the kind of work that they are legally allowed to carry out, and the length of time that they can work for. Non-UK nationals must provide this code to their prospective employer, who then inputs the applicant’s share code and date of birth into the GOV.UK website to determine whether they are eligible to work in the UK. ↩