Employment & Pensions Blog: Government Crackdown on Illegal Gig Economy Workers

Most people are aware that there are severe consequences for employing someone who does not have the right to work in the UK. Employing someone you know does not have the right to work is a criminal offence, and doing it accidentally can result in a civil penalty of up to £60,000 per illegal employee if you haven’t carried out the proper checks. 

As the law currently stands, employers are only required to check the right to work to those who meet the definition of ‘employee’, meaning that that they don’t actually have to check the right to work status for workers and the self-employed. 

At the same time, the gig economy in the UK (and globally) is going through a period of significant growth, with businesses again engaging individuals on a flexible self-employed or worker basis to avoid the costs that come with permanent employees. As these gig economy individuals don’t (at least in theory) meet the legal definition of an employee, businesses technically don’t have to check their right to work. Following a series of recent raids from the police, the Government is now concerned that the gig economy has become a safe haven for illegal working. 

Clamping Down on Illegal Working

As a result, the Government has now announced plans to introduce stricter laws designed to clamp down on illegal working by bringing right to work checks for gig economy and zero-hour workers in line with the existing requirements for employees. Meaning that businesses who use gig economy and zero-hour workers will have to carry out right to work checks for these individuals using the same Home Office process that they currently use for their employees. Businesses who fail to carry out these proposed checks will face the same substantial fines and criminal penalties mentioned above. 

At the time of writing this, the date for implementing these changes is unconfirmed.  

Comment

Few are going to oppose the clampdown of illegal working in the UK. However, before these changes are implemented, the Government needs to clarify certain points to help employers understand exactly what their new obligations are:

• What does the Government mean by ‘gig economy workers’? Does this simply mean that businesses will have to check the right to work for everyone they engage with, whether they are an employee, worker or self-employed? 
   
• Self-employed contractors typically have a right of substitution, the right (where they aren’t available) to send someone else to carry out the work instead. Many employment status cases have been decided on this right of substitution, and the case law is clear that the more unrestricted this right is, the more it weighs in favour of self-employment (i.e. the more unrestricted the contractor is in deciding who they can send as a substitute, the more likely it is they will be genuinely self-employed). Rather than having a completely unrestricted right to send a substitute, presumably these changes mean that the right of substitution will now need to be made subject to the substitute having the right to work in the UK.   

What is clear is that the Government wants the obligation to confirm the right to extend beyond just employees. Whilst we wait some important clarification on certain points, businesses who use flexible labour should review their existing right to work policies and consider how these proposed changes might impact their existing right to work processes in practice.   

If you require any assistance in relation to right to work, please contact a member of the Employment Team.