A marketing agency in Bristol engages a freelance graphic designer. He works from home, invoices monthly, and is not on the payroll. He uses his own equipment. He works for other clients. He has been providing design services to the agency for eighteen months.
Nobody has ever asked him for right to work documentation. He is a contractor, not an employee. The agency's HR manager was clear on this point when the question came up: "We only need to check employees. He's self-employed."
Eight months later, an immigration enforcement visit reveals that the designer has overstayed his Tier 2 visa by two years. The agency is issued with a civil penalty notice. Their argument — "he was a contractor, not an employee" — is rejected. The penalty stands.
The assumption that right to work checks only apply to employees is one of the most common and expensive compliance errors in UK business. The legal reality is more nuanced, and the consequences of getting it wrong are severe.
What the law actually says
The Immigration, Asylum and Nationality Act 2006, Section 15, defines the scope of the right to work obligation. It applies to any person who employs another person under:
- A contract of employment (the traditional employee relationship)
- A contract of apprenticeship
- A contract personally to do work (a broader category that captures many contractor arrangements)
The critical phrase is "contract personally to do work." This is not limited to employees. It covers any arrangement where a person is engaged to perform work personally — as opposed to an arrangement where the person can send a substitute.
The Home Office employer's guide to right to work checks makes this explicit. The guide states that the right to work obligation applies to anyone "employed under a contract of employment, a contract of apprenticeship or a contract to do work or supply services." It further clarifies that this includes workers who are not employees in the traditional sense.
The test is not what the parties call the arrangement. It is the substance of the relationship. If a person is engaged to do work personally — whether they are called a contractor, a freelancer, a consultant, or anything else — the engaging business has a right to work obligation.
The personal service test
The dividing line is personal service. If the arrangement requires the individual to perform the work themselves — rather than having the right to send a substitute — the right to work obligation applies.
Consider two scenarios:
Scenario A: A business engages a plumbing company to install a new heating system. The contract is with the company. The company decides which of its employees does the work. The business has no control over which individual turns up. This is a contract for services — not a contract personally to do work. No right to work check is required on the individual plumber.
Scenario B: A business engages a self-employed plumber — John — to install a new heating system. The contract is with John personally. The business expects John to do the work. John cannot send someone else in his place without the business's agreement. This is a contract personally to do work. The business has a right to work obligation on John.
The distinction is not always clear. Many contractor arrangements sit in a grey zone where the contract says one thing and the reality says another. The right to work obligation follows the reality, not the contract.
Where businesses commonly get it wrong
Several categories of engagement routinely catch businesses out because the individuals are not considered "employees" in the conventional sense.
Freelancers and sole traders
A business that regularly engages a freelance writer, designer, photographer, developer, or consultant to perform work personally is in the scope of the right to work obligation. The freelancer invoices the business, is not on the payroll, may work for other clients, and considers themselves self-employed. None of this overrides the obligation if the substance of the arrangement is personal service.
The key question is: could this freelancer send someone else to do the work? If the answer is no — if the business engaged this specific person for their specific skills, and would not accept a substitute without agreement — the check is required.
Personal service companies (PSCs)
Many contractors operate through a personal service company — a limited company of which they are the sole director and shareholder. The business contracts with the company, not the individual. Invoices come from the company. Payments go to the company.
This corporate structure does not automatically remove the right to work obligation. If the substance of the arrangement is that the individual performs the work personally — which is almost always the case with PSC contractors — the engaging business should conduct a right to work check on the individual.
This is also the territory where IR35 becomes relevant. IR35, the off-payroll working rules administered by HMRC, determines whether an engagement with a PSC is really self-employment or disguised employment. If HMRC determines that the arrangement is really employment — because the individual has no genuine right of substitution, is subject to the business's control, and is mutually obligated to provide and accept work — the tax consequences change. But the immigration consequences also crystallise: the individual is, in substance, employed under a contract personally to do work.
A business that treats an engagement as outside IR35 (self-employed for tax purposes) but simultaneously argues it has no right to work obligation faces a contradiction. If the person is genuinely self-employed with a right of substitution, both positions may be defensible. If the person is, in substance, providing personal service, neither position holds.
Gig economy workers
The gig economy has created a new category of worker that sits awkwardly within the existing framework. Drivers, couriers, cleaners, tutors, and other gig workers often operate as self-employed individuals connected to a platform. The platform may argue it is a technology company, not an employer. The worker may believe they are self-employed.
But a series of Supreme Court and Employment Tribunal decisions — most notably Uber BV v Aslam [2021] UKSC 5 — have established that many gig workers are "workers" in the legal sense, entitled to employment rights. The right to work obligation follows: if the platform engages individuals personally to do work, it has an obligation to verify their right to work.
For businesses that use gig economy platforms to source workers — for cleaning, delivery, maintenance, or other services — the question is whether the platform has conducted right to work checks on its workers. If it has not, and the workers are providing personal service to the end client, the compliance gap may sit with the client as well as the platform.
Consultants on long-term engagements
A management consultant engaged for a six-month project. An IT specialist contracted for a system implementation. A interim CFO brought in on a fixed-term basis. These arrangements are often structured as contracts for services, with the individual engaged through a consultancy firm or PSC.
But if the individual is performing the work personally — attending the client's offices, working on the client's systems, reporting to the client's management — the substance of the relationship may require a right to work check, regardless of the contractual structure.
IR35 and immigration: the intersection
The IR35 off-payroll working rules and the right to work obligation overlap significantly. Both turn on the substance of the relationship rather than its label. Both look at whether the individual is personally providing the work.
For medium and large businesses (those with annual turnover above £10.2 million, a balance sheet above £5.1 million, or more than 50 employees), the off-payroll working rules require the engaging business to determine whether an engagement with a PSC falls inside IR35. If it does, the business must deduct income tax and National Insurance at source.
If a business determines that an engagement is inside IR35 — meaning the individual is, in substance, an employee — then the right to work obligation clearly applies. The business has acknowledged that the individual is providing personal service in a relationship that resembles employment.
If a business determines that an engagement is outside IR35 — meaning the individual is genuinely self-employed — the right to work question becomes more nuanced. If the individual has a genuine, unfettered right of substitution (the key indicator that takes an arrangement outside IR35), the right to work obligation may not apply. But in practice, many "outside IR35" determinations are marginal, and a cautious approach is to conduct the check regardless.
The risk of not checking is asymmetric. The cost of conducting an unnecessary right to work check on a genuine contractor is minimal — a few minutes of time and a filed document. The cost of failing to check a person who turns out to be working illegally is up to £60,000 in civil penalties and potential criminal prosecution.
How to determine your obligations
For any person engaged to provide work, ask these questions:
1. Is the contract with the individual personally? If the contract is with a company (not a PSC) that assigns whichever of its employees it chooses, you are contracting for services, not personal service. The right to work obligation is on the company, not on you. But verify that the company has met its obligations — particularly if it is an agency.
2. Does the individual have a genuine right of substitution? Can they send someone else to do the work without your agreement? Not a theoretical right buried in a contract, but a practical reality. If the answer is no — if you engaged this person and expect this person to do the work — the personal service test is likely met.
3. Is the individual providing the work themselves, regardless of contractual structure? If a PSC contractor attends your office every day, works under your direction, and cannot practically send a substitute, the substance of the arrangement is personal service. The PSC structure does not remove the obligation.
4. Is the arrangement inside IR35? If you have determined that an engagement is inside IR35 for tax purposes, you have effectively determined that the individual is providing personal service. Conduct the right to work check.
If the answers point towards personal service, conduct the check. The Home Office does not require you to resolve every nuance of employment status before verifying right to work. It requires you to conduct the check where the obligation applies — and the cost of over-checking is negligible compared to the cost of under-checking.
How to verify contractors properly
The right to work check for a contractor follows the same process as for an employee, as set out in the Home Office employer's guide:
Before the individual starts work, obtain and check their original identity documents from the acceptable documents lists (List A or List B). Confirm the documents are genuine, the photo matches the individual, the dates are valid, and the work permissions cover the type of work being done.
Make and retain copies of the relevant documents, with a record of the date the check was conducted.
For individuals with time-limited right to work, set a reminder for a follow-up check before the expiry date. This is particularly important for contractors on long-term engagements whose visa status may change during the engagement.
Use the online checking service for individuals with biometric residence permits or eVisas, in addition to or instead of manual document inspection.
Record the check centrally, not just in the project file or the contractor's folder. When the Fair Work Agency asks to see your right to work records, they will not distinguish between employees and contractors. Your system should not either.
Building a unified compliance system
The distinction between employees and contractors creates a practical challenge: many businesses have separate systems for employee compliance and contractor management. Employee records sit in the HR system. Contractor records sit in procurement, in project management tools, or in departmental filing systems.
This separation creates gaps. The HR team knows which employees have been checked. Nobody knows which contractors have been checked. When a new contractor starts, the assumption is that "someone else handles that" — legal, procurement, the project manager. When enforcement visits, the gaps are immediately visible.
The solution is a unified compliance approach that treats every person engaged to do work — regardless of their employment status — as requiring verification. One audit trail. One set of records. One standard of verification.
This does not mean treating contractors identically to employees for all purposes. It means applying the same rigour to identity verification and right to work compliance, regardless of the label on the relationship.
Certifyd's Right to Work Portal covers your entire workforce — employees, contractors, freelancers, and agency workers — with the same verified, audit-ready compliance process. One system for every person who works for your business, regardless of how the engagement is structured.