Two co-founders launch a fintech startup in London. One is British, one holds a Tier 1 (Entrepreneur) visa that expired eight months ago. Both are listed as directors at Companies House. Both draw a salary. Neither has had a right to work check.
The business grows. They hire staff. They run right to work checks on every employee, diligently, from day one. They have a compliance process. They have an audit trail. They are doing everything right — except for the person at the top of the organisation who has no legal right to work in the UK.
When this surfaces during an immigration enforcement visit, the penalty is not reduced because the rest of the compliance programme was exemplary. The law does not offer a discount for irony.
The legal position is clear
The Immigration, Asylum and Nationality Act 2006 creates a civil penalty for employing a person who does not have the right to work in the UK. The key question is not whether someone is an "employee" in the traditional sense. It is whether they are employed under a contract of employment, a contract of apprenticeship, or a contract to do work personally.
Company directors who receive remuneration — whether as a salary, fees, or any other form of payment for their services — fall within the scope of the right to work obligation. The Home Office employer's guide to right to work checks explicitly confirms that right to work checks must be conducted on company directors, partners, and LLP members who are paid for their work.
This is not ambiguous. It is not a grey area. If a director receives payment, the company must verify their right to work before that payment begins.
When the obligation applies
The obligation applies in the following circumstances:
Salaried directors. A director who draws a salary from the company must have a right to work check conducted before they start receiving that salary. This includes executive directors who work full-time in the business and receive PAYE earnings.
Directors receiving fees. Some directors — particularly non-executive directors — receive fees rather than a salary. If those fees constitute payment for personal service (which they almost always do), the right to work obligation applies.
Salaried partners. In partnerships and LLPs, salaried partners who receive fixed remuneration for their work (as distinct from a share of profits) must be checked. HMRC's employment status rules, which determine whether a partner is treated as employed or self-employed for tax purposes, do not override the immigration obligation — but in practice, if HMRC treats you as employed, immigration enforcement will too.
LLP members receiving a salary. Members of a limited liability partnership who receive a guaranteed minimum payment for their services fall within scope.
When the obligation does not apply
There are genuine exceptions, and understanding them prevents unnecessary checks that could themselves create legal issues:
Unpaid directors. A director who receives no remuneration of any kind — no salary, no fees, no benefits in kind — is not within scope. This is common in early-stage startups where directors work without pay, or in charitable organisations with voluntary trustees who also hold directorships.
Honorary positions. A person who holds a directorship in name only, with no executive function and no payment, does not require a right to work check.
Equity-only founders. A co-founder who holds shares and sits on the board but draws no salary, fees, or other payment is not within scope — until the moment they start receiving remuneration.
Partners receiving profit share only. A partner in a traditional partnership who receives only a share of the firm's profits (not a salary or guaranteed payment) is generally outside scope, because the relationship is not one of employment. However, this distinction is fact-specific and can be challenged if the substance of the arrangement resembles employment.
The critical point is that the distinction turns on payment for personal service, not on job title or corporate structure. A person called "director" who receives no payment does not need a check. A person called "consultant" who receives regular payment for personal work does.
Why this gets overlooked
Despite the clarity of the legal position, right to work checks on directors and partners are among the most commonly neglected compliance obligations in UK businesses. Several factors explain this.
Founders check themselves. In many startups, the person responsible for HR compliance is also a director who needs checking. The psychological barrier to checking yourself is significant. It feels bureaucratic, unnecessary, and slightly absurd. But the law does not care about how it feels.
Assumption of legitimacy. Directors, particularly those who founded the company, are assumed to have sorted out their own immigration status. Nobody questions whether the CEO has the right to work. The assumption is that someone at that level would not be in the country without permission. This assumption is often correct — and occasionally catastrophically wrong.
Companies House does not check. Registering as a director at Companies House does not require proof of right to work. Anyone can be appointed as a director regardless of their immigration status. This creates a false sense of official validation — "they're registered at Companies House, so it must be fine."
Investors and partners do not ask. During due diligence, investors typically check the cap table, the financials, and the IP ownership. They rarely ask whether the directors have had right to work checks. This means the gap can persist through multiple funding rounds.
Visa transitions create blind spots. A co-founder may have had the right to work when the company was founded — on a Tier 1 visa, a spouse visa, or even a student visa with work rights. When that visa expires or changes, the right to work may lapse. If nobody is tracking it, the director continues working without permission. This is particularly common with visa expiry tracking gaps in early-stage businesses.
The consequences of non-compliance
The penalties for employing a director without the right to work are identical to those for employing any other worker without the right to work:
- First offence: civil penalty of up to £45,000 per illegal worker
- Repeat offence: civil penalty of up to £60,000 per illegal worker
- Criminal prosecution: up to five years' imprisonment for knowingly employing someone without the right to work
For a startup, the financial penalty alone could be existential. But the secondary consequences may be worse.
Sponsor licence implications. If the company holds or is applying for a sponsor licence, a compliance failure at director level is likely to result in refusal or revocation. The Home Office expects the people responsible for sponsorship compliance to be compliant themselves.
Investor confidence. Discovering mid-due-diligence that a co-founder has no right to work is not just a legal problem. It raises fundamental questions about the company's governance, attention to detail, and risk management. These are not questions investors enjoy asking.
Director disqualification. In serious cases, a director who has been working without the right to work — and who knew or should have known about their status — may face disqualification proceedings. This removes their ability to act as a director of any UK company.
Personal liability. Unlike most corporate penalties, immigration offences can attach to individuals as well as entities. A director who knowingly employs another director (or themselves) without the right to work faces personal criminal liability, not just a corporate fine.
How to conduct the check properly
The right to work check for a director follows the same three-step process as for any other worker, as set out in the Home Office employer's guide:
Step 1: Obtain. The director must present original documents from the acceptable documents lists (List A or List B) published by the Home Office. For British and Irish citizens, this typically means a passport. For non-UK nationals, it means a passport plus visa, BRP, or eVisa.
Step 2: Check. The documents must be checked in the presence of the holder. The person checking must satisfy themselves that the documents are genuine, the person matches the photograph, the dates are valid, and the work permissions cover the role.
Step 3: Copy and record. A clear copy of the relevant pages must be made and stored securely, with a record of the date the check was conducted.
For directors with biometric residence permits or eVisas, the online right to work checking service should be used instead of or in addition to manual document inspection.
Who conducts the check on the directors? This is the practical question that most businesses struggle with. The answer is that the check must be conducted by someone authorised by the company — typically the company secretary, the HR lead, or another director. In a two-person startup, one director checks the other. It feels circular, but it satisfies the legal requirement.
The check must be conducted before the director begins receiving remuneration. For existing directors who have never been checked, the check should be conducted now. There is no retrospective penalty for not having conducted the check previously — but from the moment you become aware of the obligation, continuing to pay an unchecked director without verifying their status is knowing non-compliance.
The partnership and LLP dimension
Partnerships and LLPs present additional complexity because the line between partner and employee is blurred.
In a traditional partnership, partners are self-employed and share in the profits and losses of the firm. A partner who receives only a share of profits is generally outside the scope of right to work checks.
But modern professional partnerships — law firms, accounting firms, consultancies — frequently have salaried partners who receive a guaranteed minimum payment regardless of firm performance. HMRC already treats many of these arrangements as employment for tax purposes. The immigration legislation takes a similar view: if the substance of the arrangement is that a person is paid for personal service, a right to work check is required.
For LLPs, the position is governed by section 4 of the Limited Liability Partnerships Act 2000 and the relevant immigration provisions. Members who are treated as employees for tax purposes should be treated as requiring right to work checks.
Practical steps for businesses
Audit your board and partnership. List every director, partner, and LLP member who receives any form of payment. For each one, confirm whether a right to work check has been conducted and recorded. If it has not, conduct one immediately.
Include directors in your compliance audit process. When you prepare for a Fair Work Agency or Home Office visit, do not exclude directors from the sample. If an inspector asks to see right to work records and you cannot produce one for the CEO, the conversation deteriorates quickly.
Track visa expiry dates for all personnel, including directors. A director whose visa expires mid-tenure needs a follow-up check just like any other employee. Build this into your visa tracking process.
Brief your board. Make sure every director understands the obligation and has complied. Frame it not as a bureaucratic exercise but as a governance requirement — the same category as filing confirmation statements and maintaining the PSC register.
Document the process. Record who was checked, when, by whom, and what documents were reviewed. Store this with your corporate governance records, not just your HR files. When investors, auditors, or regulators ask, you need to be able to produce it promptly.
Certifyd's Right to Work Portal covers your entire workforce — including directors, partners, and board members — with the same verified, audit-ready compliance process you use for every employee. One system, one standard, no blind spots at the top.