Regulatory Outlook

Employment and immigration | UK Regulatory Outlook September 2023

Published on 27th Sep 2023

AI and employment law | UK employers face threefold rise in penalties for illegal workers | Umbrella  and employer-of-record regulation on its way – potential liability for users of their services

AI and employment law

The wider application of artificial intelligence (AI) and the implications for employment law is the subject of a House of Commons library briefing published this summer. Our Insight looks at recent developments in relation to AI in the workplace. On 28 September, our compliance webinar series offers some tips on how to mitigate and manage regulatory risks associated with the use of generative AI.

UK employers face threefold rise in penalties for illegal workers

The Home Office has announced that, from early 2024, employers will face initial fines of up to £45,000 per illegal worker, an increase from the current level of £15,000. This is also set to increase from £20,000 to £60,000 for repeat breaches. The changes represent a 200% increase in the fines faced by employers. The Home Office is also to launch a consultation later this year on stronger action that could be taken to deter licensed businesses from employing workers without lawful immigration status.

Umbrella  and employer-of-record regulation on its way – potential liability for users of their services

29 August saw the closure of a consultation period relating to proposals to regulate so-called umbrella companies (the UK equivalent of Employers of Record, or EORs), many of whom are considered to be involved in various forms of tax avoidance and general non-compliance. Any organisation which leases or seconds its staff on any regular basis, and any organisation using the services of such organisations, may be affected by any legislation resulting from this.

Many commentators consider the most likely outcome will involve transfer of tax and other liabilities from non-compliant  umbrellas to their users, possibly on a strict liability basis, so that users are forced to carry out detailed due diligence if they want to avoid serious financial risk. However any such regulation will probably require primary legislation that may not come into force for some time, which is seen by many as likely to lead to a continuing proliferation of tax avoidance schemes in the labour supply chain. Users will, in the meantime, still need to take care to have Criminal Finances Act procedures in place so that they can show they took reasonable steps to prevent the facilitation of criminal tax evasion in their labour supply chain.

We recently ran a webinar providing an update on umbrella, employer of record and independent contractor and discussing how to prepare for likely new enforcement and new legislation in 2024-5. Request the recording here.

New law giving temporary and agency workers a right to request more predictable working patterns

See our Insight for more.

ICO updates guidance on information about workers' health  

The ICO has released guidance aimed at employers to better understand their data protection obligations under UK data protection law (namely, the UK GDPR and DPA 2018) regarding their employees' health data.

Subjects covered include how to handle sickness and injury records, how to comply with regulatory requirements when operating an occupational health scheme, or ways to ensure compliance when monitoring worker's health.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

Interested in hearing more from Osborne Clarke?