Prevent Potential Fines With a Compliant Construction Recruitment Process

Advice Centre

Safeguard your business by making sure that your construction recruitment process is compliant. Why risk a costly fine and long-lasting reputational damage when you could just follow the right steps from the beginning?

If you’re not compliant, you’re not just cutting corners – you’re breaking the law.

Is my construction company really likely to be fined?

Yes! The UK government is cracking down on illegal employment and a quick Google search will show you plenty of examples of British companies that have been caught out over the last few years. In 2024, the BBC reported that FP McCann and Adana Construction were fined £225,000 and £180,000 respectively for employing illegal contractors and workers. 

Fines for non-compliant construction recruitment are on the rise

Fines for employing illegal workers have risen to a potential £60,000 per illegal worker. 

The £60,000 fine for repeat offenders came into force on 13th March 2024 and tripled the previous fine of £20,000. For first time offences, the fine per worker is £45,000, another substantial increase on the previous £15,000.

These increased figures should be enough to demonstrate the severity with which the government views non-compliance, and with a focus on the construction sector, now is the time to check your compliance process.

There is increasing government focus on the construction industry

In March 2025, the Home Office published a news article that listed the construction industry as a new sector covered by employment checks. Penalties for non-compliance include:

  • Fines of up to £60,000 per worker
  • Business closures
  • Director disqualifications
  • Potential prison sentences of up to 5 years

If your recruitment agency is non-compliant your company could still be fined

As a business owner, it’s not enough to make sure that your own company is compliant. If you use a non-compliant recruitment agency, you could still face repercussions. The construction sector is particularly vulnerable to employing illegal workers as the use of subcontractors and self-employed workers is more common than in other sectors.

According to research conducted by Verian for the Home Office, 81% of the employers using agency workers said that recruitment agencies were responsible for conducting right to work checks. While it’s understandable that construction businesses want to transfer responsibility to the agencies they work with, it’s not true that it’s entirely down to the third party. As a business owner you must understand the processes involved with every step of your supply chain.

How a lot of construction recruitment agencies make this worse

Sadly, we know that certain construction recruitment agencies don’t follow the procedures they should – leaving their clients vulnerable to malpractice, without even being aware that the integrity of their business has been compromised.

Low margins are forcing poor practices

Competition for contracts is tough between recruitment agencies, specifically those new to the game. Rather than focusing on establishing good practices and developing an understanding of the sector, some recruitment companies simply drive down their prices in the hope that cheap will win. While low margins may look attractive to businesses looking for workers, it’s important to remember that if prices look too good to be true, they probably are.

Low prices will often mean poor practices, which could manifest in many ways: underskilled workers, uncommitted workers, and non-compliant workers.

‘Getting away with it’ is unlikely to last much longer

Just because a company has been able to ‘get away’ with poor practices in the past, it doesn’t mean that will continue. The UK government has made it clear that they will be taking decisive action when it comes to illegal workers. In November 2024, Operation Tornado saw enforcement teams conduct 235 visits to nail bars and convenience stores, with 154 people arrested under suspicion of working illegally. Within the same operation, more than 50 businesses were given civil penalty referral notices worth up to £40 million. While Operation Tornado targeted nail bars and convenience stores, other industries being targeted include construction and car washes.

Tightening government legislation impacting construction companies and recruiters

The change in legislation and tightening of the law will impact construction recruitment agencies as well as construction companies, and it’s vital that there’s a level of joint understanding in relation to the importance of compliance within our sector.

Ultimately, the crackdown will help our industry become more reputable, and prevent companies breaking the law to have one-over on companies who do everything they can to provide a compliant service.

How do I protect my construction company from fines?

There are several steps you can take to protect your construction company from fines.

First, take a look at your own policies. Do you engage workers directly? Ensure you understand the new legislation and that everything your own business does is within the law.

Next, take a look at the companies in your supply chain. Do you know their compliance policies and have a record of the right to work checks?

It might seem daunting, but taking time out to really examine the contracts and agreements between your company and theirs, and their company and their workers, can make all the difference.

Ignorance of compliance guidelines is no excuse and will not save your company

Simply telling enforcers that you didn’t understand the law won’t be enough to protect you from fines. With so much press and guidance available to you, ignorance is no excuse. You must be diligent in your approach to engaging workers and the only way to stay on top of the changes is to understand the law.

Your approach to protecting your company from fines should be twofold:

  1. Be aware of the latest compliance legislation yourself
  2. Ask for proof of compliance from your recruitment partners

All staff within your organisation should be aware of the latest compliance legislation too – it’s not enough to rely on one person to do the grunt work. Once you’re confident with your own processes, move on to your recruitment partners and gather all of the information you need to ensure that your business is not at risk.

What do P.I.E.R do to ensure compliance and reduce potential fines?

At P.I.E.R we welcome legislation changes that will strengthen the credibility and reliability of our industry. From the start of our journey, compliance has been a key component of our offering. We strive to provide our clients with a recruitment solution that they can trust and our unique 7 step process will help to mitigate your risk of potential fines in the future.

Use a recruitment company with a compliant recruitment process

The 7 step process we follow with all of our clients can give you peace of mind that all of your compliance requirements have been considered.

Step 1: Define Needs – Understanding your needs to ensure qualified workers in the right areas

The first step when we engage with our clients is to understand their needs. We’ll ask you what issues you’re facing so we understand the problem completely. Often our clients will say that with previous construction recruitment agencies, they’ve found that the workers they have engaged didn’t have the right experience (if any), or that the workers were engaged incorrectly. We don’t want our clients to waste their money on a worker that doesn’t fit their requirements.

We’ll ask you a series of questions that will help us find the right workers at the right time. You’ll be able to define the experience level of the workers you’re looking for, any qualifications they need to have or additional training they should have undertaken, and we’ll find out your budget.

When you’ve defined your needs, P.I.E.R will find you qualified and experienced workers that fit your brief.

Step 2: Impact Advice – Identify impact points in the area that could affect recruitment

Once you’ve told us what workers you’re looking for, we’ll be able to offer you some advice about rates of pay, legal frameworks and compliance such as understanding SDC (supervision, direction, and control). With over 3 decades of experience within the construction sector, we can help you mitigate the problems you’ve faced in the past. If you’re struggling to retain workers but your rates are too low, we can give you up-to-date guidance on the typical rates expected by workers that consider your geographical area, the level of skill and experience you need, and the specific type of construction work you require.

With the full details of your project, we’ll also be able to advise you on any worker timelines and the size of the temporary workforce you’ll need. For example, we can help you plot when you’re likely to need more temporary workers, and at which stage of the project you’ll be able to pull back on workers. By providing you with a complete worker plan, we can ensure you retain a higher percentage of your workers across the project, reducing your staff turnover, hassle, and overall cost.

Step 3: Identify Candidates – Identify candidates using tried and tested workers to fit needs

Step 3 is for us to identify the right workers for your project. We know each of the workers on our database and can quickly identify suitable candidates from our pool of trusted and skilled tradespeople. We won’t send out a plea for ‘any’ construction workers to get in touch with us. There’s no need. Years of working in our industry and building contacts and connections means that we will know the capabilities and limitations of our workers. 

You’ll be given a pack for each worker we suggest that includes their experience, qualifications, training, references, and previous work history. It’s far easier to match the right worker with the right project when you have all of the information available. While of course you don’t have to listen to our recommendations, why wouldn’t you? When you’re offered compliant, reliable, and hard-working candidates you can be reassured that we’ve sourced the best match for the work you need.

Step 4: Worker Compliance – Ensuring workers documentation and checks

Ensuring worker compliance is not a one-time action. Our team stays on top of the compliance legislation to make sure that our workers are correctly engaged, whether that be by PAYE or umbrella companies. All of our workers will have their references, qualifications, and identity checks, and we’ll make sure that any limitations about how or when they can be engaged are made clear to you, our client.

You’ll already be aware that HMRC will raise questions if workers are engaged incorrectly. Equally, the use of unreputable umbrella companies can have a damaging effect on your business too. If a recruitment agency is using a dodgy umbrella company to pay workers engaged on your project, you could be liable too – even if you didn’t know there was an issue.

At P.I.E.R, we undertake due diligence on the umbrella companies we use, and as required by law, our workers have a choice of umbrella company. The extent of our compliance knowledge means that we have extensive knowledge of IR35 and SDC, so you can have peace of mind that all compliance requirements are being followed to the letter. Every step in our process can help you avoid costly fines.

Step 5: Client Compliance – Ensuring your compliance with SDC

It’s important for clients to be aware of every process that needs to be followed when you engage temporary workers, including SDC. Supervision, direction and control is not an issue that’s solely for recruitment agencies to understand – if you’re engaging temporary workers for your business, you must understand it too.

SDC determines employment status. If a self-employed worker is subject to SDC, they must be put on the payroll. Agency legislation is documented in full in HMRC’s Employment Status Manual. Put simply, the legislation does not apply if it can be demonstrated (and is recorded) that a worker is not subject to supervision, direction, or control, in terms of how they provide their services. SDC will impact PAYE and it’s important for construction businesses to understand how they are engaging workers and why they are engaging them in that way.

At P.I.E.R, we engage many workers as PAYE workers. Lots of workers choose to be paid in this way, but workers within SDC, must be paid as a PAYE worker. There are a variety of workers caught under the SDC ruling in the construction industry, including Labourers, Trade Mates and Skilled Labourers.

We find that clients will often know very little about SDC. At P.I.E.R, we make sure that we’re completely transparent in the way we operate, including advising our clients on the right way to engage workers. Our clients will sign off if SDC does not exist, adding another layer of protection to their business.. We check workers for SDC, and can explain the process to clients so that they are never kept in the dark about their responsibilities.

Step 6: Payroll Compliance – Using only FCSA / Saferec umbrella companies for payroll

Once you understand how to pay clients, it’s important to ensure that the recruitment agency you work with is using accredited umbrella companies. At P.I.E.R we only use FCSA or SafeRec umbrella companies for our payroll. SafeRec conducts a full due diligence process on all its Umbrella Company PSL. This process includes auditing payslips, reviewing contracts of employment, and how the Umbrella Company complies with laws and regulations.

Workers get given a choice of umbrella companies and you can be confident that payroll compliance is assured. Our focus on payroll compliance protects everyone in the supply chain from tax liabilities, including you and your business.

Step 7: Compliant Workforce – A fully compliant workforce to meet your needs

The final step in the P.I.E.R process is the delivery of fully compliant, qualified workers that suit your project. With a workforce plan in place that will cover your project from start to finish, you can spend less time worrying about your workers, and more time focusing on your business.

With our high level of compliance, industry knowledge, and up to date understanding of legislation, you’ll be protected against fines, non-compliance and reputational damage. Not all recruitment agencies are compliant, but it’s your responsibility to make sure you’re working with an agency that is.

What’s the worst that can happen if I don’t use a compliant recruitment agency?

If you knowingly or unknowingly engage with a recruitment agency that’s not compliant, you’ll be facing financial and reputational damage that could last well beyond the duration of your latest construction project.

Landscape of increasing penalties and fines

The government crackdown on non-compliance and illegal workers is already impacting businesses that don’t listen to the law. With a greater awareness of the penalties imposed in the sector, there’s no reason to put yourself at risk.

Quickly changing compliance legislation

Compliance legislation is ever evolving and while it’s understandable that clients can’t always stay on top of the details, it’s never been more imperative to work with a recruitment agency you can trust.

What you are likely to be fined now will increase in the future

The fines for non-compliance have tripled in recent years, and there’s no chance they’ll reduce. Get your ducks in a row now and be ready for future inspections without needing to panic at the last moment.

Let P.I.E.R help protect you from fines

As a trusted construction recruitment specialist with a unique 7 step-process for protecting our clients, we can make sure you don’t face any fines in relation to your compliance or your workforce.

Use a recruitment company with a compliant construction recruitment process and reduce your risk of fines.

Book a Call

References

Similar Posts