What does increasing scrutiny on recruitment practices mean...?

The government holds substantial powers over your M&E construction company. Unless you’re dedicating time and resources to keep on top of recent changes, you might not even be aware of the extent of their control. With increasing scrutiny on recruitment practices and umbrella companies, including a new Labour Market Enforcement Strategy released in July 2025, construction is fast becoming an industry bound by watertight legislation.

It’s survival of the fittest, and for your construction company to thrive, you need to be aware of the risks your company could be facing every day.

A new era of risk for construction recruitment

Construction has notoriously been known as an industry that will cut corners to make sure projects keep moving. Favouring action over paperwork, we’ve all heard stories of construction companies that might not be entirely above board, but that will get the job done. In this new era of risk for construction recruitment, this laissez-faire approach simply isn’t acceptable.

The need to find more workers within the construction industry as a whole

The construction industry is in dire need of more workers; the impact of Brexit and the COVID pandemic are still being felt in 2025. In order to meet demand, a further 225,000 workers are needed by 2027. Inevitably, the need for new workers has meant that some companies have chosen to take the risk of engaging workers that are underqualified, not compliant, and even illegal.

Why are construction companies facing more risk of fines?

The attention faced by the construction industry has led to a new focus on all aspects of construction, from M&E services, to labour and management, and the government has taken decisive action to try and ensure the right procedures are followed in the sector. While reputational damage and legal action has always been a repercussion faced by non-compliant construction companies, a new focus on the fines companies could face puts greater financial pressure on businesses to follow the right procedures.

Government legislation and pressure on construction recruitment

In August 2023, the government announced that fines for those supporting illegal migrants would triple from February 2024. This announcement was the biggest shift in civil penalties since 2014. In 2024, FP McCann and Adana Construction were fined a combined total of £405,000 for employing illegal contractors and workers. While the Home Office has since issued an apology for the immigration raid on FPMcann, as the workers were in fact ‘lawfully entitled to work on the site’, the point has been made: the government will not hold back when it comes to issuing fines for non-compliance in construction.

The four broad areas of legislation

The four broad areas of legislation the government are tackling are:

Immigration compliance
Labour exploitation and modern slavery
Competence and qualification
Health and safety

The general public are likely to be aware of compliance and health and safety in construction, but as a construction business owner, immigration and labour exploitation are equally important to keep at the forefront of your mind when it comes to the workers you engage.

Construction companies can be fined £45,000 per illegal worker for a first offence, with repeat offences carrying a penalty of up to £60,000 per worker. For some, the issue of immigration compliance will lead directly onto the issue of labour exploitation. When workers are perceived to be exploited, the Gangmasters and Labour Abuse Authority (GLAA) is likely to come into play. GLAA is an executive non-departmental public body, sponsored by the Home Office, with the aim of protecting vulnerable and exploited workers. The GLAA holds police-like powers, and any negative connection with the GLAA is likely to create extreme reputational damage for your construction business.

Engaging workers with the correct competencies and qualifications is often linked with a worker’s possession of a CSCS card. Unfortunately, CSCS cards can be seen as an easy target for fraudsters looking to replicate cards and provide unqualified and incompetent workers with false paperwork.

Failure within any of the previous 3 areas of legislation can ultimately lead to health and safety failings, which can have dire consequences for your business. With illegal or incompetent workers, health and safety risks can increase tenfold, and have the ability to cause your construction business an immense amount of financial and reputational damage.

What are the financial risks for your M&E construction company with new legislation?

New legislation cracks down on the four areas referenced above, and the government’s ‘no-nonsense’ approach to enforcement can mean that your construction company is at risk of substantial fines.

UK immigration law and focus on illegal workers

The fines of up to £60,000 per illegal worker aren’t simply threats. The government has backed up their new legislation with an increase in immigration enforcement visits in key sectors by 50%, and this includes construction. With a greater chance of being caught out, this is a clear warning to those who flout the rules, and a strong message of the importance of knowing the status of your workers.

The statistics already speak for themselves, as since July 2024, the Home Office has carried out over 9,000 enforcement visits, resulting in 6,410 arrests and 1,921 civil penalties. These figures show an increase of 40% compared to the previous year.

CSCS schemes compliance

While CSCS cards are used to demonstrate that a worker has the training and qualifications for the work they carry out, they can not be used as proof of the right to work in the UK. A brief glance at a CSCS card is not an appropriate way to safeguard your business, and with sophisticated replicas in circulation, it’s vital that all workers on construction sites have their cards thoroughly examined, or electronically checked if possible.

Forging and incorrect use of CSCS cards is not a new phenomenon, but it’s definitely under greater scrutiny than ever before. In 2019. Oleksandr Sukhoviy was arrested for forging CSCS cards. Officers seized 3,000 completed identity documents, 3,500 passport style photos and 300 Construction Skills Certificate Scheme (CSCS) cards, as well as 40,000 blank cards and £15,000 in cash. If you’re found to be engaging workers who do not have valid CSCS cards, you’ll be breaching health and safety guidelines and could be putting your business at risk.

CIS compliance

The Construction Industry Scheme (CIS) is enforced by HMRC and is the primary regulator in the compliance of recruitment-related taxes. Failure to pay your taxes correctly can result in severe financial penalties: even accidentally submitting your return incorrectly can incur a penalty of up to 30% of the underpaid tax. For late tax returns, penalties begin at £100 for returns that are a day late, and will continue to increase. A return that is submitted 2 months late will receive a second charge of £200. A return that is 6 months late will incur a further charge of £300 or 5% of the CIS deductions due, whichever is the higher amount.

New scrutiny on umbrella companies

The government is doubling down on their scrutiny of umbrella companies. Evidence of non-compliance from umbrella companies has been noted and the government launched a consultation on tackling non-compliance in the umbrella company market in the summer of 2023.

Now, the government plans to take action in order to protect vulnerable workers. Responses from the 2023 consultation have led to plans that will see umbrella companies regulated and brought within the scope of the Employment Agency Standards Inspectorate’s (EAS) remit. To help protect workers from large tax bills caused by non-compliant umbrella companies, from April 2026, responsibility to account for PAYE will shift from the umbrella company that employs the worker, to the recruitment agency that supplies the worker to the end client.

On 21st July 2025, the United Kingdom Labour Market Enforcement Strategy 2025 to 2026 was released. The strategy places particular emphasis on construction as a high priority sector for law enforcement. Preventative action to reduce the risk of exploitation has been highlighted, and confirms that umbrella companies will be clearly defined to allow for their regulation within the scope of EAS.

This legislative change will make you, the business owner, legally responsible for ensuring tax deductions are correct.

Police with paperwork waiting to issue fine to construction company

How can construction companies avoid fines with their recruitment process?

The number of fines to construction companies are rising year on year. Data from the Home Office demonstrates that in the first quarter of 2025, 748 penalties were issued for illegal workers, with a total value of fines worth £41.6 million. These figures are noticeably higher than in the final quarter of 2024, 489 penalties were issued, with a total value of £29.2 million.

To stop your construction company being hit by fines, it’s essential that you revisit your recruitment process.

Adopt due diligence across your Mechanical & Electrical supply chain

To have confidence in the due diligence process your construction company follows, it’s key for you to understand every aspect of your supply chain. From the umbrella companies you work with to the individual workers you engage, you should be completely comfortable that everyone is qualified for their role, and has the correct paperwork to legally do their job.

The Construction (Design and Management) Regulations 2015 details duties for all parties involved in a project. Clients have to make suitable arrangements for managing a project, including appointing competent designers and contractors. Contractors have a responsibility not to appoint anyone on a construction site unless they have the skills, knowledge, training and experience to carry out their tasks in a manner that secures health and safety. These legal requirements connect health and safety management with the recruiting, vetting, and engagement processes.

Use P.I.E.R to help you build a compliant recruitment process

At P.I.E.R, we understand how every aspect of construction knits together, and we know that one element will often have a knock on effect on the rest. For example, illegal workers without the correct paperwork could potentially be lacking the skills necessary to do their job. A forged CSCS card could lead therefore to devastating health and safety consequences that will leave you facing reputational damage and hefty fines.

As experts in M&E recruitment, we can make sure your mechanical and electrical construction staff are taken care of from the moment you consider engaging them, to the second the project has been completed.

By working with your business, we’ll help guide you through all of the legislation that could have an impact on your bottom line. Our dedication to creating compliant construction workforces across the UK has set us in good stead for the last two decades, and we have a track record of providing high quality construction workforces, that are competent, compliant, and cost effective.

Use a compliant recruitment process

A compliant recruitment process will help your construction company grow, and protect your business from unnecessary financial penalties. Contact P.I.E.R for more advice on a compliant M&E workforce, and to find out more about the increasing scrutiny facing our sector. We’re happy to offer advice and guidance to new and existing clients, and our transparent approach has meant our reputation for compliant construction recruitment is well known within the industry.

Safeguard your construction company with a compliant M&E recruitment process. Let P.I.E.R show you how.

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References

These are the sources of research and references we have used to create this article:

What does increasing scrutiny on recruitment practices mean for my construction company?

A new era of risk for construction recruitment

The need to find more workers within the construction industry as a whole

Why are construction companies facing more risk of fines?