Are your commercial contracts updated to protect your business from employment law changes?

Stanley Stephens, Solicitor

New rules on third-party harassment and right to work checks have increased the importance of managing risk across commercial relationships.

We look at what has changed and how businesses can use their contracts to strengthen compliance and protection.

Third party harassment

From 30 October 2026, employers could face liability where an employee is harassed by a third party in the course of their employment and the employer has failed to take all reasonable steps to prevent it. The new protection extends to harassment by people outside the employer’s organisation, including customers, clients, contractors and suppliers.

For employers, this means preparations should extend beyond updating HR policies and training. Where employees regularly interact with another organisation’s workforce, employers should consider whether the commercial contract governing that relationship can help manage the risk.

Acas guidance on third-party harassment specifically identifies reviewing client, customer and supplier contracts or terms and conditions to ensure they contain relevant protections as one of the steps employers could take.

Depending on the nature of the relationship, contractual provisions might require both parties to:

• take appropriate steps to prevent harassment of the other party’s personnel;
• maintain suitable anti-harassment policies and procedures;
• provide mechanisms for reporting and addressing incidents; and
• ensure appropriate protections extend to subcontractors where relevant.

The appropriate provisions will depend on the relationship and the degree of interaction between the parties.

Contractual provisions are not a substitute for the wider steps employers may need to take. Acas guidance on third-party harassment also identifies measures such as assessing risks, monitoring and recording incidents, maintaining appropriate policies and providing training.

However, reviewing relevant commercial contracts alongside those HR measures can help employers address third-party harassment risk both within the workplace and across their wider commercial relationships.

Right to work

From 1 October 2026 the Border Security, Asylum and Immigration Act 2025 expanded the illegal working regime under the Immigration, Asylum and Nationality Act 2006 by widening the definition of an “employer” (the Extended Liability Regime).

In practical terms, a business may now be liable for failing to carry out “right to work” checks even where it does not directly employ or engage the illegal worker. In these circumstances, the business may face a civil penalty liability.

The Extended Liability Regime applies in the following situations:

• Intermediary contractor arrangements: Party A engages Party B to provide a service. Party B subcontracts provision of that service to Party C. Party B would be an intermediary contractor between Party A and Party C. Party B can be liable for Party C’s failure to undertake “right to work” checks.
• Online matching platforms: A business operates a website matching customers with service providers. The business operating the website could be deemed to be the employer of the service provider or their employees, and therefore responsible for carrying out the relevant “right to work” checks.
• Substitution arrangements: A business employs an individual to provide work or services, and their contract includes a substitution clause. The business may be deemed the employer of any substituted individual and responsible for checking the substituted individual’s “right to work”.

Certain arrangements remain outside the scope of the Extended Liability Regime. This includes genuinely self-employed individuals who operate their own businesses and provide services directly to customers, including many individuals working through personal service companies. However, whether an arrangement falls within the regime will depend on the specific circumstances, including how the services are arranged, supplied and performed. For example, an individual operating via limited company who forms part of a subcontracting chain rather than providing services directly to the end-customer, could still be caught by the Extended Liability Regime.

Businesses can manage their exposure to liability through establishing a “statutory excuse”. This includes reviewing contractual arrangements and imposing right to work compliance obligations on suppliers. Businesses should also consider requesting evidence of compliance and protections in respect of any breach, through warranties and an indemnity.

Our commercial team can assist businesses in assessing commercial relationships and introducing proportionate anti-harassment and right to work compliance provisions into new and existing contracts with suppliers. Contact the team on 0161 832 3434, or at [email protected].