Anyone committing the offence will face penalties of up to six months in prison, a £5,000 fine, or both.
The Gangmasters Licensing Authority (GLA) sees this as a key weapon in the fight to end worker exploitation. Mike Wilson, chief executive of the GLA said: "It takes two to exploit labour - the provider and the user. We have introduced the GLA licensing scheme to bring providers up to the mark. It is now time to look at the other side of the relationship - the labour user.
"We have already started to do this. A number of investigations have been opened and information and evidence is being gathered with the expectation of early action.
"By using unlicensed labour providers, labour users become complicit in this exploitation. This is illegal and risky. Risky, because buyers and retailers understand perfectly the damage to their business that could be caused through association with illegal and exploitative practices and will simply stop using sources that are tainted in this way."
With the offences now in place, GLA enforcement teams are starting to deal with the illegal operators trading in the sector. Powers provided under the Gangmasters Licensing Act will be used to investigate, gather information, interview, arrest and prosecute those operating in the sector without a licence, and those using unlicensed labour providers.
Defra has published guidance that sets out the steps that a labour user can take to ensure a labour provider is licensed. By taking these steps a labour user can establish a defence in court to show they took all reasonable steps to check that the labour provider was licensed.
Jeff Rooker, Minister for sustainable food and farming said: "Farmers and other labour users will for the first time break the law if they use an unlicensed labour provider. "I would urge all labour users to follow our guidance. We have tried to keep the steps a labour user can take as simple as possible to ensure they do not impede the flexible supply of labour. This is vital, but it is also important to ensure the checks are robust enough to identify rogue gangmasters. I believe the Defra guidance strikes the right balance."