What’s the Current Policy?
Umbrella companies are often used by recruitment agencies to handle payroll and employ workers.
However, they are not properly regulated under current laws that apply to employment agencies.
This Means…
- Umbrella companies are not directly covered by the main rules.
- They fall outside of government inspections, even though they employ agency workers.
- Some non-compliant umbrella companies may deny workers’ rights or avoid taxes, and there’s no strong enforcement to stop this.
What’s Changing?
- Umbrella companies will now be regulated under the same rules as employment businesses.
- The law will be updated to include umbrella companies in the official definition of “employment business.”
- The Employment Agency Standards Inspectorate will inspect and take action against non-compliant umbrella companies.
- New rules will make sure workers get clear information about their pay and contract terms; and are protected from abuse and unfair treatment.
How Will They Be Regulated?
- The new Bill will define umbrella companies and allow them to be regulated by law.
- The Government will consult with stakeholders to update the rules they apply to umbrella companies, and fix key problems like unclear pay and difficulty enforcing workers’ rights.
Will Hiring Through Agencies Be More Expensive?
- The Government doesn’t think this will add big costs for businesses.
- It will help by stopping unfair, non-compliant companies from undercutting honest ones.
- New tax rules will also reduce the risk of mistakes or wrongdoing with worker classification.
- Workers will benefit from clearer pay, better understanding of their rights, and knowing who’s responsible for protecting those rights.
How Harding Evans Can Help
If you’d like tailored guidance on how the Employment Rights Bill may affect your business, our team is here to help.
Get in touch today on 01633 244233 or wilded@hevans.com.
