Government shelves plans to regulate umbrella industry leaving workers exposed to skimming, tax avoidance schemes and withheld holiday pay

The government has shelved plans to introduce the Single Enforcement Body (SEB) for employment rights, which included a strategy to regulate the umbrella industry. The SEB was to be introduced to protect workers’ rights and prevent bad practices in the labour market.

The powers of the SEB body were to have new powers to tackle non-compliance. That would have been through the introduction of civil penalties for underpayment for the breaches under the gangmasters licensing and employment agency standards regimes that result in wage arrears.

“It will also have powers to enforce statutory sick pay, holiday pay and transparency in supply chains / modern slavery statement reporting,” stated the government.

But according to news reports, Grant Shapps, the Business Secretary, revealed that plans for a “single enforcement body” for labour laws have been put on the back burner. Mr Shapps also said according to a Telegraph report that the employment bill is no longer “on the cards” after it was left out of every Queen’s Speech since the last election. 

The government is showing an astonishing disregard for millions of workers.

Julia Kermode, founder of IWORK

Workers are more exposed than ever to unscrupulous practices

Julia Kermode, founder of IWORK – a temporary worker advocate body– calls the government’s plan to put the SEB on hold “a bitter blow for workers”.

Kermode says temp and contractor workers time and time again find themselves “exposed to the risks of the unregulated umbrella sector – whether that’s being lured into working through tax avoidance schemes or being forced to use certain companies against their wishes due to restrictive preferred supplier lists.” 

“It’s also another kick in the teeth for workers whose holiday pay is often withheld by unscrupulous umbrella companies and employment agencies,” she says.

By shelving plans to introduce the Single Enforcement Body and in turn, regulate the umbrella industry, “the government is showing an astonishing disregard for the millions of workers losing millions of pounds collectively to this questionable practice,” says Kermode.

“The timing couldn’t be much worse, either. The government has made this decision at a time when temporary workers – many of whom operate through umbrella companies – are needed more than ever, to plug the gaps as strikes cause havoc in the lead up to Christmas,” says Kermode.

Abandoning the Single Enforcement Body also increases the onus on recruiters and end clients that engage umbrella companies to carry out their own due diligence.

Fred Dures, founder of specialist payroll auditor, PayePass

Umbrella companies will continue to self-regulate

Fred Dures, founder of specialist payroll auditor, PayePass, says the news is “extremely disappointing”.

“It’s yet another broken promise from the government, that continually fails to deliver on the promise to regulate the umbrella industry,” says Dures.

“This short-sighted move from the government effectively rules out regulation any time soon. With this in mind, the onus falls on umbrella companies to self-regulate – something which isn’t being prioritised enough. Abandoning the Single Enforcement Body also increases the onus on recruiters and end clients that engage umbrella companies to carry out their own due diligence,” he says.