Why new umbrella policy proposals should be a no-brainer for ministers

We’d like to register our support for the Poyser-Seeley Harris draft policy in ‘Umbrella Companies: Call for Regulation.’

Put another way, we support regulation for the umbrella company sector and have done for some time, writes Joanne Harris, technical commercial manager at Parasol.

Why brolly regulation matters

To those unconvinced that regulation is the way to go for umbrella companies, we’d say this: robust regulation of all umbrella companies would provide much-needed reassurance to recruitment agencies and end-hirers trying to get to grips with private sector IR35 reform.

Affected by those new April 6th off-payroll rules or not, the contingent workforce could also receive further protections – one of the key distinguishers of the draft when compared to yesterday’s proposals on umbrella companies made via amendments to the Finance Bill.  

As even some critics of umbrellas are now starting to realise, there is undoubtably a place for good, compliant umbrella companies, especially more so in the post-IR35 reform world. Such companies can add value to the supply chain by providing useful, legitimate functions, such as facilitating work for work-seekers, taking on payroll and HR functions for temporary work agencies, and providing employment rights to workers who may not otherwise be offered this protection.

Quick-wins

The draft policy is not ignorant of these much-needed functions in the current labour market. On the contrary, the 30-page draft is a very well-considered document, containing some sensible, practical and not overly complicated recommendations that the government should urgently consider..

We believe the quick-wins are particularly important for the government to make in relation to holiday pay and additional pay transparency, as the recently introduced Key Information Document requirement has failed to prove sufficient.

To our mind however, the first step which we hope HM Treasury takes (given it has received the draft policy) must be to start with the government fulfilling promises which it has already made. So that means government forging ahead with the regulation of umbrella companies either by the expansion of the remit of the Employment Agencies Standards Inspectorate (EAS), or by establishing a Single Enforcement Body (SEB). But crucially, as the authors of the draft acknowledge, the decisions on the EAS and the SEB are unlikely to be made while the Director of Labour Market Enforcement position continues to go unfilled. Surely it must now be an obvious starting point for ministers to prioritise this appointment.

Final thoughts

My final impression of the draft is much the same as my first. In our view, this policy draft serves as a very helpful log of all the sound and sensible recommendations that have been issued in recent times by government, reviewers for the government and industry advisers to improve the compliance of umbrella companies. Whether it’s tackling the perceived abuse, which still exists around holiday pay, or addressing the confusion surrounding umbrella payslips and invoice reconciliations, there’s clarity of thinking here that busy policy-makers in Whitehall should seize and act on -- now.