Umbrella company advisers condemn the Single Enforcement Body being set aside

Dust settling on the government’s move to shelve the Single Enforcement Body isn’t pacifying the many critics of the quietly announced decision.

Rebecca Seeley Harris, co-founder of the Fair Umbrella Campaign says that in the SEB’s absence, the government must specify “what it is going to do to help” the umbrella sector.

Like Seeley Harris, ContractorUK has asked the business department for the rationale behind the decision of Grant Shapps, the business secretary, to last month set the SEB aside.

'More interested in existing bodies'

The minister told the House of Commons that what the government is “more interested in, is making sure that the bodies that are already there are operating effectively.”

Shapps’s comments suggest he is aware the SEB was meant to amalgamate the work of the EAS Inspectorate, HMRC’s National Minimum Wage enforcement team and the GLAA.

Unveiled in 2021, the SEB was set to have many roles, but regulating umbrella companies -- “certain companies that are involved in the payment of agency workers,” was explicit.

Further to that brief in a government consultation response in June 2021, funding for the SEB was even apparently confirmed to the Fair Umbrella Campaign (FUC) in November 2021.

'Government could at least spell it out'

The FUC’s Seeley Harris says the job of regulating brollies could now go to the Employment Agency Standards Inspectorate but, without government saying so, there is no certainty.

“Whether they are going to put it under the remit of the EASI and Conduct Regulations, this could at least [be spelled out by the government],” she told ContractorUK.

“Either way, the SEB not going to go ahead…[is] even more reason for at least some updated guidance on the status of the umbrella worker, and their rights.”

'Screaming'

In his comments that have been interpreted as the government deciding to shelve the SEB, Shapps implied that the SEB could be taken off the shelf at a later date.

The minister told the Commons Business Committee on December 13: “It may be that with two years left of the parliament, we are still able to address single enforcement bodies [sic].”

David Harmer, a contractor compliance specialist warns at that far-off juncture, the industry would have effectively lost its voice.

“For many years now, the umbrella industry has been screaming out for regulation,” Harmer, of Markel Tax told ContractorUK.

“It was our wish to finally see the government provide some much-needed regulation which is tailored to this sector.”

'Very disappointing'

Chris Bryce, CEO of the FCSA has pointed out that it’s more than just a wish -- it was a formal request that his organisation had made to HM Treasury.

“When [we] submitted [our] evidence to the [Treasury’s umbrella market review], we called for regulation to be brought forward. And for the proposed SEB to be properly funded.”

A former contractor, Mr Bryce described the decision of Mr Shapps (assuming the minister’s comments do mean that the SEB isn’t going ahead), as “very disappointing.”

'Another kick in the teeth'

For workers who use umbrella companies, having the SEB set aside is a “bitter blow,” according to independent work expert Julia Kermode.

“It’s also another kick in the teeth for workers whose holiday pay is often withheld by unscrupulous umbrella companies”, says Kermode, founder of IWORK.

“[With this shelving decision] the government is showing an astonishing disregard for the millions of workers losing millions of pounds collectively to this questionable practice.”

A former CEO of the Freelancer & Contractor Services Association (FCSA), Kermode said setting aside a regulatory body for umbrellas at a time of industrial action was potentially calamitous.

'Havoc'

“The timing [of the government’s decision] couldn’t be much worse”, she said.

“[It comes] 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”.

With a Single Enforcement Body “on ice”, umbrella company Parasol believes it will be up to brollies to clean up their sector themselves.

'Due diligence'

A qualified solicitor Fred Dures agrees. “The onus [now] falls on umbrella companies to self-regulate -- something which isn’t being prioritised enough.”

Sounding aware of the Criminal Finances Act 2017, Dures, boss at PayePass added: “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.”

Often called to vet umbrella companies for similar reasons is Crawford Temple, the chief executive of compliance organisation Professional Passport.

'Was always going to be complex'

He regards shelving the SEB as “disappointing” but says it is unsurprising because “it was always going to be complex to achieve.”

Temple also said: “With plans [for the SEB] shelved, it is more vital than ever that the government now demonstrates its commitment to stamping out non-compliance and malpractice in our industry.

“[But currently] the government continues to drag its feet on taking visible enforcement action to find the perpetrators of these schemes and close them down.”

'Complacency'

Others, too, sense the same disinterest from the government, even extending to umbrella companies.

At contractor law firm ReLegal Consulting, its founder Ms Seeley Harris said last night: “What is very important now is for the director of Labour Market Enforcement Margaret Beels, to deliver her report on the ‘Strategy for the Labour Market’ which, incidentally, we haven’t had since 2020. Anecdotally, Beels has said that the problem is the complacency of ministers on this subject… [and] I wouldn’t disagree.”