Please refer to the editor’s commentary for the context to this article
Crawford Temple, CEO and founder of Professional Passport says recruiters need to act to remove their risk.
The storm that followed my suggestion that recruitment agencies should cover PAYE under the incoming Joint and Several Liability (JSL) rules from April 2026 was as fierce as it was predictable. But the noise and misinformation now circulating in the market risks distracting recruiters from the reality: unless we tackle JSL transparently and decisively, the recruitment supply chain faces serious consequences.
We’ve been here before. The sector has a long history of reacting badly to change, only to later accept the inevitable. Back in 2010, when the Agency Worker Regulations were introduced, providers split into two camps: comparable pay or the so-called “Swedish Derogation.” Professional Passport was clear then that comparable pay was the only sustainable option. Others dismissed that as scaremongering. Within months, reputational backlash destroyed Swedish Derogation and the model was abandoned.
More recently, the Off-Payroll reforms sparked similar turmoil. Fearing risk, many clients simply removed personal service companies from their supply chains almost overnight, pushing contractors into umbrella employment. The lesson was the same: clients and agencies will always prioritise risk avoidance over everything else.
And that is the context recruiters must keep in mind as we debate JSL.
Risk and Control
Two principles always determine behaviour in our sector: risk and control. Where risk exists but no one in the chain can control it, it will simply be removed. That is why agencies and end-clients are so cautious and why ignoring the realities of JSL is dangerous.
Some providers have rushed to market with “solutions,” promoting monthly checks of PAYE through RTI verification as the answer. These checks are marketed with terms like “guarantee” and “real-time,” giving recruiters a false sense of security. The problem is that they do not and cannot eliminate the risk.
Here’s the reality. PAYE liabilities accumulate in weekly cycles, payable on the 22nd of the following month. If your agency has a weekly PAYE bill of £20,000, at any point you are exposed to a rolling liability of between £60,000 and £160,000 if the umbrella fails. There is never a point where that liability falls to zero.
So, when a monthly check comes back clear, what does it really mean? It simply confirms that liabilities from a past cycle have been paid. It does nothing to address the rolling liability building up in the current cycle. If an umbrella collapses during that time, the agency is left holding the bill, despite already having sent the money once. In other words, you could end up paying PAYE twice.
This is the fundamental misunderstanding that many of JSL’s loudest cheerleaders have failed to recognise.
The Only Way to Remove Risk
The only way an agency can truly eliminate liability under JSL is by paying PAYE directly to HMRC after each payroll run. Two payments: one to the umbrella for wages, one to HMRC for tax. Simple, transparent, and effective.
Critics argue this undermines the role of the umbrella. That is simply wrong. The umbrella continues to perform all the work it always has – processing payroll, ensuring compliance, and managing employment obligations. Agencies taking responsibility for the PAYE remittance do not diminish that value. What it does do is satisfy both sides of the risk-control equation.
And let’s be honest: this is not a new concept. Umbrellas already take on financial risks every day by offering credit terms to agencies, often without insurance. Many will see this as just another form of manageable risk, and there are even insurance products available to support it.
What recruiters must avoid is being seduced by claims of risk-free guarantees where none exist. When the truth emerges, as it inevitably will, the damage to the umbrella market and the wider recruitment industry could be severe.
Transparency, Not Spin
What troubles me most about the current debate is the lack of transparency. Some providers appear more interested in defending their commercial models than in helping recruiters navigate the risks. Misrepresentation of facts, overstating the value of payslip checks, or dressing up RTI verifications as foolproof solutions only puts the entire market at risk.
Recruiters deserve clarity. The reality is stark: you either accept rolling liabilities of up to hundreds of thousands of pounds and hope your provider doesn’t collapse, or you take proactive steps to remove the risk entirely by handling PAYE payments directly.
It is not about undermining umbrellas. It is about securing the future of the entire sector. Every time recruiters have allowed themselves to be reassured by half-truths in the past, the market has paid the price. Let us not repeat that mistake.
A Pivotal Moment for Recruiters
Change is never easy, and many are quick to predict the death of the umbrella whenever new rules land. We heard it when expense rules shifted. We heard it after Off-Payroll. Yet umbrellas are still here, bigger than ever. JSL will not end them either, unless we allow poor decisions to force agencies and clients out of the market altogether.
Recruiters should see this moment as pivotal. The umbrella market thrives on volume. If agencies lose confidence because they feel exposed to uncontrollable liabilities, they will default to agency PAYE. Once that shift happens, it will be nearly impossible to reverse.
That is why this debate matters so much. If we can show we understand the risks, if we are willing to be transparent and innovative, then umbrellas and agencies alike can flourish. But if we cling to false assurances and marketing spin, we risk losing ground that will take years to recover.
The Way Forward
So where does this leave recruiters? With a choice.
- You can place your trust in monthly checks and “guarantees” that don’t actually eliminate your liability.
- Or you can take control, pay PAYE directly to HMRC, and remove the risk entirely.
For me, the answer is clear. Transparency and risk elimination must be our guiding principles. Anything less is a dangerous distraction.
Recruiters are right to be cautious. But you are also in a position to lead. By insisting on real solutions, not empty promises, you can safeguard your business, protect your workers, and ensure our industry continues to grow.
Because at the end of the day, risk will always dictate behaviour. And those who control it will control the future of recruitment.
