As a recruitment and payroll sector professional, I’ve watched the contractor market evolve through several seismic shifts, IR35 reforms, rate squeezes, and now the growing frustration surrounding umbrella-only working.
Contractors have been voicing the same concerns for years: opaque deductions, confusing payslips, lack of choice, and a feeling of being processed rather than partnered with. For too long, much of the industry hasn’t truly listened. Now, the consequences are becoming clear and costly.
Highly skilled contractors are leaving the market, mid-tier professionals are reluctantly accepting umbrella arrangements they distrust and agencies are beginning to feel the pressure of an avoidable talent drain.
The irony? The solution has been available all along. It sits in the form of a third-party fee-payer model, run by specialists in IR35 and compliant payroll operations, providing transparency and control for both contractors and agencies.
Contractor Sentiment: “It’s Not Just About Compliance, It’s About Control”
Across the forums, comment threads, and LinkedIn groups that so often reflect the pulse of the market, one message keeps resurfacing.
“My take-home doesn’t match what I was promised.”
“I’m being told I have to use a particular umbrella, it’s non-negotiable.”
“I used to love contracting, but the umbrella experience has drained that completely.”
These voices have been consistent since well before the 2021 off-payroll reforms.
Contractors aren’t railing against compliance, they’re frustrated by the lack of transparency and autonomy in how compliance is delivered.
Many lower-rate workers have reluctantly accepted umbrella models as the cost of staying in work. But higher-rate contractors who have historically worked through their Limited Company, the engineers, technologists, finance specialists who drive value for end-clients are pushing back or leaving the sector altogether.
And recruiters are now seeing the long-term effect: unfilled assignments, delayed projects, and eroding trust.
This is no longer a fringe frustration. It’s a structural issue affecting talent attraction and retention across the UK’s contingent labour market.
The Risk for Agencies: Losing Talent by Ignoring Contractor Feedback
If the recruitment sector continues to insist on “umbrella-only” pathways, then there is a risk of alienating the very workforce that powers the contracting industry.
According to recent ContractorUK discussions and LinkedIn polls:
- Over 60% of contractors would prefer a compliant limited or deemed employment route over an umbrella.
- Nearly half say they would reject an assignment outright if forced into an umbrella arrangement.
- And three-quarters cite transparency as the top factor in choosing between payment models.
The data speaks plainly: contractors want to be heard. They want choice, clarity, and trust.
Ignoring that message isn’t just poor engagement, it’s bad for business. Agencies that cling to outdated or one-size-fits-all models risk losing access to the very people who deliver project success.
A Readily Available Solution: Third-Party Fee-Payer Deemed Employment
Fortunately, agencies don’t need to reinvent their supply chain to solve this. A compliant third-party fee-payer model, operated by a IR35 specialist IR35, already provides the bridge between regulatory assurance and contractor satisfaction.
Here’s why it works:
| Problem | Fee-Payer Solution |
| Opaque deductions and margin confusion | The fee payer provides full payment transparency, every line visible, every cost accounted for. |
| Loss of contractor autonomy | Contractors remain within the contractual chain, not employed under an external entity’s control. |
| Umbrella compliance concerns | A professional IR35-expert fee-payer carries full PAYE responsibility and liability, protecting both the agency and end-client. |
| Reputational risk | Transparent processes enhance the agency’s standing with both clients and workers. |
When run by a true IR35 and payroll compliance expert, a third-party fee-payer structure not only meets legislative requirements, it restores confidence and control to every party involved.
How Agencies Can Respond and Retain Talent
The first step is simple, but long overdue: listen.
Contractors have been telling us what’s wrong for years. We must make it our business to respond with action, not indifference.
Here’s how forward-thinking agencies are doing it:
- Hold structured feedback sessions with current and former contractors to understand their pain points.
- Offer a genuine choice – umbrella or third-party fee-payer — and publish side-by-side cost breakdowns.
- Partner only with IR35-qualified fee-payer specialists who can shoulder the compliance burden confidently.
- Train consultants to explain payment options clearly and empathetically, not as a script, but as a conversation.
- Promote transparency as a selling point – clear payment information, clear chains, clear accountability.
This is not a complex reinvention of the wheel, it’s about reintroducing trust and professionalism into how contractors are engaged.
The Bigger Picture: Listening as a Business Strategy
The contracting sector thrives on flexibility, yet for too long, payroll models have offered anything but.
Listening to contractors isn’t just a moral imperative; it’s a strategic one. The fee-payer deemed employment model is not experimental, theoretical, or “in development”, it’s operational, proven, and ready to scale.
By embracing a transparent, IR35-specialist fee-payer alongside trusted umbrella partners, agencies can stop the talent drain in its tracks and rebuild contractor confidence.
Final Thought
Contractors have been asking for clarity and choice for years. Those who earn the most and deliver the most value are now voting with their feet. If the recruitment sector truly wants to attract, retain, and respect its contractor community, it must start listening and act decisively.
