The government has opened a consultation entitled Make Work Pay: Modernising the Agency Work Regulatory Framework: https://www.gov.uk/government/consultations/make-work-pay-modernising-the-agency-work-regulatory-framework
Commenting on this move, Crawford Temple, CEO of Professional Passport welcomed the move saying the government’s intention to modernise the agency work regulatory framework was good, and the focus on transparency, security and choice broadly positive: “Proposals such as clearer information on rates and deductions, alongside giving workers greater choice in how they are engaged and paid, are steps in the right direction,” he added.
“However, it is important to recognise the realities of the current labour supply chain. Responsible umbrella companies are already operating on very tight margins while carrying significant compliance and financial risk,” he said. “In many cases, umbrellas have limited control over assignment rates or the behaviour of agencies and end-hirers in the chain, yet are often closest to the worker and expected to absorb the costs. Measures that improve transparency throughout the entire supply chain are therefore essential if these reforms are to be fair and effective.
“Without end-to-end transparency on rates, margins and deductions, there is a real risk that umbrellas will be pushed into increasingly precarious financial positions while agencies retain disproportionate control over workers’ engagement and pay. A genuinely level playing field requires consistent responsibility on all parties in the chain, not just those at the point of payroll.”
Dave Chaplin, CEO and founder, ContractorCalculator believes one key proposal is ensuring genuine choice for the contractor. “In particular, removing the ability for recruiters to make offers of work conditional on the use of an umbrella company is critical,” he said. “Historically, this practice of forcing workers into particular arrangements is precisely why so many contractors were funnelled into high-risk, and in some cases, outright tax-avoidance schemes. The proposed approach should significantly curtail that behaviour.
“As a consequence, recruiters who currently rely entirely on third-party umbrellas will need to ensure they can offer in-house payroll, because not all contractors will want to work through an umbrella company. The rules will change so that employment businesses cannot make work-finding services conditional upon workers working through an umbrella company. The default position appears to be agency payroll, unless the contractor already operates their own limited company or has chosen an umbrella of their own.”
According to Chaplin the consultation also proposes to introduce more clarity and transparency when it comes to rates of pay. “The government’s own Agency Worker Survey Report in 2021 found that workers are unclear about who is paying them and at what rate they are being paid,” he said. “Transparency around pay and deductions is extremely welcome, signalling the end of the “assignment rate” that has caused so much confusion in the temporary labour market and made it difficult for contractors to understand their payslips.
“All in all, the latest proposals will move the market closer to being fair and balanced.”
