The UK Government has finally decided to introduce regulation for umbrella companies. In response to the Taylor Review. The Department for Business, Energy and Industrial Strategy (BEIS) announced that umbrella companies will be under the regulation of the Employment Agency Standards Inspectorate (EASI).
The Government has accepted 19 recommendations from the review, which listed 35 recommendations in total. For contractors, the regulation of umbrella companies is the main issue to consider.
Referring to the expansion of the EASI’s remit, the Freelancer and Contractor Services Association (FCSA) said: “[It’s] a really positive development, assuming that it will be fit for purpose.”
This expansion will enable the EASI to investigate complaints “involving an umbrella company.” Complaints may be made by an umbrella company’s existing or new users as well as its partners.
BEIS said that the EASI will focus on situations in which individuals using an umbrella company and working through recruitment agencies feel that they have not received “adequate” pay.
Some suggested that high-end sectors such as IT would drive the inspectorate’s umbrella division, but the Taylor Review said that high-end contractors are actually well served by these companies. “Ship Shape wholeheartedly supports increased regulation of umbrella companies to help do away with illegal operators, whose questionable schemes can often result in serious consequences for workers.” says Luke Shannon-Little.
However, EASI will cover all umbrellas and will “protect decent employers from unfair competition.”
BEIS added: “We will continue to monitor the role of umbrella companies. [We will do this] by ensuring the EASI works closely with HMRC and the Gangmasters and Labour Abuse Authority to identify any further enforcement or regulation required to tackle any detrimental aspects of the arrangement.”