New government plans aimed at tackling labour market abuses among some umbrella companies have been criticised by the Trades Union Congress (TUC), which claims that the proposals are insufficient to tackle the issue.
Umbrella company usage has increased rapidly over recent years, particularly as a result of IR35 legislation, which came into force for public sector organisations engaging self-employed workers in 2017 and for private sector organisations in 2021.
With around 600,000 workers currently thought to be employed through umbrella companies in the UK, scrutiny of alleged abuses by some operators has grown. Some workers have alleged that they haven’t been paid while working through umbrella companies, while others say they have been denied rights such as holiday pay. There have also been allegations of tax avoidance.
The governments new proposals would aim to tackle such issues, but the TUC has claimed they don’t go far enough, saying that thousands of independent contractors working through umbrella companies but not classified as agency workers would be excluded.
Reports have indicated that new regulations may be enforced by the government’s Employment Agencies Standards Inspectorate (EASI), but the TUC has also claimed that, under UN standards, the department does not have the required number of officers.
TUC General Secretary Frances O’Grady commented: “It has long been clear that our lack of regulation lets dodgy umbrella companies off the hook – allowing them to act with impunity and treat workers appallingly.”
“But the government’s proposals fall far short of what’s needed. Hundreds of thousands of workers using umbrella arrangements might miss out on protection because they aren’t agency workers. And there aren’t enough inspectors to make sure companies stick to the rules. Tinkering around the edges won’t cut it. It’s time for a ban on umbrella companies.”
The TUC’s call for a ban on umbrella companies has been criticised, with Rebecca Seeley Harris, an expert in IR35 status, saying that, while regulations may be needed, banning umbrella companies from the labour supply chain is not the answer.
Author: Steven English
18.03.2022
