TUC calls for ban on ‘scandalous’ umbrella companies

James Poyser and Rebecca Seeley Harris respond to calls by the TUC for the government to ban umbrella companies amid their growing use in the UK labour market.

Yesterday (29th July), the Guardian reported on a call by the Trades Union Congress (TUC) to ban umbrella companies and make it a legal obligation for agencies to directly employ the staff they place with end clients. New research by the TUC estimates that half of agency workers are employed by umbrella companies. The union body is also warning that the use of umbrellas could spiral post-pandemic with the increase in agency work as companies struggle with labour shortages. The TUC’s general secretary, Frances O’Grady, said: “These scandalous workplace practices have no place in modern Britain. But our inadequate regulations let dodgy umbrella companies off the hook – allowing them to act with impunity.”

Rebecca Seeley Harris, chair of the Employment Status Forum, comments on the TUC report: “The TUC report on the umbrella industry emphasises the need for the market to be properly reviewed and regulated.

“However, an immediate outright ban would be very complex to implement overnight because of the legislative timetable and the time companies would need to unravel arrangements. We also believe there is a place for umbrellas and proof that it is possible to run umbrellas fairly, ethically and profitably.

“Regulation, which we discussed with BEIS this month, is the best approach, but it will take considerable time to introduce it, because of the legislative formalities and timetable for the Spending Review.

“In the meantime, the TUC’s recommendation to use the Conduct Regulations and HMRC enforcement is one that we highlighted in our policy paper and fully agree with. It is essential to ensure people are not exploited any more.

“However, in order to drive this forward the vacant post of the Director of Labour Market Enforcement still needs to be filled. It is deeply concerning that 18 months after Matthew Taylor left it is still open, and undermines the declared intention of the government to clean the market up.”

James Poyser, CEO of inniAccounts and founder of offpayroll.org.uk, adds: “We also back the TUC’s call for supply chain liability and reference this in our policy too. Too few companies have full sight of their labour supply chain. End clients have no idea they are using umbrellas when they engage with agencies and recruiters, in the same way millions of contracted staff have no idea they are employed through an umbrella.

“The use of umbrellas has become an uneasy by-product of the IR35 reforms and just as IR35 holds end clients accountable for employment choices, so the same should apply to umbrellas. Until there is a legal obligation to prove supply chain ethics in the labour market we fear little will change to improve workers’ rights in this regard.

“Overall, there still remains a long way to go in the battle for workers’ rights, despite the announcement of a single enforcement body, which is why we will continue to press the government to work with us on the policy we have written and submitted.”

Rebecca Seeley Harris concludes: “I am encouraged that the TUC has added its voice to the campaign to get the umbrella company market cleaned up. Although we do not endorse an outright ban at this moment in time, regulation is a very necessary thing as is the joint liability of the supply chain. End clients should know how their labour is being supplied and have an interest in the ethical supply and good treatment of workers.”

Read more about Rebecca and James’s Umbrella Regulation Policy