The government has finally unveiled its strategy on the regulations pertaining to umbrella companies. The business department constructed a reply against the Taylor Review. It states that regulations from the Employment Agency Standards Inspectorate would now cover umbrella companies.
The Taylor Review presented a list of 35 recommendations. Among these, including this one, 19 recommendations were approved by the government.
The FCSA (Freelancer & Contractor Services Association), the sector body, offered some insights on the legislation. It states that “[It’s] a really positive development assuming that it will be fit for purpose.” The legislation is expected to boost the remit of EASI.
The expansion will facilitate the inspectorate to examine complaints which are related to umbrella companies. These complaints can be made by the company’s new, existing or prospective partners.
The department explained that the action of the EASI will be targeted for scenarios in which employees who work with recruitment agencies did not get the “adequate” pay. New recommendations state that the high-end sectors like the professional IT contracting sector are not going to have the same level of power for the brolly division of the inspectorate’s.
Business analysts opine that “The Taylor Review concluded that, while higher skilled, higher paid sectors are well served by umbrella companies, their role is more questionable for lower skilled, lower paid roles.”
The EASI is expected to extend for all the types of umbrella companies other than those where the roles of workers is understated. This is done in order to prevent any exploitation of employees stemming from unfair competition.
Officials from the BEIS (Business, Energy, and Industrial Strategy) department explained that “We will continue to monitor the role of umbrella companies. [We will do this] by ensuring the EASI work 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.”
The FCSA disclosed that they have been exchanging views with BEIS for the regulations of brollies. In the future, it is going to carefully observe the approach of officials on regulations and closely monitor that a regulation that seems to be ‘detrimental’ is not always going to be acknowledged as damaging.
For instance, the government plans to revoke the Swedish Derogation model, though there are qualms that such an action is bound to be ‘controversial’, as warned by Julia Kermode from the FCSA.