The government has launched a 12-week consultation on new Umbrella Company Regulations, proposing more than 30 changes that could reshape how the temporary labour market is regulated. Here’s what contractors need to know.
1. Security – Stronger protections around pay
The government is considering changes to several Conduct Regulations to improve:
- Fair remuneration
- Wider worker protections
- Greater assurance for businesses
The focus is on making sure workers are paid correctly and that responsibilities across the supply chain are clearer.
2. Transparency – Clearer information about pay and rights
Proposed changes aim to improve:
- Clarity for workers
- Pay transparency
- Proportionate regulation
This could mean clearer breakdowns of pay, deductions, and contractual terms — helping contractors better understand how they’re being paid and by whom.
3. Choice – How you operate
Changes are proposed to the rules affecting how contractors engage with agencies and umbrella companies. The aim is to ensure workers have a genuine choice and understand their options.
4. Umbrella companies brought into scope
Under the Employment Rights Act 2025, umbrella companies will be formally included within the definition of an “employment business” under the Employment Agencies Act 1973.
This means umbrella companies will be directly regulated by the Conduct Regulations, something many contractors have long called for.
The consultation also references Joint & Several Liability (JSL), signalling that responsibility for non-compliance could extend across the labour supply chain.
5. Proposed definition of a PSC (Personal Service Company)
The government suggests a PSC would be defined as:
- A limited company
- Where the sole or main shareholder is also the director
- The individual works through their own company instead of being employed directly
- The individual controls the company
- They own more than 50% of the shares and direct its management
This clarification could affect how different contractor models are treated under the rules.
What should you do?
- Review how you currently operate (umbrella or PSC).
- Watch for updates from your agency or provider.
- Consider responding to the consultation – contractors have 12 weeks to share views.
These proposals could significantly impact how contractors are paid, protected, and regulated, so staying informed is essential.
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