The long-awaited Labour Market Enforcement Strategy 2022/23 has been published, outlining the government’s plan to ensure legislation keeps pace with the evolving employment landscape.
Within this, Margaret Beels OBE Director of Labour Market Enforcement Strategy reaffirmed the government’s promise to regulate the umbrella industry, along with introducing the Single Enforcement Body (SEB), the latter of which Grant Schapps recently said would be shelved.
The document states:
“HMRC estimates put the number of individuals working through umbrella companies at 100,000 in 2007/08, rising to 500,000 in 2020/21 (HMT/HMRC, 2008; HMT/HMRC/BEIS, 2021), and the early indications are that IR35 changes may have accelerated this growth.
“The Government has committed to regulating umbrella companies which will be a welcome step towards achieving compliance provided EAS receives the necessary budget to enforce the regulation. Taking into consideration the outcomes of the current consultation, I will work closely with the relevant departments to seek to root out non-compliance in this area.”
Julia Kermode, founder of body championing independent workers, IWORK, commented:
“On one hand, I’m glad this document is finally here. But its publication and its promises don’t gloss over the fact that it’s nearly the end of the period the strategy covers. IWORK, along with many other stakeholders contributed to the consultation, submitted a written response, attended meetings and had our say.
“I realise the delay in publishing isn’t Margaret Beels’ fault. She has done everything possible to stick with her timeframe but hasn’t been helped by the political chaos. However, it’s very disappointing that the government has deprioritised dealing with problems in the labour market, whilst many people continue to be exploited. Westminster has been talking about regulating the umbrella sector for years and made no progress whatsoever. So I can’t help but take fresh promises with a pinch of salt.”
Seb Maley, CEO of IR35 specialist, Qdos, said:
“The government has acknowledged here that IR35 reform pushed contractors into working via umbrella companies. Yet amazingly, this industry is still unregulated. Westminster was adamant that IR35 reform was needed to increase compliance, but we now have half a million people operating in a sector where tax avoidance schemes are commonplace. While there are plenty of fair, transparent and compliant umbrella companies, it’s no secret that regulation is desperately needed.”
Fred Dures, founder of specialist payroll auditor, PayePass said:
“This is a step in the right direction. Promising to regulate the umbrella industry will help flush out tax avoidance schemes and in turn, protect the 500,000 people working through umbrella companies in the UK. The Single Enforcement Body is back on the cards, too. It was only months ago that Grant Schapps said it was being shelved. But let’s not get too ahead of ourselves. There are a lot of promises made in this strategy, which we’ve heard before. Plus, a lot of these plans are caveated, based on available budget and parliamentary timescales.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.