The Low Incomes Tax Reform Group is joining the growing calls for regulation of umbrella companies and has shared advice for the workers using them in order to avoid common issues.
The LITRG is joining voices such as Matthew Taylor (author of the 2017 Taylor review of modern working practices), the Trade Union Congress (TUC) and the Association of Independent Professionals and the Self-Employed (IPSE), to create regulation for umbrella companies in order to protect the workers who contract through them.
Victoria Todd, Head of LITRG, explained, “Umbrella companies have been in the news a lot recently: there was the furore about an umbrella withholding holiday pay from workers, the loan charge APPG’s report linking umbrella companies to disguised remuneration and now concerns about the use of mini umbrella companies. Added to the negative practices by non-compliant umbrella companies highlighted in our own recent report, it is clear what the problems are in this area and that some action is needed.
“The government previously set out a number of proposals which would, if implemented, be the first steps towards regulation of the sector. It is disappointing that none of these proposals have been taken forward. Government must make these actions a priority as well as giving serious consideration to what other steps might be needed.
“Regulation would drive away those umbrella companies that do not respect employment law, which will help protect lower paid agency workers who are vulnerable to exploitation. As they are likely to be the umbrella companies that are also non-compliant with tax law, there is a potential double benefit. There are also wider impacts. For example, non-payment of holiday pay is likely to be impacting considerably on gross wage levels, meaning lower receipts for the Exchequer.
“It was in 2017 that Matthew Taylor first mooted the idea of regulation but nearly four years later, there has been no progress, even though the Government accepted his recommendation. Indeed, it seems further away than ever, given the post of the Director of Labour Market Enforcement, who provides strategic direction for the enforcement bodies, is currently empty.”