Empowering the Freelance Economy

Workers’ watchdog to regulate umbrella companies, but there’s just one problem

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A new workers’ watchdog will regulate umbrella companies, according to a consultation report published by the UK Department for Business, Energy and Industrial Strategy (BEIS). The new Single Enforcement Body (SEB) body would be committed to enforcing holiday pay for vulnerable workers, enforce transparency in supply chains and regulate umbrella companies.

  • New civil penalties will be introduced for the breaches under the gangmasters licensing and employment agency standards regimes that result in wage arrears.
  • The naming scheme for the enforcement areas covered by the newly extended civil penalties will be extended. Naming non-compliant businesses have an important deterrent effect.
  • Threshold for naming employers has been increased so firms that owe arrears of more than £500 in National Minimum Wage payments to their workforces will now be named. Previously the threshold was over £100

The government will combine the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and HMRC’s National Minimum Wage Enforcement combined into a single enforcement body.

The news of the enforcement body comes after more than 40,000 people from the Philippines had been recruited to front British companies as part of a mini-umbrella scheme costing hundreds of millions of pounds in lost taxes, as previously reported by The Freelance Informer.

However, freelancers and agency workers that have unknowingly gone through a fraudulent umbrella company could be holding their breath before any enforcement of mini-umbrella fraudsters takes place. It could be years before the SEB becomes active and starts enforcing.

“The SEB is clearly a good framework but, it needs funding,” wrote Rebecca Seeley Harris, an Independent Employment Status, Off-payroll & IR35 Expert, on her LinkedIn feed.

“It seems to be at odds with how projects might work in the private sector, you would get it costed and approved first before you announced the go-ahead. Hopefully, the SEB will get funding at the Spending Review but, we are still looking several years before this is implemented, I suspect,” said Seeley Harris.

Have you been affected by an umbrella company scam? Should workers have to wait years until the SEB is implemented? Leave your thoughts in the Comments section. 👇

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