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further regulation, recently stating it is introducing measures aimed at tackling non- compliance, fraud, and exploitation, while protecting workers’ rights and maintaining labour market integrity for two initiatives: regulation of umbrella companies by the Department of Business and Trade, and tax protection by HMRC. The former, under amendments to the Employment Rights Bill, addresses company conduct and worker protection. The latter alters who is deemed the employer for tax purposes, and is therefore liable to make payments of tax and social security to HMRC. Employment Employment Rights Bill (ERB) establishes a new legal definition for labour suppliers, aimed at umbrella companies and places them under the regulatory authority of 14 I 04:05 Rights Bill Labour Supply Regulation: The
The Government has proposed a legislative change to transfer PAYE responsibility from the labour supplier, such as an umbrella company employing the worker, to the recruitment agency that supplies the worker to the end client
the Employment Agency Standards Inspectorate, with future oversight by the Fair Work Agency. This initiative aims to ensure transparency and compliance with employment and tax laws among umbrella companies, though it may also impact other businesses, such as professional employer organisations (Employers of Record). The Bill is expected to receive Royal Assent by summer, with some reforms potentially taking effect as early as October 2025. Also included is a proposal for a new requirement for agency workers to be offered contracts with a
guaranteed minimum number of hours each week, which would sit alongside their equal treatment rights under the Agency Worker Regulations 2010. Tax Legislation PAYE Responsibility Shift: The Government has proposed a legislative change to transfer PAYE responsibility from the labour supplier, such as an umbrella company employing the worker, to the recruitment agency that supplies the worker to the end client. If no agency is involved in the labour supply chain, the end client will assume this responsibility. This change is due to take
GLOBAL PAYROLL MAGAZINE ISSUE 11
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