Queen’s Speech: Employment Bill omission suggests further delays to umbrella market regulation

The government’s commitment to rolling out statutory protection for umbrella company contractors is being called into question after the omission of any mention of the plan in yesterday’s (10 May 2022) Queen’s Speech.

In the lead-up to the address, which sets out the programme of legislation the government intends to pursue during the forthcoming parliamentary session, contracting market stakeholders had hoped the speech would include an Employment Bill and signal a timeline for umbrella market regulation to be rolled out.

But no Employment Bill was mentioned in the Speech, despite the government finding itself under pressure – since the publication of the Taylor Review in 2017 – to press ahead with regulating the umbrella sector.

In recent months, there have been promising signs of progress on this front, including the announcement of a consultation – overseen by several government departments – into the inner workings of the umbrella market in December 2021.

This came six months after an announcement in June 2021 from the Department for Business, Energy and Industrial Strategy (BEIS) about its plans to create a single enforcement body (SEB) tasked with protecting workers – including umbrella company contractors – from rogue employers and workplace malpractice.

At the time, the SEB was billed as being a “powerful” watchdog that would be created through a collaboration between HM Revenue & Customs (HMRC), the Gangmasters and Labour Abuse Authority, and the Employment Agency Standards Inspectorate (EASI).  

The SEB would have powers to “name and shame” non-compliant employers – including non-compliant umbrella firms – that deny workers their holiday pay or act as fronts for tax-avoidance schemes, for example.

The body would also provide employees with a “one-stop shop” to report these behaviours without having to take their cases to a tribunal, and would have the power to issue fines of up to £20,000 for each worker affected by workplace malpractice.  

It was hoped that an Employment Bill would provide clarity on when the SEB would be formed and come into force, and its omission from the Queen’s Speech has prompted an outpouring of disappointment from various quarters, including from the government’s own director of labour market enforcement, Margaret Beels.

Beels took on the role in November 2021 after it had been left vacant following the departure of Matthew Taylor in January 2021, who had been filling in on an interim basis.

The creation of the SEB was referenced in the press release announcing Beels’ appointment, as she has responsibility for setting the strategic direction for the three government bodies that are coming together to form the body.

In a series of posts on Twitter, Beels described the absence of any mention of the SEB from the Queen’s Speech as a “real disappointment” because it means having to wait even longer for the necessary parliamentary time to make it a reality.

In the meantime, she said she will be working closely with the sponsoring departments and enforcement bodies involved in creating the SEB to “strengthen enforcement and improve worker protections”, which she described as her “priority”.

The lack of clarity on when the SEB will come into force has also been greeted with frustration by Rebecca Seeley Harris, former senior adviser to the Office of Tax Simplification and chair of the Employment Status Forum, and InniAccounts CEO James Poyser.

The pair have previously collaborated on the creation of a draft policy paper, which they gifted to BEIS in May 2021, in a bid to speed up the government’s progress on introducing regulation for umbrella companies.

In a joint statement, Seeley Harris and Poyser said they found it “unfathomable” that the government has failed to prioritise the creation of the SEB and, in turn, the regulation of the umbrella company industry.

“It delivers a brutal message of indifference to hard-working self-starters from the gig economy workers to consultant GPs and private sector contractors,” they said.

“We will continue to work with BEIS and the director of labour market enforcement to ensure that these vulnerable umbrella company workers get the protection they deserve, as well as ensure that reputable umbrella companies are not disadvantaged by the lack of regulation of the industry as a whole.”

Computer Weekly contacted the BEIS press office for clarification on what the omission of the Employment Bill from the Queen’s Speech means for the delivery timeline of the SEB, but was told this was a matter for the Number 10 press office. At the time of writing, the Number 10 press office is yet to respond to Computer Weekly’s request for comment.

However, the omission of the Employment Bill from the Queen’s Speech had been anticipated by some, Computer Weekly has learned, on the basis that BEIS is still working through the responses it received via its December 2021 umbrella company consultation. The outcome of that exercise is largely expected to inform the approach the government takes to statutory regulation.

Meanwhile, Crawford Temple, CEO of umbrella company compliance assessor Professional Passport, pointed out that Beels had initiated another consultation that is not due to close until the end of May that may also yield information that would be invaluable for setting out how the SEB should work.

“The consultation that closes on 31 May is calling for evidence on emerging issues around compliance and enforcement in the UK labour market which will help inform [Beels’] labour market enforcement strategy for 2023/2024,” Temple told Computer Weekly. “I anticipate that the findings from both those reports will serve to inform the priorities of the single enforcement body.”

In the meantime, and in the absence of the Employment Bill, it is still possible for authorities to take action to protect the rights of contractors better, and crack down on non-compliant umbrellas that act as fronts for tax avoidance, said Dave Chaplin, CEO of compliance firm IR35 Shield.  

“While it is disappointing that the Employment Bill will not be making its way through Parliament in the next two years, this does not prevent the authorities from cracking down on tax avoidance and evasion that enters the supply chain via agencies working with disreputable umbrella companies,” he said. “HMRC already garners the data it needs, and just needs to act on it quickly.”