REC calls for umbrella company abuse hotline

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The Recruitment and Employment Confederation (REC) has revealed a four-point plan to tackle poor practice by umbrella companies and ensure that recruitment agencies do all they can to protect the rights of temporary workers.

The recruitment sector body called for the creation of a dedicated hotline for workers to report umbrella company abuse to HM Revenue & Customs, as well as a legal definition of umbrella companies that the government could use as a starting point for regulation.

It said that one of the reasons that umbrella companies have escaped regulation is the fact that there is no legal definition of what they involve. The REC said the government should follow the definition of a temporary work agency as set out in the Agency Worker Regulations.

Its four-point plan was revealed after the government rejected amendments to the Finance Bill that would have clamped down on the misuse of umbrella companies.

Neil Carberry, chief executive of the REC, said: “Recruiters want a robust and fair supply chain, where workers’ rights and pay are protected and all parties’ responsibilities are clear. Bad-faith umbrella companies have been allowed to thrive alongside compliant businesses for too long.

“An HMRC-run hotline for reporting bad practice by umbrellas would make it easier for workers to report abuses, and help government bodies to coordinate their efforts to stamp out bad practice. It is essential that the government regulates umbrella companies as a matter of urgency to protect both workers and recruitment agencies.”

Carberry said that recruitment companies and employers have a responsibility to operate with fairness and transparency.

“Workers should always know who they are employed by, and we worked with government on the introduction of the Key Information Document to ensure everyone has this information. We urge all recruiters to always conduct rigorous due diligence on their supply chains, and I have written to all our members with new guidance to help them do so – this is more important than ever right now,” he said.

The REC’s four-point plan includes:

  • HMRC to set up a hotline dedicated to reporting bad practice by umbrella companies
  • A proposed legal definition of umbrella companies that government should use as a starting point for regulation
  • New guidance for all REC members to follow to avoid working with non-compliant umbrellas
  • Re-affirming and clarifying the REC’s Code of Professional Conduct, members’ obligations, and the actions that the REC will take against members who are have found to have breached the code.

It has published an umbrella company factsheet for members, which includes some frequently-asked questions about how and when they can be used in a compliant way.

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