Question

To ask the Secretary of State for Business, Innovation and Skills, how many umbrella payroll companies have been subject to enforcement action by the Employment Agency Standards Inspectorate in each of the last five years.

The Employment Agency Standards Inspectorate (EAS) enforce the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (both as amended).

These regulations apply only to employment agencies which place people permanently with employers, and employment businesses who place people temporarily with hirers.

If an umbrella company is providing payroll services they would not fall within the definition of either an employment agency or employment business and EAS would not have vires to take enforcement action.

If, however, they were providing work-finding services in addition to payroll services they could be investigated by EAS, but would be recorded in the investigation as either an employment agency or employment business.

Umbrella companies acting as employers are still required to comply with employment law and where individuals feel that their statutory employment protections have been breached, they are able to seek redress through the normal routes. However, it can be difficult for individuals to be sure of whether they are “employees” or “workers” and which employment protections they have. That is why, in October, the Business Secretary announced a review of employment status aimed at identifying options that provide more clarity and transparency up front.