Labour Urged to Close Employment Bill Loopholes as 700,000 Workers Shift Into Umbrella Companies
Updated
Updated · LabourList · May 29
Labour Urged to Close Employment Bill Loopholes as 700,000 Workers Shift Into Umbrella Companies
3 articles · Updated · LabourList · May 29
An upcoming Employment Status Bill is being pressed to outlaw “zero-rights employment,” where people are taxed as employees but receive no matching workplace protections.
About 700,000 workers were engaged through umbrella companies in 2022-23, up roughly 169% from 2015, as firms used payroll intermediaries to limit tax risk while avoiding direct employment obligations.
Under those arrangements, workers can be denied rights from the end client and may pay fees on wages, pensions and even apprenticeship levy costs, while some temporary staff are pushed to waive existing protections.
A harsher off-payroll model, described as common in parts of the NHS and wider public sector, leaves workers classed as employees for tax but with no sick pay, holiday pay, pension or parental benefits.
The argument is that Labour’s wider workers’ rights agenda will remain incomplete unless tax status and employment rights are aligned, forcing firms to treat people as either genuinely self-employed or fully employed.
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