New workers' watchdog will have powers to tackle non-compliant umbrella companies

The spokesman added: “Protecting and enhancing workers’ rights through robust regulation – including for those employed by umbrella companies – is a priority for this Government.”

A report from a Parliamentary group called for action to clean up the ‘Wild West’ supply chain that exploits freelance and contract workers. The Loan Charge & Taxpayer Fairness All Party Parliamentary Group said its report exposed significant malpractice in the supply chain by many umbrella companies and recruitment agencies. The APPG said this type of behaviour encourages tax avoidance schemes.

The Government has revealed that responsibility for tackling modern slavery, enforcing the minimum wage and protecting agency workers, which is currently spread across three different bodies, will be brought under one roof

Business Minister Paul Scully said: “This Government has been absolutely clear that we will do whatever we can to protect and enhance workers’ rights.

“The vast majority of businesses want to do right by their staff, but there are a minority who think the law doesn’t apply to them. Exploitative practices like modern slavery have no place in society.

“This new workers’ watchdog will help us crack down on any abuses of workers’ rights and take action against companies that turn a blind eye to abuses in their supply chains, while providing a one-stop shop for employees and businesses wanting to understand their rights and obligations.”

The plans are part of the Government’s wider efforts to protect workers’ rights.

The spokesman said: “Since last year alone, the Government has boosted the minimum wage for around two million employees, protected furloughed workers’ parental pay, brought Jack’s Law into force to support bereaved parents, and more.”

Creating this new body will require primary legislation and so timing will be dependent on the legislative timetable, the spokesman said.

The spokesman added: “Creating a new body is a substantial organisational change and we are making sure that all aspects of this reform have been thoroughly considered.

"This is essential to ensure a smooth transition and improved enforcement for both vulnerable workers and employers. A new single body would mean funding could be used more effectively with a greater impact on tackling non-compliance.”

Rebecca Seeley Harris, a former senior policy adviser to the Treasury, who has called for action against umbrella companies, said it was fantastic news umbrella companies will be specifically included in the new body’s remit.

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