The information was revealed yesterday [12 June 2025] to a wide group of umbrella company owners, trade body leaders and others involved in the ongoing development of new legislation to take effect in April 2026. 

Participants in the call with HM Revenue & Customs have told Recruiter that the proposal suggests the reforms would include ‘joint and several liability’ (JSL), meaning liability would be shared between the agency and umbrella company, or between the end client and umbrella company if no agency is involved.

This would involve the introduction of a new chapter within the Income Tax (Earnings and Pensions) Act (ITEPA) to establish the JSL.

The primary responsibility for any shortfalls will lie with the lead agency, defined as the agency that holds the direct contract with the end client. This approach aims to ensure accountability throughout the supply chain and reduce non-compliance risks. HMRC has indicated that draft legislation reflecting this position is expected to be released within the next month, providing greater clarity on the final framework. 

The move signals a tightening of regulation around umbrella company arrangements and reinforces HMRC’s commitment to improving compliance and transparency in the labour supply market. Further guidance is anticipated alongside the draft legislation to assist stakeholders in preparing for the changes.

Rebecca Seeley Harris of Re:legal Consulting said: “There is still work to be done despite this announcement because JSL comes in various guises. It won’t be until the draft legislation is published in July that we will find out the details but what we do know is that it will be an absolute liability with no statutory excuse or defence. It will be new legislation in ITEPA. Also, the agency closest to the end client will have primary liability.

“The tax policy is only one part of the puzzle – the next will be the regulation of the industry by the Department of Business and Trade (DBT). There will hopefully be a consultation on this in the autumn.”

She went on to say that the revelation yesterday was “a huge step forward and very welcome. I had been advocating for JSL specifically along with the FCSA [Freelancer and Contractor Services Association] as a workable solution for both HMRC and the umbrella industry, so I was delighted to hear that it is the ‘direction of travel’ for the government”.

Also commenting, Crawford Temple, CEO of Professional Passport, said: “We welcome HMRC’s update today but as always the devil will be in the detail. It will be interesting to see how the agencies react when they learn about their new positions under the proposed legislation – what is key is that there will be no excuses to mitigate their liabilities. There are a lot of unanswered questions and hopefully the draft legislation will provide the clarification that we all need.”

Seb Maley, CEO of tax compliance specialist Qdos, said: “You can feel the collective sigh of relief among umbrella companies and, in some respects, among recruiters too. While the reform itself was never going to be met with open arms, noises from government indicate that the changes will not be as extreme as feared.

“If confirmed in the draft legislation next month, agencies or end-clients will be liable for tax not paid by an umbrella from April 2026 – as opposed to agencies also being responsible for making tax deductions themselves, which has the potential to cause headaches, non-compliance and question marks over the role of umbrella companies in the supply chain.

“Given agencies are set to carry the can for non-compliance carried out by another party – which has hallmarks of the off-payroll working rules – due diligence is set to become even more important in the lead up to April 2026. The cost of engaging a rogue umbrella company could be financially devastating to an agency.”

Maley added: “On the other side of the coin, umbrellas themselves should see this as an opportunity – a chance to demonstrate their compliance, which will make them an attractive proposition to the agencies they work with.”

Chris Bryce, CEO of the FCSA, commented that his organisation and its members were “pleased to see this direction of travel. We thank HM Treasury and HMRC officials for considering our representations, and the evidence we provided. We hope that the JSL approach is endorsed by the Exchequer Secretary and look forward to seeing the legislation”.

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They show that compared to the same period a year ago, for the period April 2024-March 2025:

• Single Employment Tribunal (ET) receipts increased by 23% – 42,000 claims were received
• Single ET disposals rose by 6%
• Single ET Open caseload stood at 45,000 – an increase of 32%, as receipts have exceeded disposals over the last year
• Multiple ET claim receipts increased by 23%
• Multiple ET disposals fell by 49% compared to 2024/25
• Multiple ET receipts exceeded disposals, resulting in a 9% rise in open caseload to 446,000 open cases
• Four jurisdictions make up the majority of claims – 60% of claims: Unfair dismissal amounted to 22% of those claims, Breach of Contract (14%), Disability discrimination (13%) and Unauthorised deductions (12%).

Ellie Rogers, associate solicitor at Constantine Law, said: “The working caseload statistics are telling – a 32% and 9% increase in single and multiple ET claims. Disability discrimination claims are also cited as being disproportionately high in number, perhaps due to their relative complexity.

“In March 2025, the Employment Lawyers Association highlighted the inadequate funding of the Tribunal system, together with inconsistent practices between Tribunals as being a huge factor in the backlog. Many of claims take two years plus to reach a full merits hearing. The road to justice is incredibly slow.”

Rogers went on to say: “The ET system is creaking, and it is expected to get worse. This is particularly so, as the job market has tightened following the increase of employer National Insurance Contributions and the contraction of the economy. The Employment Rights Bill will also likely have an impact – unfair dismissal rights are likely to become a day one right from autumn 2026 (to be confirmed). Further, the ET limitation period will be extended from three to six months. New rights will undoubtedly lead to increased claims and a system under even more pressure.”

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Government minister Justin Madders (pictured) told recruiters on Tuesday [11 June] at the Recruitment & Employment Confederation LIVE conference that the road map would clarify what steps must be taken and in what order for specific elements to take hold.

Madders, the minister for employment rights, competition and markets, was interviewed by REC CEO Neil Carberry at the event about the controversial bill, which features a number of provisions that are unpopular with recruiters, employers and the wider business world. 

Madders acknowledged that the “first and most frequent question” he is being asked by businesses is, “When’s this all going to happen?” In turn, Madders said, he is being advised that preparations must include consultations taking place, payroll software must be updated, clauses require parliamentary drafting and secondary measures considered to “make sure that it [ERB] actually delivers the outcome, which means that we’ve got to make sure that the businesses have the time and space to get it implemented correctly”. 

With regard to recruiters, Madders noted: “We’ve got to give you guys as much certainty and a clear ‘heads-up’ when things are likely to come in and hopefully, when that [the road map] comes out. It should be very shortly you’ll get a sense that there is going to be a bit of time to prepare, and things aren’t all going to come at you at once – which I think will give you all opportunities to plan ahead a bit better.”

Carberry suggested that REC members are concerned that ERB compliance could push up the costs of recruiters who take standards seriously, while rogue operators are able to charge less. 

“That is the whole ethos that we are trying to end, so that businesses don’t feel that they’re under pressure to take a race to the bottom,” Madders said. “So the creation of the Fair Work Agency [part of the ERB], I think, is going to be fundamentally game-changing in terms of the way enforcement happens in this country. So it’s going to bring in the existing enforcement bodies, but it’s also going to have some new powers particularly in terms of wages and holiday pay. 

“But the whole purpose of it is that if we bring the existing agencies together, often you will find where there is a labour violation, something else going on in the background, and bringing everyone together, sharing intelligence, using best practice and really sending a very clear message from government that we expect these standards to be followed. We’ll make sure that the people… will have confidence that they are not going to be undercut by people who don’t play by the rules. So important for us moving forward.”

Also on government’s mind, Madders said, is how to deal with the challenged employment tribunal system, including such issues as reducing the waiting time for tribunals. Acas has a “big” role to play there, Madders said, as does the Fair Work Agency, once established. 

“As a former employment lawyer,” Madders said, “I absolutely recognise that sometimes you need to have a tribunal but actually, most of the time, a two-year wait for a decision is in nobody’s interest. So we are beginning to have conversations with all stakeholders about how we reduce the waiting time… but also how we try and resolve disputes earlier without having to resort to litigation.”

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Investments in housing, transport, the National Health Service and nuclear power were emphasised by the government in yesterday’s [11 June 2025] Spending Review. However, the criticisms were directed to issues such as reforming the Apprenticeship Levy reform and tackling widespread unemployment, as well as the renewed emphasis on a zero-hours contract ban and ‘fire and rehire’ policies.

The announcements yesterday “get us halfway along the track”, said Neil Carberry, Recruitment & Employment Confederation CEO. “The missing piece of the puzzle in all this, is delivery. Despite talking about the need for a deep pool of talent, there was little on workforce today – yet we know this is the critical part of getting where we need to go without further tax rises. 

“And not just on skills, where the prospect of Apprenticeship Levy reform is exciting, but we await practical details. The upcoming Industrial Strategy is the opportunity to do this – dealing with workforce development as an economic essential, not only an employment rights issue. Across the country, REC members are helping build power stations, renovate our railways, drive British manufacturing and invest in our defence. Proper partnership with the sector to deliver a workforce strategy that meets the needs of the mid-21st Century will be essential.”

Carberry also took aim once more at the government’s approach to NHS funding, following calls by health ministers last week to “eradicate” agency spending in the health sector.

“Extra NHS funding won’t fix its staffing crisis,” he said. “We have built a system where decision-making for any form of hiring into the NHS is glacially slow, and even though the costs of all other forms of hiring now outstrip on-framework agency rates, it is agencies that are called out as ‘expensive’. A true partnership approach to solving the issues – rather than attacking an entire sector on poor evidence – is what is needed. We are ready to help drive up the quality and value the NHS gets.”

Responding to the Spending Review, Tania Bowers, global public policy director at the Association of Professional Staffing Companies (APSCo) said that the review “didn’t reveal any surprises, however it did feel more like a Spending Review promising future returns, rather than one giving much need confidence to businesses today”.

Noting the UK’s high level of unemployment and job losses, Bowers said, she was also critical of the government’s emphasis on employment law reform. “The current situation isn’t being helped by the government’s approach to the professional staffing sector. … It was disappointing to hear the chancellor reference the ban on zero-hours and ‘fire & rehire’ practices in her speech, for example. Yes, exploitation needs to be stamped out in the workforce, however, an unnecessarily rigid process won’t be beneficial for anyone, particularly not skills short remits such as healthcare and the NHS.

“As we highlighted in our response to Wes Streeting following the announcement that agency workers and temporary staffing firms would be limited in use across the NHS, a reduction of access to flexible resources will be damaging in the short-term. The detailed Spending Review document suggests that this practice is being extended across other government departments, with the Department for Environment, Food & Rural Affairs (Defra) and the Foreign, Commonwealth & Development Office (FCDO) also being tasked with reducing reliance on contractors.”

Bowers went on to say: “The focus on skills and training is something we certainly welcome. The money for skills is clearly focused on the young, construction workers and getting the economically inactive back into work, which are all sensible steps. However, this needs to happen in parallel to building up more technical skills, particularly given the focus on AI.

“… Only business can deliver the much-needed growth to support this Spending Review,” Bowers said. “We fear that their optimism is unfounded, given the potential for international outsourcing. We ask them to reconsider the breadth of the measures and undertake detailed updated impact assessments now, whilst the bill is still in Parliament.”

Gi Group UK managing director Pete Taylor has added his voice to criticism of the spending review, noting that the £1.2bn allocated for upskilling and apprenticeships lacks detail.

“The £1.2 bn commitment to training and apprenticeships looks great on the surface,” he said. “But as ever, the devil is in the detail. What does this investment actually mean on the ground? What sectors will it target, and how will it reflect what young people actually want, not just what policymakers think they should want? Today’s younger generation is savvy, better informed, and acutely aware that the traditional job-for-life model no longer exists.

“Training schemes must be flexible, future-facing and linked directly to market demand. What would good look like? I’m not sure anybody outside of those on the frontlines of recruitment could tell you.”

Furthermore, Taylor doubled down on his stance that the Labour government’s decision to ban zero-hour contracts is reductive and harmful: “The government’s stance on zero-hours contracts shows a disconnect with how many people want to work. Forcing one-size-fits-all employment models risks excluding people who actively choose flexible work to balance study, caring responsibilities or other commitments. Saying these contracts are exploitative is reductive and uninformed. Contracts aren’t exploitative, practises are. Rather than banning these contracts outright, we should be focused on tackling exploitative practices wherever they exist, not punishing the flexibility that many workers genuinely value.”

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According to a company statement, the acquisition will strengthen Salford-headquartered Morson’s (pictured) training capabilities at a time when the demand for skilled professionals continues to rise.

Ged Mason, CEO of Morson Group, said: “This acquisition represents a key strategic move to develop our training business, with 3B’s suite of construction offerings complementing Morson Training’s established and substantial expertise across rail and power.

“I look forward to seeing the business integrate and collaborate over the coming months to deliver even greater value for our clients and people.”

Founded in 2011 by executive chair Dave Brooks and managing director Mat Bewley, Wigan-based 3B Training is one of the UK’s largest construction training providers, with offices across the North-West, Yorkshire and the Midlands.

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• Jobmatch Sweden has partnered with Spanish consultancy Cotera Performance to introduce its occupational psychology testing tool, Jobmatch Talent, to Spanish-speaking markets. The collaboration aims to support recruitment efforts amid Spain’s growing labour demand.

• Liquid Friday and Firefish Software have launched a new integration designed to streamline recruitment operations. The integration connects Firefish’s CRM platform directly with Liquid Friday’s systems, removing the need for duplicate data entry and helping to reduce errors in the candidate onboarding and payroll process. For agencies already using Firefish or considering CRM upgrades, the integration offers a simplified and automated way to manage the full candidate journey – from registration to payroll – while supporting regulatory requirements and data integrity.

• Lattice has announced its next generation of AI agent functionalities aimed at streamlining HR operations and improving workplace productivity. Key updates include voice input for hands-free interaction, automated 1:1 meeting summaries, and a dashboard delivering proactive management insights. A new ‘Coach’ feature offers real-time guidance to managers and employees, while expanded integrations bring the AI Agent into tools like Slack and Microsoft Teams. Overlaying these new functions, Lattice’s new AI Agent Platform allows companies to build their own agents. Employees will be able to create their own AI agents that can be customised to their data, roles and systems.

• IT blog makethehire.com has launched to explore and share insights on how tech is shaping the recruitment world – from applicant tracking systems and AI tools to sourcing automation and candidate experience platforms.

This is the message that Neil Carberry, CEO at the Recruitment & Employment Confederation (REC), gave to an audience of recruiters this morning [10 June 2025] at the REC’s major annual conference RECLive25.

In his opening keynote address, Carberry acknowledged the challenging conditions that most sectors in the UK industry have faced during “two years of treacle” since 2023, saying: “There is no hiding that we have faced perhaps not the worst markets we have ever seen, but one of the longest runs of challenging weather ever. REC data suggests that it has now been two years of treacle for most sectors.

“We know that some of this is cyclical; the market will bounce back. Indeed, both member anecdote and our data have gently improved over the spring,” he said. “But some of it – frankly – hasn’t. There are more changes afoot.”

While expressing his optimism about the recruitment industry and current trends, he challenged his audience to up their professional game in the years to come. “I believe that all of the trends we are seeing now – all the noise in the system – are going to make trusted talent advice and fulfilment more essential to clients in the years to come,” he said.

“But we will need to change to seize that opportunity.”

He downplayed the role of technology in his talk and emphasised the need for clients and regulators alike to “do the ‘people stuff’ well” in order to get a handle on the lack of productivity that has plagued the UK. At the core of his advocacy work with government and clients is, Carberry said, the principle that value is not created “just by running a machine-like process”. He went on to say: “The people you place are not components. They are as individual as are the problems your clients face.”

Carberry continued: “There is no doubt that the scale of technological and demographic change we face over the next couple of decades is as great as any we have seen before.

“And where do you go in the world where we have returned to a picture of more risk?... Who do you trust? The specialists. In the labour market, us. The talent people. We know.

“But we need to step up to that; the ‘same old’ won’t do.”

Carberry urged the recruiter audience to explain the value they deliver and to “resist commoditised views of what we do, whether from clients chasing undeliverable things or from public officials who don’t understand the diversity of our sector”.

The latter remark echoed his earlier criticism of government health leaders who last week blasted the recruitment industry in a challenge to NHS trusts to cut back further and even “eradicate” spend on recruiters operating in the healthcare sector. Today, Carberry referred to health ministers’ comments as “last week’s disgraceful and ill-founded attack on NHS staffing partners”.

Ending his speech, Carberry reminded the audience that even in the volatile world environment and over the coming decade, “specialism and service matter. We are not deliverers of a basic process but of the most complex one of all. Matching people and client solutions… to client problems”.

“This is something to be proud of. And trusted partners will matter more in the future – not less.

“The future for all of us is in being that trusted partner. We will need to change – to evolve. But the prize is there.”

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The international agency, offering elite household staff for high-profile families across the UK, the Gulf and worldwide, has partnered with the Montessori Apprentice Academy for those interested in achieving qualifications in the Montessori methodology of child education.

Romero Drever, a former nanny and governess for royal families aboard luxury megayachts in the Middle East, launched Nanny & Governess in London’s Mayfair in December 2024 “to deliver bespoke, discreet and high-standard placements based on trust, compatibility, and excellence”.

The agency specialises in placing nannies, governesses, private educators, maternity nurses, personal assistants, butlers, chauffeurs, house managers, housekeepers and even pet carers. All candidates are selected for their discretion, experience and ability to thrive in demanding private households, according to the company statement.

Since its launch last year, the agency has grown, making successful placements in London and New York. With more than 100 vetted candidates across the UK, the US and Gulf region, Romero Drever says “the demand continues to grow through word-of-mouth and reputation alone”.

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The REC’s CEO Neil Carberry hit back at demands from the Department of Health and Social Care this week for the elimination of NHS agency spend, condemning the action as “another revision of a failed tactic” and “scapegoating”.

In a letter this week to NHS trusts and integrated care boards (ICBs), government health leaders termed recruitment agencies providing temporary workers as “rip-off” and threatened to “consider” legislation to force NHS bodies to cut agency spend beyond the £1bn saved in the last year.

Carberry argued: “[The NHS] has been cutting spend for years – but never solved the problem, because agency work isn’t the problem. Officials have built a system that has raised [staff] bank costs higher than agency and punished those agencies who signed up to cost controls at the expense of those who didn’t in the name of this crusade.”

He went on to say: “[This week’s statement] is just another revision of a failed tactic – and you can tell that by the way that the department refuses to even discuss the issue of agency cost with agencies themselves. They are afraid of the truth.”

Financial experts with inside knowledge of the recruitment industry have previously noted the dramatic effects of the NHS’s already lessened agency spend on recruitment consultancies serving the healthcare sector, with business activity dropping perilously. 

“Employers globally use agency staff to effectively manage employment costs and varying demand as an addition to their core substantive employees. Agencies help save money and improve service, while offering skilled professionals the working lives they want,” Carberry said.

“Today’s scapegoating statement from the government will rightly alarm the public about the impact of rushed cost-cutting on safe staffing. It also further unsettles agency workers – a vital, flexible workforce who are often taken for granted, but without whom the NHS would struggle to operate.

“The NHS needs a balanced workforce strategy. That means combining long-term investment in training and retention with a flexible approach to meeting immediate pressure and treating agencies as partners rather than as peripheral players to be blamed. We’re ready to work with the government to achieve its aims – but that has to start with an end to the name-calling,” Carberry concluded.

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