The Recruitment and Employment Confederation (REC) are calling on the HMRC to set up a dedicated hotline for workers to report bad practice by umbrella companies.

This news comes after experts have called on the Government to take action on regulating the umbrella market, citing the need for employees to receive the correct rights and benefits.

The REC have stated that setting up this hotline would aid in tackling abuses by umbrella companies and provide workers with an outlet to report bad practice occurring.

However, this is only one step in a four step plan created by the REC. It states that the entire plan was put into place to ensure that recruitment agencies which use them do all they can to protect the rights of temporary workers.

The other elements of the plan include:

  • A proposed legal definition of umbrella companies which government should use as a starting point for regulation
  • New guidance for all REC member businesses to follow to avoid working with bad-faith, 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.

The REC have particularly noted that a lack of a legal definition linked to umbrella companies is creating a key barrier, ensuring that these companies can avoid any responsibilities that would be associated with regulation.

As such, the body have proposed that the Government adopts a set definition which could be used as a starting point for regulation of the umbrella sector.

This, the body said, would create a level playing field between umbrellas and employment agencies and help ensure that umbrellas can be held to account if they breach their legal obligations.

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.

Workers should always know who they are employed by, and we worked with government on the introduction of the Key Information Document (KID) 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.