Recruitment agencies that use umbrella companies and outsourced employers have several responsibilities with regard to compliance. These responsibilities can be grouped into three main categories: compliance with employment laws, compliance with tax laws, and compliance with industry regulations.

1. 1. Compliance with employment laws:
      • Recruitment agencies that use umbrella companies and outsourced employers are responsible for ensuring that the employment arrangements they set up comply with all relevant employment laws. This includes laws governing minimum wage, working hours, health and safety, and discrimination.
      • The agency must also ensure that the umbrella company or outsourced employer has the necessary insurance cover in place, such as employers’ liability insurance.
   2. Compliance with tax laws:
      • Recruitment agencies that use umbrella companies and outsourced employers must ensure that all tax obligations are met, including the correct deduction and payment of income tax and national insurance.
      • The agency must also ensure that the umbrella company or outsourced employer is registered with HM Revenue and Customs and that all tax returns are filed on time.
   3. Compliance with industry regulations:
      • Recruitment agencies that use umbrella companies and outsourced employers must comply with any industry-specific regulations that apply to their business. This could include the Conduct of Employment Agencies and Employment Businesses Regulations 2003 in the UK, which sets out the requirements for agencies that provide temporary or permanent staff to clients.

Overall, it is the responsibility of the recruitment agency to ensure that the umbrella company or outsourced employer it works with is compliant with all relevant laws and regulations. This includes conducting due diligence on the umbrella company or outsourced employer to ensure they have the necessary systems and processes in place to meet their obligations. Failure to do so could result in fines, legal action, and damage to the agency’s reputation.

Umbrella Check offers a compliance service specifically designed to protect Recruiters for the risk of noncompliance in their supply chain and provided defence from prosecution should noncompliance be discovered.

Contact us today to understand how we can limit your outsourced employment risks – info@umbrellacheck.org.uk