HMRC publish guidance aimed at employment businesses working with umbrella companies

Government has published new guidance which it states is intended to demonstrate how an employment business should protect itself from non-compliant businesses in their supply chain.

It details best practice considerations and things to look out for which may indicate non-compliance.

Read the guidance here.

Aspire Comment

The guidance reiterates that employment businesses must ensure that their checks are ‘regular, reasonable and proportionate’. 

It is notable that, in the list of suggested actions for due diligence, the guidance states; ‘Find out if the umbrella company is outsourcing its employer responsibilities to a third party, and do due diligence on that third party’. 

This introduces interesting connotations as the employment business will not have any direct contact with the third party supplier and no contractual obligation exists between these two entities. 

Employment businesses may wish to update their umbrella supplier contracts to stipulate the obligation for due diligence to be passed back up the supply chain and, if they subcontract the obligation to complete the due diligence to their supplier, ensure that it is completed to a standard which is acceptable to them.