Huge developments in the recruitment world
There are three potentially huge developments that will affect the recruitment industry, all of which are looming. Together, they could transform the landscape.Firstly, there is Umbrella company legislation due in April, which will pass tax liability down the supply chain in the event of Umbrella companies going bust with taxes owing. Given that the Umbrella industry is characterised by multiple insolvencies, followed by "phoenixing" and, indeed, the whole purpose for many agencies who send their staff to Umbrellas is to turn a blind eye to their tax behaviour, this transfer of liability will be seismic. The end user of labour will be liable for the tax if the downfall of the Umbrella then causes the downfall of the agency. This is potentially wonderful news for compliant agencies who have battled for many years to expose the appalling behaviour of so many Umbrellas and agencies.
Secondly, the Fair Work Agency is due to be created, again in April. Billed as the body that can now address labour expoitation as a "one stop shop", all eyes will be peeled to see if this body has the funding, the teeth and the will to bring errant employers to book and to make, for the first time, labour exploitation a genuinely risky proposition. History would suggest that this is unlikely - the current bodies which police exploitation in the recruitment agency sector, the GLAA and the EAS, have been staggeringly impotent. Just a few high profile cases early on might be enough to change behaviour.
Thirdly, the Employment Rights Bill is due to be introduced, bit by bit, probably over several years. While many of the aims are worthy in principal, the detail, such as it is so far, is inadequate to the point of ridicule. The Labour party did not have recruitment agencies in mind when outlining the scope of the legislation. They then added agencies to the mix, for fear of empoyers migrating increasingly towards agencies to avoid the legislation. A great deal of the legislation is entirely unsuited to the purposes of temporary work that agencies fulfil and it seems, to these eyes at least, impossible to imagine how they can produce solutions which will satisfy their aims without leaving loopholes so large that all those who wish to do so can dodge their responsibilities with ease. Either that, or they will kneecap the world of temporary work, which would be detrimental to workers, agencies and labour users. Perhaps, the hardest challenges will be extended until such time as this government seeks re-election, and quietly buried. I know of no-one in the recruitment agency world who thinks there is any chance of the bill being finalised as first envisaged, or at any time soon.
So, the agency world faces challenges and opportunities which are hard to evaluate, but certainly from April 2026, it will look very different to how it looks now.