Until now, tax compliance and worker rights operated as separate concerns, enforced by different bodies. From April 2026, the Fair Work Agency brings them together under a single enforcement framework.
For recruitment agencies, this changes the conversation. Your umbrella partner doesn’t just need to get PAYE right. They need to get holiday pay, statutory sick pay, and day-one employment rights right too.
What the Fair Work Agency Does
The Employment Rights Act 2025 created the Fair Work Agency (FWA) to enforce a broad set of worker protections alongside existing tax compliance. It consolidates functions previously split across HMRC, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority.
In practical terms, the FWA will have authority to investigate both tax irregularities and worker rights breaches within the same supply chain. If an umbrella company is cutting corners on sick pay, the same investigation may examine their PAYE compliance. The days of treating these as separate compliance domains are over.
Why This Matters for Agencies
Joint and Several Liability, also live from 6th April 2026, already makes agencies financially liable for umbrella PAYE failures. The FWA adds a reputational and regulatory dimension that extends beyond tax.
Agencies placing workers through umbrella companies need to confirm that their partners are meeting both sets of obligations:
- Statutory Sick Pay (SSP) from day one — new rules remove the previous three-day waiting period
- Day-one paternity and parental leave rights — no qualifying period under the updated Employment Rights Act
- Holiday pay calculations — correctly applied, transparent, and auditable
- Payslip transparency — workers must be able to see exactly how their pay is calculated
If your umbrella partner fails on any of these, the FWA has the power to investigate the entire supply chain, not just the employer of record.
What We Recommend
We’ve been clear about this for years: compliance is not a competitive burden. It’s a baseline. The agencies and umbrella companies that treat worker rights as seriously as tax obligations are the ones that will come through this regulatory shift strongest.
Our accreditation process already assesses these areas. We examine payroll processing, contractual transparency, holiday pay treatment, and compliance with employment legislation. Working with an FCSA-accredited umbrella company means you’re starting from a verified position.
But accreditation is a point-in-time assessment. Agencies should maintain regular contact with their umbrella partners, request updated compliance evidence, and document everything. If something changes between assessments, you need to know.
The regulatory environment is tightening because too many workers have been let down by non-compliant operators. We support that direction. The best response is to ensure your supply chain is built on providers who welcome scrutiny, not those who avoid it.
Check your umbrella’s accreditation status at fcsa.org.uk or contact us at info@fcsa.org.uk
