Since 6 April 2026, Joint and Several Liability (JSL) has been a live reality for the labour supply chain. Although the legislation is framed around tax liability and accountability, its practical effect has been to materially change how umbrella companies are assessed by agencies and end‑clients alike.
For well‑run umbrella companies, this is not about sudden non‑compliance. Many already operate strong payroll processes, clear employment models and established controls. What JSL has accelerated, however, is the expectation that these standards are independently evidenced, continuously monitored and clearly defensible.
In response, the sector is leaning towards third‑party assurance. Independent audits and FCSA accreditation are becoming central tools in providing agencies with confidence that umbrellas operate to consistent, recognised standards, with the FCSA’s Code of Compliance and ongoing audit regime being widely regarded as a strong foundation for demonstrating due diligence and professional governance.
This approach highlights an important distinction. JSL does not require umbrella companies to underwrite agency tax exposure, nor does it transfer responsibility wholesale onto compliant operators. What it does bring into focus is the importance of demonstrable standards- clarity of process, independent validation, and the ability to evidence, rather than assert, good practice.
Where does insurance fit in?
Insurance has an important, but often misunderstood, role in this landscape. It should not be viewed as a mechanism to absorb agency liabilities, nor as an answer to statutory risk.
Where insurance does matter is in supporting umbrellas against the consequences of heightened scrutiny: regulatory enquiries, professional defence costs, and the operational disruption that can arise even in the absence of wrongdoing. Approached properly, insurance underpins resilience rather than replacing compliance.
It is also worth being cautious of narratives that suggest complex supply‑chain risk can be transferred neatly through new, agency‑driven products. Umbrella companies should not be expected to fund solutions designed primarily to address agency balance‑sheet concerns, particularly where robust audit and accreditation already exist.
Seen in the round, JSL is less a threat than a differentiator. Umbrella companies that combine strong operations, independent assurance and proportionate insurance are well placed as the market continues to mature and expectations continue to rise.
For umbrella companies and agencies navigating this environment, the quality of advice and support matters. At Caunce O’Hara, we believe an effective response to JSL requires more than surface‑level solutions. It demands rigorous, ongoing review of insurance products, a detailed and up‑to‑date understanding of evolving legislation, and close liaison with specialist tax advisers to ensure structures remain appropriate and defensible. By actively scrutinising the market and challenging product design, Caunce O’Hara helps clients make informed, evidence‑led decisions that reflect best practice. As expectations continue to rise, disciplined advice, grounded in expertise and independent validation, remains the most effective protection.
