On 6 February 2026, the Department for Business and Trade launched its Make Work Pay: Modernising the Agency Work Regulatory Framework consultation. This consultation seeks views on the Government’s proposals to strengthen the regulatory landscape governing the temporary labour market, with the dual aim of enhancing worker protections while minimising burdens on businesses.
For context, the Employment Rights Act 2025 (ERA) amended section 13 of the Employment Agencies Act 1973, introducing an updated definition of an “employment business”, which will formally bring umbrella companies within the scope of the definition. The Government have proposed that the updated definition will take effect at some point in 2027. This reform reflects the increasingly prominent role umbrella companies play in today’s labour market and the need for a clearer, more consistent regulatory approach. Separately through the Finance Bill 2026, the Government is introducing joint and several liability to address issues around tax non-compliance due to come into force in April 2026. Building on these legislative changes, the Government is now inviting feedback on several key issues, including:
- How regulation of the temporary labour market should be adapted to account for the activities of umbrella companies.
- What broader changes should be considered in order to modernise the current rules.
The overarching objective is to ensure robust protections for all workers, particularly those operating through umbrella companies, while supporting a flexible, responsive temporary labour market that continues to contribute to economic growth. The consultation considers four key areas:
- Strengthening security for agency workers and providing confidence for businesses.
- Providing greater transparency on pay, contracts, and employment rights.
- Empowering workers with greater choice in how they are engaged and paid.
- Updating and streamlining regulations to reflect current working practices and reduce unnecessary administrative burdens.
Strengthening security for agency workers and providing confidence for businesses.
The Government acknowledges that temporary agency work offers flexibility for both workers and the employment business or the hirer. However, they believe that this flexibility must be balanced with greater security for workers. From 2027, the Employment Rights Act will introduce new protections for agency workers, including a right to guaranteed hours, reasonable notice of shifts, and payment when shifts are cancelled, shortened, or changed at short notice. These measures aim to give workers more stability in an increasingly unpredictable labour market.
The current Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the “Conduct Regulations”) were created at a time when supply chains were far simpler. The rapid growth of umbrella companies has exposed gaps in the existing regulations, leaving some workers without adequate protections. At the same time, these regulations have become overly complicated, creating administrative burdens without necessarily improving outcomes for workers. To address these issues, the Government proposes that updated regulations should focus on three core security objectives:
- Ensuring fair remuneration – ensuring agency workers are paid promptly and fully, with robust mechanisms to resolve non-payment. Employment businesses should also be able to negotiate fair compensation for the services they provide.
- Wide-ranging protection – safeguarding agency workers across all types of supply chains and engagement models, including newer, more complex arrangements.
- Assurance for businesses – ensuring hirers can trust that agencies workers supplied to them are appropriately qualified and suitable for their roles, supporting better hiring decisions and maintaining safeguarding standards.
Providing greater transparency on pay, contracts, and employment rights.
The Government highlights that transparency is crucial to a fair temporary labour market, yet significant problems persist especially around pay, deductions, and basic documentation. Complex supply chains, including the growing use of umbrella companies, have made these issues more pronounced. The consultation points to a range of survey data demonstrating that many workers still struggle to understand how their pay is calculated and what deductions are being made.
The Government also notes that poor transparency harms legitimate businesses by creating an uneven playing field, particularly when some operators bypass regulatory requirements to act quickly. Current regulations are not well-suited to a modern, fast-paced labour market with increasingly complex supply chains. The government proposes that future regulations should be guided by three transparency objectives:
- Clarity for agency workers – ensuring that agency workers know key details about their assignment, employer, contractual status, and corresponding rights.
- Pay transparency – enabling agency workers to have the opportunity to agree the actual gross rate of pay before accepting the assignment, with clear information about any deductions from their pay.
- Proportionality – provide clarity and transparency for agency workers without imposing unnecessary administrative burdens or overwhelming workers with excessive information.
Empowering workers with greater choice in how they are engaged and paid.
The Government emphasises that genuine choice is central to an effective temporary labour market. Choice not only protects workers’ dignity but also drives fair competition between businesses by ensuring that service quality, not hidden incentives or opaque practices, determines competitiveness.
Evidence shows that many workers currently lack meaningful choice, particularly regarding engagement through umbrella companies. Most workers using umbrella companies report they had no option but to do so, and many were not given a choice of which umbrella company to work with. Workers also report losing independence and control when required to work this way. To address these issues, the government proposes that future regulation should be guided by two core “choice” objectives:
- Choice in engagement – agency workers should not be forced to be engaged and paid through an umbrella company.
- Choice in work – agency workers should be free to turn down work without suffering detriment.
Updating and streamlining regulations to reflect current working practices and reduce unnecessary administrative burdens
This part of the consultation outlines the remaining parts of the Conduct Regulations not addressed earlier, focusing particularly on Schedule 3 occupations such as performing artists, creative professionals, and sportspeople (e.g., actors, musicians, models, artists, and professional athletes). These sectors operate differently because agencies traditionally work on a representation model where the work-seeker is the client, meaning the regulations apply in a distinct way.
The Government is seeking views on whether these specific regulations should be streamlined or amended to better support security, transparency, and choice for both workers and businesses, while also reducing the administrative burdens.
Overall, the consultation signals a major shift for the temporary labour market, aiming to bring clarity, fairness and modernisation to a complex system. As reforms take shape, both workers and businesses will need to adapt to a more transparent and accountable regulatory framework in the future.
