What’s in store for the UK contractor industry, as L-Day looms large?

There’s lots going on at the moment, behind the scenes, that affects the contractor and umbrella company marketplaces, but this calm before a potential legislative storm won’t last long, writes Roger Sinclair, legal consultant at contractor law firm Egos.

In fact, this coming Monday, July 21st 2025, is when the draft legislation that will form the Finance Bill 2026 is due to be published.

What will be published next to Finance Bill 2026?

Alongside the bill, the government will publish:

• explanatory notes;
• tax information/details;
• impact notes;
• responses to consultations and supporting/other documents.

L-Day? It’s D-Day for umbrella companies

Appropriately named Legislation Day, or L-Day for short, Monday is when we can expect to see the draft legislation intended to implement the end result of successive governments' attempts to “tackle non-compliance” -- as they put it, in the umbrella company market.

Contractors and us advisers have heard it said that HMRC is on board with the idea of ‘tackling umbrella company non-compliance’ by making both the umbrella, and the agency directly dealing with the client in the contract chain (or, if there is no agency, the client itself), jointly accountable for the PAYE liabilities relating to umbrella company workers provided to the client. 

The wording of Joint & Several Liability (JSL) is imminent, surely…

And so Monday 21st is when we’re expecting to see the draft detail of the legislation intended to implement that high-level plan, dubbed Joint & Several Liability for umbrella companies, with effect from April 6th 2026.

This HMRC tax compliance plan for umbrellas is a completely different and separate matter from the Employment Rights Bill (ERB).

Where's the Employment Rights Bill at?

The ERB is now entering the final stages of its passage through parliament, with the ‘Report stage’ in the House of Lords underway yesterday (July 14th).

After this Report Stage, the bill will be returned to the House of Commons.  

However, further government amendments to the bill were published last week.

The ERB journey to come (now includes a roadmap)

And even when the bill passes into law, many aspects of it will also require further consultations, and then regulations to be made by parliament, before their provisions actually take effect.

An Employment Rights Bill “roadmap” published by the government earlier this month envisages a phased implementation of the ERB’s provisions.

Therefore, some Employment Rights Bill measures will take effect from April 2026, some in October 2026, and some in 2027.

The Employment Rights Bill: seven measures you may have missed

Curiously, perhaps, the ERB originally contained 28 measures, but these have been further refined in the course of passing through the legislative process, with the effect that at present, the bill seems to have been modified to include:

1. Extending the new provisions on zero and low hours contracts to agency workers;
2. Doubling the protective award for failure to collectively consult;
3. Increasing Statutory Sick Pay to the lower of 80% of salary or the standard SSP rate (N.B. the burden of SSP is borne by employers)
4. Introducing stronger regulation of umbrella companies;
5. Requiring records of compliance with annual leave obligations to be kept and retained;
6. Extending bereavement leave to cover pre-24-week pregnancy loss;
7. Banning Non-Disclosure Agreements (NDAs) relating to allegations of ‘relevant harassment or discrimination’ (i.e. including, but not limited to, sexual harassment).

The ERB: Labour’s ‘kid in a candy store’ moment?

It may be unkind of me, but the rate at which new provisions have been added to an already long and broad list rather brought to my mind the image of a child at a ‘pick-and-mix’ display of sweets, hoping that Mummy and Daddy won’t notice.

Almost needless to say, we will all need to take notice on L-Day; contractors, agencies, umbrellas and end-client employers, to scrutinise the wording of these invariably far-reaching changes for the UK’s contractor and umbrella marketplaces.