‘Anxious’ contractors await Finance Bill 2025/26 & Employment Rights Bill

A lawyer’s alert to ContractorUK that the Employment Rights Bill (ERB) has been overloaded is being echoed by an umbrella company accreditation body.

Ahead of its publication on Monday, L-Day, Roger Sinclair of Egos warned this week about the rapid “rate at which provisions” have been added into the ERB.

His concern was that a bill now exceeding 30 employment measures could be challenging for clients, agencies and contractors to scrutinise when unveiled in one fell swoop on July 21st.

‘Employment Rights Bill is a bill of bills’

Now, and in light of the late add-ins, the FCSA says it has become “increasingly clear that the ERB will not achieve Royal Assent until autumn 2025.”

Chris Bryce of the Freelancer & Contractor Services Association (FCSA), which accredits umbrella companies, yesterday told ContractorUK:

“The ERB is in effect a ‘bill of bills’, leaving all of the detail to secondary legislation, which will follow in line with the government’s ERB roadmap [which is still intact despite the now later-than-expected Royal Assent]. “

Not sounding impressed, FCSA’s CEO Mr Bryce added: “It was therefore surprising to see even more new measures added by the government at such a late stage.”

‘Labour must strike right balance between business and workplace protections’

These late, additional employment measures from Labour risk being problematic to the government’s key challenge when drafting the ERB.

The challenge exists even if FCSA, among others, supports protected bereavement leave for mothers who experience pregnancy loss before 24 weeks -- one of the late additions.

“Striking the right balance between stronger workplace protections and supporting business growth [is the key challenge for the government],” Kate Shoesmith, of the REC, yesterday told ContractorUK.

‘Vital Employment Rights Bill consultations ahead of secondary legislation’

The deputy CEO of the Recruitment & Employment Confederation (REC), Ms Shoesmith added: “The roadmap timeline should help businesses plan ahead.

“But it cannot make up for poorly designed legislation -- which is why consultation on the details before secondary legislation is produced is so vital.”

With those details unknown, Orca Pay Group is growing impatient with those confidently claiming to be ‘in the know’ about the particulars of legislation.

‘Chain of Joint and Several Liability meetings’

Orca CEO Rob Sharp explained: “[Following] meeting after meeting mostly centred around joint and several liability [for umbrella companies which is due to be unveiled on L-Day as part of Finance Bill 2026], to my amazement this morning, I’m seeing posts…saying that this may not be as bad for recruitment agencies if they fall foul of [JSL].

“[Or at least, not as bad] as [agencies] first thought.

“How anyone knows this, given that the ‘nuts and bolts’ of the JSL legislation haven't been released yet, is anyone’s guess. But to read this [confidence], I was genuinely [shocked].”

‘JSL is the umbrella company market’s foundational Finance Bill measure’

 A former contractor, the FCSA’s Mr Bryce agrees that while a few key areas of the ERB and Finance Bill 2026 are broadly known, the finer details are pending.

“We have informally been told that Joint and Several Liability will be the foundation of measures [affecting umbrella company contractors] to be published on Monday 21st July.

“[Therefore we] will be looking to find if any devils are hiding in the detail…[but] this is too important to rush.

“And anything [definitive] commentators are currently saying may not align with the as yet unknown detail.”

‘Definition of umbrella company’

Crawford Temple, CEO of Professional Passport, says one of the key unknowns is how the government defines “umbrella company.” 

“Getting [the definition of an umbrella company] right is crucial.

“If the definition is too narrow, it creates loopholes that can be exploited; if it’s too broad, it can be easily circumvented.”

Mr Temple’s Professional Passport, which assesses umbrella company compliance, says one key detail is already known, however.

‘HMRC intends to allow PAYE reporting under the umbrella company reference’

“We’ve had a heads-up from HMRC that they intend to allow the PAYE to be reported under the umbrella PAYE reference.

“While making the reporting simpler, this does signal more changes that will be required to protect the supply chain, with the agency having that liability,” he said in a video.

‘Big shift in supply chain accountability and non-compliance risk reduction’

Trying to bottom-line it based on the facts so far, Mr Temple told ContractorUK:

“What we can say is that a big shift is coming to both ensure accountability throughout the supply chain and reduce non-compliance risks.”

But Temple emphasised that the JSL tax compliance plan for umbrellas (Finance Bill) isn’t the same as umbrella company regulation (Employment Rights Bill).

‘ERB key elements for umbrella companies pushed back, as far as 2027’

“[According to the ERB roadmap] the key elements of the ERB that were set to impact the umbrella world have been pushed back. It’s now likely to be late 2026 and 2027 for umbrella company regulation.

“So regulation of umbrellas is on the agenda for consultation in autumn 2025, but… regulation will only be effective if it is supported by rigorous enforcement measures.”

‘Lord Holmes Amendment 110  subjects employment businesses to a licensing body’

Sounding equally concerned by effectiveness, the FCSA says it is supporting a peer’s amendment to the Employment Rights Bill.

First tabled in May 2025, the amendment would have the effect of subjecting “employment businesses” to a licensing authority (Amendment 110).

Mr Bryce said of the ERB in a statement to ContractorUK on Monday: “The House of Lords is part way through their ‘report stage’ with amendments being debated and voted on.

“It is anticipated that ‘report stage’ will conclude this week, with the third and final reading [of the ERB] in the Lords, happening in September 2025.

“This week we will be looking out to see how Lord Holmes’s reworked Amendment 110 fares.

“We want to see regulation which builds on existing good practice -- and does not seek to reinvent the wheel.”

‘Four major updates to umbrella company working expected at L-Day’

Likely, then, to please the association, four areas of umbrella company working “expected” on Monday all seem to have nods to existing processes or mechanisms, according to Giant Group.

“Some major updates that could reshape how umbrella companies operate…are expected to focus on [four areas],” Giant Group director Del Williams began in a social media post.

“Making accreditation mandatory for umbrella companies; cracking down harder on non-compliance/tax avoidance schemes, giving workers more clarity on their rights and employment terms [and fourth], putting more responsibility on agencies and clients to run proper [due diligence] checks.”

‘Umbrella companies, recruitment agencies and clients need to check’

Williams says the four changes “have been a long time coming” and are welcome, as the quartet should make the umbrella company market “fairer, safer, and more transparent for everyone”.

He added: “Final legislation is expected in October 2025, with a go-live implementation date of April 6th 2026.

“Now’s a good time for umbrella firms, recruiters, and clients to check they’re ready for what’s coming.”

‘Anxiety’

And if they don’t check, Orca’s Mr Sharp offered up the technical term for exposure to HMRC: “I say this without having any knowledge of what the legislation looks like [but from April]…don't get caught with your pants down.”

The REC’s Ms Shoesmith said last night: “The ERB roadmap has made time for meaningful engagement between government and business to ensure the bill gives employers and candidates alike enough flexibility. [But] there is little doubt that anxiety about the bill has added to the volatility in today’s jobs market.”