What the Employment Rights Bill means to Umbrella employees

As an Umbrella Company employee, navigating the world of temporary contracts, agency relationships and payroll arrangements can seem confusing at times. And with the introduction of the recently announced Employment Rights Bill in the not-too-distant future, changes are on the way that promise to shift the landscape for (hopefully) the better. 

In this blog we explore what the Bill means for Umbrella Company employees, and how SG Umbrella can help you. 

The Employment Rights Bill 

The bill essentially is a proposed piece of UK legislation that’s aimed at modernising and strengthening workers’ rights, with a particular focus on protecting those with non-traditional working arrangements, such as Umbrella employees, gig economy workers, and zero-hour contract staff. 

It’s designed to: 

Crack down on unfair working practices – especially those which can sometimes be found in agency and Umbrella Company setups 

Provide workers with greater transparency and job security – particularly around pay, holiday and contractual terms 

Potentially shift responsibility – for things such as PAYE tax from the Umbrella Company to the recruitment agency or end client, which will help reduce tax avoidance and those operating illegally. Please note that this has not yet been confirmed 

Create The Fair Work Agency –(FWA) a new regulator – which has been designed to oversee employment practices, and help to resolve any disputes 

Expand rights – around flexible working, parental leave, redundancy protection, and fair treatment whilst at work 

The key implications for Umbrella Company Employees 

*The regulation of Umbrella Companies 

• Umbrella Companies will be formally regulated and defined as employment businesses 

• They will fall under the oversight of the Employment Agency Standards Inspectorate, and transition to the Fair Work Agency (FWA) once it has been established 

*Shift in PAYE responsibility 

• From April 2026 the shift in obligation to account for National Insurance Contributions (NICs) and PAYE will transfer from Umbrella Companies to the recruitment agencies. If no agency is involved then the responsibility will shift to the end client 

*Please note that both the regulation of Umbrella Companies and the shift in PAYE responsibility are not yet confirmed, and may still change.  

Enhanced worker protections

• Flexible working – employees are now able to request flexible working arrangements from day one of their employment 

• Parental rights – will be extended for maternity, paternity, and bereavement leave, including protections for loss in pregnancy 

• Redundancy protections – there will be stronger safeguarding around unfair dismissal, especially for new parents 

Improved Disputed Resolution

• The FWA will have the authority to initiate proceedings on the behalf of the worker, which in turn will streamline the resolution of employment disputes 

Transparency in contract terms

• Umbrella Companies must now provide clear information relating to pay, holiday entitlements, and job roles from the outset of employment 

These reforms have been designed to provide Umbrella Company employees with rights and protections which are in-line with those already received by people in traditional employment roles, and will address any previous concerns regarding the concerns around exploitation and lack of clarity within the sector. 

When will the Employment Rights Bill come into force? 

At present the Employment Rights Bill is undergoing consultations in order to refine the bill’s provisions, and many of the reforms will take effect in 2026.  

How SG Umbrella can help 

Here at SG, we stay on top of the latest legislation to understand how upcoming changes will impact both our business and you as our employee. If you have any questions about the Employment Rights Bill and what it could mean for you, don’t hesitate to reach out — we’re here to walk you through it in more detail. Simply get in touch with one of our team, who will be happy to walk you through the impending changes.