Employment services provider Parasol has called for urgent government action to tackle the “Wild West-excesses” of unethical and offshore umbrella companies.
Parasol says policymakers should act now by introducing independent regulation of the umbrella and outsourced employment sector.
The call follows publication of the government’s response to the 12-week consultation on reforming the recruitment sector’s legal framework, and HMRC’s recently-announced crackdown on offshore umbrella providers.
Derek Kelly, managing director at Parasol, said: “Both of these developments are welcome, but we’d like to see a dedicated consultation that focuses purely on umbrella companies.
“The ideal outcome of this consultation would be the creation of a regulator with the power to crack down on widespread non-compliance and malpractice amongst cowboy providers at the less reputable end of the market.
“We firmly believe the sector should be subject to the same level of scrutiny and regulatory oversight as banking and financial services. After all, we are looking after people’s livelihoods.”
Warrington-based Parasol, the UK’s largest professional employment organisation (PEO), has provided employment rights and benefits to more than 55,000 career contractors in sectors such as IT, telecoms and engineering since its launch in 2000.
The company, a founding member of the Freelancer & Contractor Services Association (FCSA), offers its contractor employees a contract of employment, guaranteed hours of work, holiday pay and full HR support.
Mr Kelly added: “Here at Parasol we firmly believe that regulation is both inevitable and desirable, because as things stand the danger is that all providers end up being tarred with the same brush.
“Allowing unethical practices to persist unchecked would be unfair to contractors, recruiters and their clients – not to mention those employment providers that behave ethically and responsibly.
“The fact is that there are virtually no barriers to entry into the umbrella / employment services market.
“Regulation would help contractors to make more informed decisions when choosing a provider, and would help to raise standards generally throughout the industry.”