JSL Regulations Will Affect All Umbrella Companies
The Illusion of Immunity in the Umbrella Sector
It would be nice, wouldn’t it, to believe that the new Joint and Several Liability (JSL) regulations will only unsettle the shadier corners of the umbrella industry? That compliant umbrellas, operating with their books in order and their ethics intact, can simply carry on as before? Because, of course, that always works out perfectly… not.
The reality is less comforting. JSL regulations, designed to tackle non-compliance and tax avoidance within the umbrella sector, threaten to upend the entire landscape—no matter how sterling your reputation or how many badges you pin to your website.
The Reach of JSL: No Company Left Untouched
The premise behind JSL is simple: agencies, umbrellas, and end clients may all be held jointly and severally liable for unpaid taxes if non-compliance is found anywhere in the supply chain. What does this mean in practice? That every single umbrella company becomes a risk factor, not just the obviously dodgy ones.
Let’s dispense with the idea that compliant umbrellas will float serenely above the regulatory storm. The new rules create an environment where guilt, or at least suspicion, is shared. Agencies and end clients will be forced to assume the worst—because now, they bear the consequences if they don’t.
Agencies and End Clients: The New Gatekeepers
The JSL regime doesn’t simply encourage caution; it demands it. Agencies and end clients, suddenly exposed to crippling liabilities, are expected to:
Implement rigorous due diligence on every umbrella partner
Regularly audit payroll and compliance processes
Demand detailed assurances and documentation
Potentially avoid the umbrella sector altogether if the risks outweigh the benefits
The days of casual partnerships are over. Expect layers of bureaucracy, repeated requests for evidence, and, inevitably, slower onboarding and payment cycles—regardless of your previous record.
Accreditations: Losing Their Lustre
Previously, agencies and clients leaned heavily on accreditations as a shortcut to trust. But with Professional Passport openly stating that their stamp does not guarantee protection against non-compliant umbrellas, that comfort blanket is threadbare at best.
In other words, your gold standard badge is now little more than window dressing. Agencies cannot rely on it, and neither can you. The implication is clear: accreditations may soon be seen as little more than marketing—hardly the shield they once appeared to be.
The Impossible Task: Identifying Clean Umbrellas
So, what are agencies supposed to do? The guidance is vague. The risk is high. And the traditional markers of compliance—accreditations, previous audits, glowing testimonials—no longer offer genuine reassurance.
Consider the position of an agency director:
“If we can’t trust accreditations or official lists, how are we supposed to know who’s running tax schemes? Do we audit every payslip? Interview every payroll manager? The risk is on us, not the umbrella.”
Consequently, agencies face a Hobson’s choice: either take on the soul-crushing burden of forensic due diligence, or retreat from umbrellas altogether and push workers into PAYE. Either way, umbrellas—compliant or not—will be under unprecedented scrutiny.
A Cautionary Table
| Old Approach | New Reality Under JSL |
|---|---|
| Rely on accreditations | Accreditations lose influence |
| Trust established brands | Assume risk everywhere |
| Minimal due diligence | Intensive, ongoing auditing |
| Focus on price/service | Focus on risk avoidance |
The Next Steps: Prepare for the Unavoidable
It’s time for umbrellas to abandon complacency. The belief that “compliance equals immunity” is a dangerous myth. Every company must:
Reassess all internal processes for transparency
Prepare for far more intrusive agency and client assessments
Communicate proactively about risk mitigation, not just compliance
Expect, and plan for, a period of turbulence as agencies adjust their risk appetite
The Cold Truth
JSL regulations are not a targeted missile. They are a regulatory carpet bomb. No umbrella company, no matter how clean, can afford to relax. In the new world, the only certainty is increased scrutiny—and the end of business as usual.
If you haven’t already started preparing for a world where compliance is assumed to be fiction until proven otherwise, you’re already behind.
