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Prepare your workforce strategy for changing regulations, stronger supplier oversight and more effective compliance.
As UK businesses prepare for 2027, workforce compliance deserves a place on the strategic agenda. Regulatory changes, evolving employment practices and increasing scrutiny of labour supply chains mean organisations need to understand their responsibilities and ensure their processes remain effective.
For businesses using temporary workers, contractors and recruitment agencies, compliance is rarely limited to a single employment document or onboarding procedure. It involves the wider relationships between employers, recruitment suppliers and other parties involved in supplying labour.
November is an ideal time to review existing arrangements, identify potential weaknesses and establish priorities for the year ahead.
Why workforce compliance needs attention
A well-managed workforce helps organisations remain productive, flexible and commercially competitive. However, poorly controlled recruitment arrangements can introduce operational, financial and legal risks.
These may include incomplete records, inconsistent onboarding, unclear supplier responsibilities and insufficient oversight of employment practices.
The Employment Rights Act 2025 and its phased implementation timetable also make it important for employers to check which changes apply, when they take effect and what practical preparations are required. Businesses should consult current government guidance rather than assume every announced measure is already in force.
Five areas to review before 2027
1. Right to Work procedures
Employers must ensure that the appropriate Right to Work checks are completed using a permitted method and that the necessary evidence is retained.
Review your procedures to confirm that responsibilities are clear, the relevant checking routes are understood and follow-up checks are managed where required.
Where recruitment agencies or other suppliers are involved, establish how responsibilities and evidence are documented. Avoid assuming that outsourcing recruitment automatically transfers every legal responsibility away from the employer.
2. Recruitment supplier oversight
Businesses relying on multiple recruitment agencies need visibility of how those suppliers operate.
Review supplier onboarding, contractual requirements, performance monitoring and the process for addressing concerns. Consider whether all suppliers are subject to consistent standards, while recognising that different roles and services may require different controls.
A structured supplier management model can make it easier to identify gaps and establish clear expectations.
3. Employment status and worker arrangements
Understand how workers are engaged throughout your labour supply chain, including where recruitment agencies, umbrella companies or other intermediaries are involved. Depending on the arrangements, employment status, contractual responsibilities, tax treatment and applicable employment protections may all require consideration.
Joint and Several Liability (JSL) is a key consideration. For payments made on or after 6 April 2026, where an umbrella company employs workers in a labour supply chain, the recruitment agency holding the direct contract with the end client is jointly and severally liable for PAYE Income Tax and National Insurance Contributions that the umbrella company fails to account for correctly. Where there is no recruitment agency in the chain and the end client contracts directly with the umbrella company, that liability falls to the end client. This means HMRC can pursue the relevant agency or end client for the full unpaid amount rather than relying solely on recovery from the umbrella company. The rules apply to both new and existing labour supply chains, so organisations should not treat payroll compliance as the umbrella company’s responsibility alone.
Avoid relying on labels, contractual assurances or accreditation alone. Map the full supply chain, apply proportionate due diligence before onboarding umbrella companies, verify how PAYE and National Insurance are calculated and paid, require appropriate evidence and information-sharing, and maintain ongoing compliance monitoring. Where uncertainty exists, seek appropriate professional advice and ensure your contracts, controls and internal processes reflect the actual working arrangements.
4. Pay, records and financial controls
Accurate records support effective workforce management. Review how timesheets, rates, invoices and relevant worker information are recorded, approved and reconciled.
Look for discrepancies between agreed rates and invoices, unclear approval responsibilities or recurring administrative problems.
Good records also support better budget forecasting and help management teams understand the relationship between workforce expenditure and operational demand.
5. Regulatory change management
Assign responsibility for monitoring relevant regulatory developments. Establish a process for reviewing official guidance, assessing the impact on your organisation and communicating necessary changes to relevant teams and suppliers.
Maintain a record of decisions, process updates, training and outstanding actions.
This makes compliance a continuous management activity rather than an annual exercise undertaken only when a problem arises.
From checklist to action plan
Identifying potential risks is only the beginning. Organisations should prioritise findings according to their significance, agree owners and establish realistic deadlines.
Start by mapping the relevant workforce arrangements and identifying where information, responsibilities or controls are unclear. Consult HR, procurement, finance, operations and legal advisers where appropriate.
Next, review the evidence. Are procedures being followed consistently? Can the organisation demonstrate that required checks and approvals have taken place? Are supplier concerns investigated and resolved?
Finally, establish a regular review cycle. Regulatory requirements and workforce arrangements can change, so a process that was appropriate last year may need updating.
How Datum RPO can support workforce management
Datum RPO provides recruitment process outsourcing and managed workforce solutions designed to help organisations manage recruitment suppliers and temporary labour more effectively.
A structured approach can improve visibility, clarify processes and support more consistent supplier management. It can also help businesses bring recruitment activity, reporting and performance oversight into a more coherent operating model.
The appropriate solution depends on the organisation's workforce, supplier network and requirements. However, the objective is consistent: make recruitment easier to manage while maintaining appropriate oversight and control.
As you prepare for 2027, ask whether your current arrangements provide the visibility, consistency and evidence your organisation needs.
This article provides general information, not legal advice. Check the latest official guidance and implementation dates applicable to your organisation.
Frequently asked questions
1. What is workforce compliance?
Workforce compliance means meeting the legal, contractual and operational requirements relevant to employing, engaging and managing workers. It may include Right to Work checks, pay, employment status, record-keeping and supplier oversight.
2. Why should employers review compliance before 2027?
Year-end planning provides an opportunity to assess existing processes, understand upcoming regulatory changes, allocate responsibilities and budget for any necessary improvements.
3. Who is responsible for Right to Work checks when an agency supplies workers?
Responsibilities depend on the employment and supply arrangements and the applicable legal requirements. Organisations should establish who must carry out checks, what evidence is required and how responsibilities are documented rather than assume that using an agency removes their obligations.
4. How can a managed workforce service improve compliance oversight?
A managed service can help standardise processes, improve supplier visibility, centralise reporting and establish clearer performance controls. The precise benefits depend on the service scope and implementation.
5. How can Datum RPO help businesses prepare for 2027?
Datum RPO supports recruitment and workforce management through outsourced and managed service solutions. Businesses can discuss their current arrangements to determine whether a more structured approach to supplier management and workforce oversight would be beneficial.
