Temporary workers play a vital role in helping businesses remain agile, whether responding to seasonal demand, delivering major projects or addressing skills shortages. However, while recruitment agencies and umbrella companies play an important role in supplying contingent workers, the responsibility for ensuring robust governance and compliance ultimately sits with the organisation engaging them.
Relying on recruitment agencies and umbrella companies without regularly auditing their compliance processes can expose your business to financial penalties, legal disputes, reputational damage and operational disruption. With increasing regulatory scrutiny and the proposed introduction of Joint and Several Liability (JSL), organisations should review every supplier involved in their contingent workforce to ensure they are operating compliantly and meeting both legal and contractual obligations.
Here are eleven key compliance areas every organisation should be auditing in 2026.
Your business should regularly audit recruitment agencies to ensure compliant Right to Work checks are being completed before workers are placed.
Review whether suppliers are verifying documentation correctly, maintaining secure records and following current UK legislation. Failure to ensure these checks are being carried out correctly can result in significant financial penalties and reputational damage.
Not all recruitment agencies operate to the same compliance standards.
Businesses should regularly assess whether suppliers hold appropriate accreditations, maintain robust compliance procedures, operate transparent recruitment practices and have the expertise required to support workforce requirements.
Supplier due diligence should be an ongoing audit process rather than a one-off exercise.
Where temporary workers are engaged through umbrella companies, these suppliers should be subject to the same level of scrutiny as recruitment agencies.
With the proposed introduction of Joint and Several Liability (JSL), organisations face greater potential exposure if non-compliant umbrella companies operate within their labour supply chain. Businesses should therefore audit any umbrella suppliers used by their recruitment partners to ensure they are operating compliantly.
Audits should include reviewing payroll processes, tax compliance, employment contracts, accreditation, worker pay practices and governance procedures. Proactively auditing umbrella companies helps reduce financial and reputational risk while strengthening overall supply chain compliance.
Businesses should regularly verify that recruitment agencies and, where appropriate, umbrella companies maintain adequate Employer's Liability and Public Liability Insurance throughout the duration of the relationship.
Reviewing insurance documentation helps ensure suppliers continue to meet contractual requirements and provides assurance that appropriate cover remains in place.
Organisations should audit how recruitment agencies manage compliance with the Agency Worker Regulations.
This includes reviewing how qualifying periods are monitored and ensuring workers receive the appropriate pay, working conditions and benefits once eligible. Regular audits help minimise the risk of employment disputes and non-compliance.
Recruitment suppliers process significant volumes of personal and sensitive information on behalf of their clients.
Businesses should verify that agencies and other workforce suppliers have appropriate GDPR controls in place, including secure data storage, clear retention policies, lawful processing procedures and effective safeguards for protecting confidential information.
Modern Slavery remains a significant risk across many labour supply chains.
Businesses should audit recruitment agencies and umbrella suppliers to ensure they have robust Modern Slavery policies, undertake appropriate due diligence, train their teams and maintain effective reporting procedures to identify and prevent worker exploitation.
Accurate documentation is essential for demonstrating compliance during internal audits or external inspections.
Businesses should regularly review whether suppliers maintain complete and up-to-date records, including contracts, Right to Work documentation, qualifications, licences, certifications and training records.
Compliance extends well beyond documentation.
Businesses should regularly monitor supplier performance through agreed KPIs, compliance reporting, fill rates, response times, worker quality and service delivery to ensure suppliers consistently meet contractual and governance expectations.
Performance reviews should form part of a structured supplier audit programme rather than being undertaken only when issues arise.
Effective onboarding helps temporary workers understand company policies, health and safety requirements and operational expectations from day one.
Businesses should review both their own onboarding procedures and those delivered by recruitment suppliers to ensure responsibilities are clearly defined, consistently applied and fully documented.
Businesses should audit how recruitment agencies, umbrella companies and hiring managers work together to ensure temporary workers receive appropriate health and safety information before starting an assignment.
This includes reviewing role-specific risk assessments, training records, incident reporting procedures and ongoing support throughout each placement.
Auditing multiple recruitment agencies and umbrella companies individually can quickly become complex.
Different suppliers often operate with varying compliance processes, documentation standards and reporting methods, making it difficult to gain confidence that every organisation within your labour supply chain is meeting the same expectations.
A Neutral Vendor Managed Service provides independent oversight of your contingent workforce supply chain, ensuring every recruitment agency and umbrella company is assessed against a consistent compliance framework.
This delivers:
Rather than relying on individual suppliers to self-manage compliance, organisations benefit from independent oversight, transparent reporting and consistent governance across every supplier.
At Datum RPO, compliance sits at the heart of our Neutral Vendor Managed Service.
We independently audit and manage recruitment agency and umbrella company compliance, ensuring every supplier is assessed against agreed legal, regulatory and contractual standards before supplying temporary workers.
Our team provides ongoing supplier audits, performance monitoring, compliance reporting and complete visibility across your contingent workforce supply chain. This enables HR, procurement and operational teams to reduce risk, strengthen governance and demonstrate greater compliance assurance as regulatory expectations continue to evolve.
Although agencies and umbrella companies manage many day-to-day workforce activities, the organisation engaging temporary workers retains responsibility for ensuring appropriate governance and oversight. Regular supplier audits help reduce legal, financial and reputational risk while demonstrating compliance with UK legislation.
Businesses should review recruitment agencies' and umbrella companies' processes for Right to Work checks, payroll compliance, insurance, Agency Worker Regulations, GDPR, Modern Slavery, worker documentation, onboarding, health and safety, supplier performance and wider governance procedures. Reviewing the entire labour supply chain is becoming increasingly important as Joint and Several Liability (JSL) places greater emphasis on end-client oversight.
Datum RPO delivers independent, transparent and fully compliant Neutral Vendor Managed Services tailored to each client's workforce requirements. By auditing recruitment agencies and umbrella companies impartially and applying consistent governance across the supply chain, we help organisations reduce compliance risks, improve supplier performance and gain complete visibility of their contingent workforce.
A Neutral Vendor Managed Service introduces independent oversight across every recruitment agency and umbrella supplier, ensuring consistent auditing, governance and reporting. This strengthens compliance, improves audit readiness and gives organisations greater confidence that every supplier is meeting both legal and contractual obligations.
If your organisation works with multiple recruitment agencies or umbrella companies, now is the ideal time to review your supplier governance framework.
Contact Datum RPO today to arrange a contingent workforce compliance review and discover how our Neutral Vendor Managed Service can help you audit your labour supply chain, reduce compliance risk and strengthen governance across every supplier.