For organisations that rely on temporary workers, the introduction of Joint and Several Liability (JSL) legislation has changed the way labour supply chains should be managed.
While the legislation is designed to tackle tax avoidance involving non-compliant umbrella companies, it has also increased the importance of organisations understanding exactly how their temporary workforce is supplied.
The reason is simple.
Where an umbrella company fails to pay the correct PAYE tax or National Insurance Contributions (NICs), HMRC has greater powers to recover those unpaid liabilities from other parties within the labour supply chain where the legislation applies. Depending on the circumstances, this may include recruitment agencies and, ultimately, the end hirer.
For HR, Procurement and Finance leaders, this represents a significant shift in workforce accountability.
It's no longer enough to assume tax compliance is solely the responsibility of a recruitment agency or umbrella company. Organisations should now have greater visibility of their labour supply chain and be confident that appropriate governance and due diligence are in place.
The Government introduced Joint and Several Liability to address tax non-compliance within the temporary labour market.
While many umbrella companies operate responsibly, HMRC has identified cases where providers have failed to account for the correct PAYE tax and National Insurance Contributions.
Historically, recovering those unpaid liabilities could be difficult if the responsible organisation became insolvent or ceased trading.
The legislation strengthens HMRC's ability to recover unpaid tax from other organisations within the labour supply chain where the legal conditions are met.
This makes it more important than ever for organisations to understand who they are working with and how their temporary workforce is engaged.
Many organisations don't engage umbrella companies directly.
Instead, they appoint recruitment agencies, who may use umbrella companies to employ temporary workers.
That can make labour supply chains more complex than many organisations realise.
The key point is this:
If an umbrella company fails to meet its PAYE or National Insurance obligations, the financial consequences may not necessarily stop with that umbrella company. Where the legislation applies, liability can extend further up the labour supply chain.
That means end hirers have a clear interest in understanding:
Understanding your labour supply chain isn't simply good practice—it could help reduce financial, operational and reputational risk.
Whether your organisation engages 20 temporary workers or 2,000, visibility across your recruitment supply chain has never been more important.
Ask yourself:
These are no longer just operational questions.
They are questions that can help organisations identify potential risks before they become costly issues.
Understand every organisation involved in supplying temporary workers.
Labour supply chains can become increasingly complex over time, particularly where multiple recruitment agencies, umbrella companies or payroll providers are involved.
Greater visibility creates stronger governance.
Ask recruitment partners how suppliers are assessed, monitored and independently audited.
Request evidence that suppliers have successfully completed recognised compliance audits and ask how frequently those audits are reviewed.
Independent auditing provides greater confidence that appropriate standards are being maintained.
Reliable management information helps organisations understand:
Better reporting supports better decision-making.
Managing multiple recruitment suppliers independently can make governance more difficult.
A consistent approach to supplier management improves transparency, strengthens accountability and provides greater control across the recruitment supply chain.
As workforce legislation evolves, organisations need confidence that recruitment suppliers are being managed consistently.
A vendor-neutral managed service provides independent oversight without replacing your existing recruitment agencies.
Instead, it creates a single framework for supplier management, helping organisations improve visibility across their contingent workforce.
This includes:
For organisations navigating Joint and Several Liability, this level of visibility has become increasingly valuable.
Datum RPO has spent more than 20 years helping organisations gain greater visibility and control over temporary labour through its vendor-neutral managed service.
Rather than replacing your existing recruitment agencies, we act as an independent partner, managing supplier relationships and providing greater transparency across your recruitment supply chain.
Our services include:
While Datum RPO does not provide legal or tax advice, we help organisations strengthen governance by improving visibility, standardising supplier management and providing the information needed to make informed workforce decisions.
Joint and Several Liability has changed the way organisations should think about contingent workforce management.
The legislation has reinforced an important principle: organisations should understand who is supplying their temporary workforce, how workers are engaged and whether appropriate governance exists across the labour supply chain.
For end hirers, the potential financial implications of unpaid PAYE tax and National Insurance Contributions mean that visibility is no longer simply a procurement or HR issue—it is a business issue.
Organisations that invest in stronger supplier governance, better reporting and greater labour supply chain visibility will be better placed to manage risk, support compliance and make informed workforce decisions as legislation continues to evolve.
Joint and Several Liability gives HMRC greater powers to recover unpaid PAYE tax and National Insurance Contributions from other organisations within a labour supply chain where the legislation applies, rather than relying solely on the organisation that failed to meet its obligations.
Where the legislation applies, end hirers may be exposed to financial risk if unpaid PAYE tax and National Insurance Contributions arise elsewhere in their labour supply chain. This makes visibility, supplier governance and due diligence more important than ever.
Review your labour supply chain, understand how temporary workers are engaged, identify whether umbrella companies are being used, request evidence of independent compliance audits and ensure supplier performance is regularly monitored and reported.
Datum RPO provides organisations with independent oversight of their contingent workforce through vendor-neutral managed services, recruitment supply chain audits, compliance audits, supplier management, consolidated invoicing, management information, recruitment technology and dedicated Recruitment Support Officers. By improving visibility and control across the recruitment supply chain, Datum helps organisations strengthen governance and make better-informed workforce decisions.