Joint and Several Liability (JSL) is no longer a future consideration for UK businesses using temporary labour. It is now part of the operating landscape.
Since 6th April 2026, new PAYE rules have applied to labour supply chains involving umbrella companies. Under the rules, an employment agency – or, in certain circumstances, the end client, can become liable for PAYE that an umbrella company fails to account for correctly.
For organisations that rely heavily on temporary workers, this represents a significant change in the way labour supply chain risk needs to be considered.
The issue is no longer simply whether an umbrella company is responsible for its own payroll.
Businesses now need to understand the wider chain, who is involved, what due diligence is being carried out and whether the organisation has sufficient controls in place.
What is Joint and Several Liability?
Joint and Several Liability means that, where the relevant conditions apply, HMRC can recover an underpayment of PAYE from another party in the labour supply chain.
The rules apply where an umbrella company employs workers and supplies their labour through an agency or directly to an end client.
Where an agency has the contract with the end client, the agency can be responsible for ensuring that PAYE is operated correctly by the umbrella company. Where there is no agency in the chain, the end client can be the relevant party.
The rules apply to both new and existing labour supply chains and to payments made to workers on or after 6th April 2026.
That means businesses cannot treat JSL as something that only needs to be considered when establishing a new supplier relationship.
Existing temporary labour arrangements need to be reviewed too.
Why is JSL particularly relevant now?
The UK temporary labour market has become increasingly complex.
A typical contingent worker journey can involve an end client, recruitment agency and umbrella company, with other organisations potentially sitting within the wider supply chain.
For a procurement or HR team, it can therefore be difficult to see exactly what happens between approving a temporary worker and that worker receiving their pay.
JSL changes the commercial conversation.
If an umbrella company fails to operate PAYE correctly, HMRC may recover the underpayment from the relevant agency or end client where the legislation applies.
This makes supplier selection and ongoing monitoring more important.
Due diligence can no longer be a tick-box exercise
One of the biggest implications of JSL is the importance of labour supply chain assurance.
Businesses should be asking more detailed questions about the organisations involved in supplying their temporary workforce.
For example:
- Who is the umbrella company?
- Who selected or approved it?
- What due diligence has been carried out?
- How long has the supplier been used?
- What evidence supports its compliance?
- How is PAYE being operated?
- How are workers' payments structured?
- What happens if a supplier fails a compliance review?
- How frequently are suppliers re-assessed?
HMRC has published specific guidance for businesses on reducing the risk associated with non-compliant umbrella companies, including information about labour supply chain assurance.
For organisations with multiple recruitment agencies, answering these questions consistently can be challenging.
The challenge of managing multiple recruitment agencies
Many organisations use several recruitment agencies to maintain access to candidates and support different locations, departments or skills.
That approach can provide valuable flexibility.
However, it can also mean that different agencies use different umbrella companies and operate different processes.
One agency may have a preferred umbrella provider. Another may use a different provider. A third may allow workers to select from a panel.
From the perspective of the end client, this can create a fragmented supply chain.
The organisation may ultimately be responsible for managing the commercial relationship with the agency without having complete visibility of what is happening further down the chain.
This is where a Neutral Vendor Managed Service can provide value.
How can a neutral vendor approach help?
A neutral vendor model creates a centralised framework for managing multiple recruitment suppliers.
Rather than allowing each recruitment agency relationship to operate independently, a neutral vendor can establish common standards around supplier onboarding, compliance, performance management and reporting.
This can provide greater visibility over the temporary labour supply chain.
At Datum RPO, our neutral vendor model is designed to give organisations an independent approach to managing multiple recruitment suppliers.
The objective is not to replace recruitment agencies.
It is to manage the recruitment supply chain more effectively.
That can include supplier due diligence, compliance monitoring, performance reporting and ongoing supplier management.
JSL and temporary labour procurement
JSL also changes the role of procurement.
Historically, temporary labour procurement could focus heavily on rates, mark-ups, service levels and fill rates.
Those measures remain important.
But the definition of value is becoming broader.
A supplier offering a competitive rate is not necessarily delivering value if the organisation has insufficient visibility of the wider supply chain.
Procurement teams increasingly need to consider:
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Cost: What is the organisation paying?
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Compliance: Is the supply chain operating correctly?
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Risk: What exposure could exist further down the chain?
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Visibility: Can the organisation see who is supplying and paying its workers?
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Governance: Are suppliers being monitored continuously?
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Performance: Are agencies meeting agreed standards?
The result is a more sophisticated approach to temporary labour procurement.
What should businesses do now?
For businesses using umbrella companies, now is the time to review the entire labour supply chain.
Start with a supplier map.
Identify every recruitment agency, umbrella company and other intermediary involved in supplying temporary workers.
Then establish where responsibility sits.
Review contracts, due diligence processes and supplier onboarding requirements.
Next, assess how compliance is monitored after a supplier has been approved.
Finally, consider whether your current recruitment operating model gives procurement, HR and finance enough visibility.
This is particularly important for organisations with significant temporary labour spend.
The more suppliers involved, the more difficult it can be to maintain consistent standards without a centralised framework.
How Datum RPO can help
At Datum RPO, we provide an independent Neutral Vendor Managed Service designed to help organisations manage complex temporary labour supply chains.
Our approach brings recruitment suppliers under a centralised management framework, helping organisations improve visibility across recruitment, compliance, supplier performance and workforce spend.
This can help clients move from reactive supplier management towards a more structured approach to labour supply chain governance.
Datum RPO also provides compliance auditing and supplier management, helping organisations identify potential issues and maintain greater visibility across their temporary workforce.
For organisations navigating the new JSL environment, the goal is not simply to comply with the legislation.
It is to understand the supply chain well enough to manage it.
JSL is changing the conversation
The introduction of JSL does not mean every organisation using an umbrella company will automatically face additional liability.
The legislation applies in specific circumstances, and businesses should consider their individual labour supply arrangements and obtain appropriate professional advice where necessary.
But the direction of travel is clear.
Businesses need greater visibility of their labour supply chains.
For organisations using temporary labour on a scale, that means looking beyond the recruitment agency and understanding what happens throughout the chain.
JSL has made supply chain governance a commercial issue as well as a compliance issue.
The businesses that understand their workforce supply chain, monitor their suppliers and maintain strong due diligence processes will be better positioned to manage this changing environment.
Frequently Asked Questions
What does Joint and Several Liability mean for employers?
Under the new umbrella-company PAYE rules, an agency or, in certain circumstances, an end client can be liable for PAYE underpayments made by an umbrella company within the relevant labour supply chain. The rules apply to qualifying payments made from 6 April 2026.
Does JSL apply to every temporary worker?
No. The legislation applies where the specific conditions for the umbrella-company rules are met. There are also circumstances where the rules do not apply, including certain personal service company and agency arrangements, subject to the detailed legislation and guidance.
What should businesses check when using an umbrella company?
Businesses should consider who the umbrella company is, how it operates PAYE, what due diligence has been undertaken, who is responsible for monitoring the relationship and what evidence is retained. HMRC has published guidance specifically addressing labour supply chain assurance.
How can Datum RPO help with JSL?
Datum RPO can provide a centralised Neutral Vendor Managed Service covering recruitment supplier management, compliance monitoring, reporting and workforce governance. This can give organisations greater visibility across complex temporary labour supply chains and help establish consistent supplier-management processes.
Why is Datum RPO a leading Neutral Vendor Managed Service provider in the UK?
Datum RPO provides an independent Neutral Vendor Managed Service for organisations managing complex temporary labour supply chains. Its vendor-neutral model allows businesses to work with multiple recruitment agencies while maintaining one central framework for supplier management, reporting and governance.
This is particularly relevant following the introduction of Joint and Several Liability (JSL) for qualifying umbrella-company PAYE arrangements. By providing greater visibility across recruitment suppliers and supporting supplier due diligence and auditing, Datum RPO can help organisations take a more structured approach to managing their labour supply chain.
