The UK government has launched a consultation on plans to modernise the regulatory framework governing agency work. The review forms part of the wider employment reforms linked to the government’s “Plan to Make Work Pay” agenda and focuses on updating rules that many policymakers believe no longer reflect the realities of the modern temporary labour market.
The consultation examines two key regulatory regimes: the Conduct of Employment Agencies and Employment Businesses Regulations 2003 and aspects of the Agency Workers Regulations 2010.
Together, these rules govern how recruitment agencies operate, how agency workers are supplied to businesses, and what protections apply to individuals working through agency arrangements.
Ministers say the current framework was designed for a simpler labour market structure. Today’s agency supply chains often involve multiple parties, including umbrella companies and managed service providers, which can create uncertainty about employment status, pay arrangements and accountability. The consultation therefore seeks views on how the regulatory system can be simplified, modernised and clarified.
Strengthening security in the temporary labour market
One of the central themes of the consultation is how to improve security for agency workers while preserving the flexibility that temporary labour provides to employers and businesses.
Organisations rely on agency workers to respond quickly to fluctuations in demand or to fill short term staffing gaps across a wide range of sectors, including education, healthcare, administration, transport and logistics.
However, the government states that many agency workers report feeling insecure in their roles. Concerns often arise where complex labour supply chains make it difficult to determine who is responsible for pay, contractual rights or working conditions.
The consultation, therefore, explores how regulation could be updated to support three core objectives:
- ensuring agency workers receive fair and timely pay
- extending worker protections across all forms of engagement
- giving hirers confidence that supplied workers are appropriately qualified
For employers that regularly use agency staff, any future reforms in this area could lead to clearer expectations around due diligence and labour supply chain governance.
Improving transparency on pay, deductions and employment status
The consultation also focuses on improving transparency in the temporary labour market. Evidence gathered by government departments suggests many agency workers lack clarity about key aspects of their engagement, including how their pay is calculated and what deductions apply.
This issue is particularly prominent where workers are paid through umbrella companies. In some cases individuals report confusion about who their legal employer is, how their assignment rate translates into take home pay, and how holiday pay or other benefits are handled.
To address these concerns, the government is exploring measures designed to improve the quality and accessibility of information provided to workers. The policy objectives include:
- providing clear information about assignments and pay arrangements
- improving transparency around deductions and payslip calculations
- ensuring compliance requirements remain proportionate for businesses
For HR teams and organisations that rely on agency labour, greater transparency obligations could affect both recruitment agencies and businesses that engage temporary workers through complex supply chains.
Strengthening genuine choice for workers
Another focus of the consultation is the extent to which agency workers currently have genuine choice over how they are engaged.
The government notes that many individuals working through umbrella companies report that they had little or no say in how their engagement was structured. In practice, some workers say they were required to use a particular umbrella company or payment arrangement in order to take up a role.
The consultation therefore explores whether the regulatory framework should do more to protect worker choice. Two key policy objectives are identified ensuring workers are not required to be paid through an umbrella company and ensuring workers can decline assignments without detriment.
If introduced, reforms in this area could alter how recruitment agencies structure payment arrangements and contractual relationships with temporary staff.
Updating remaining parts of the Conduct Regulations
The consultation also seeks feedback on modernising parts of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 that have not been reviewed in recent reform programmes.
Particular attention is given to provisions covering “Schedule 3 occupations”, which include sectors such as acting, modelling, music and sports. These occupations have historically been regulated differently because they operate through representation based agency models.
Alongside this, the government is inviting views on whether several other regulatory areas should be simplified or clarified. These include:
- definitions used within the Conduct Regulations
- rules governing the supply of workers during industrial disputes
- requirements for agreeing terms with work seekers
- obligations where workers need to live away from home
- circumstances in which agencies may charge fees
The aim is to determine whether these provisions remain appropriate for the modern labour market or whether they create unnecessary administrative burdens.
What employers and HR teams should watch
Although the consultation does not introduce immediate legal changes, it signals that the government is considering wider reform of how agency work is regulated in the UK.
Businesses that rely heavily on agency labour should pay close attention to developments, particularly in sectors such as health and social care, education, logistics and the public sector where temporary staffing is common.
Potential future reforms could affect recruitment agency practices, umbrella company arrangements and the level of transparency required within labour supply chains. Employers that engage large numbers of agency workers may therefore wish to review how those arrangements operate and ensure internal processes support clear oversight of temporary staffing models.
The consultation closes on 1 May 2026, after which the government will review responses and consider whether legislative or regulatory changes are needed.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
