Managed Umbrella Companies & Labour Supply Chain Risk
We would like to highlight the importance of robust due diligence across labour supply chains, particularly given the increasing risks associated with Managed Umbrella Companies (MUCs) and umbrella employment models within the UK.
Government guidance makes clear that end-hirers and agencies must ensure all labour providers, including umbrella and MUC arrangements, are fully compliant, transparent, and do not expose businesses to financial, legal, or reputational risk.
Government Guidance
The full Government guidance can be found HERE and outlines best practice for:
- Conducting due diligence on labour providers and intermediaries
- Understanding and managing risks from MUC and umbrella structures
- Ensuring transparency of pay rates, deductions and employment status
- Protecting end-hirers from non-compliant pay or tax arrangements
April 2026 Legislative Changes
With legislative changes taking effect in April 2026, liability for unpaid tax, National Insurance, or employment obligations within MUC or umbrella models may transfer up the supply chain to the agency and/or end-hirer.
We are aware of increasing instances where MUC arrangements are not always clearly disclosed, and payslips appear compliant while concealing underlying umbrella structures. This reinforces the need to check not just payslips, but the full contractual and employment chain when reviewing labour supply partners.
Our Position
Connect Appointments wants to be absolutely clear: we do not use Managed Umbrella Companies (MUCs) or umbrella employment models at any point in our business. All workers are engaged through fully transparent, compliant employment structures with clear visibility of pay, deductions, and contractual terms.
As part of our commitment to operating at the highest industry standards, Connect Appointments is:
- Fully compliant with UK employment and agency legislation
- Approved and licensed by the Gangmasters and Labour Abuse Authority (GLAA)
- A supporter of Stronger Together principles
- A corporate member of the Recruitment & Employment Confederation (REC)
- Subject to compliance inspection by HM Inspectorate for Employment Agency Standards (last completed 2026), with regulatory responsibility transferring to the Fair Work Agency from April 2026
Next Steps
We recommend that businesses review their labour supply arrangements, ahead of the April 2026 changes to ensure full compliance and appropriate risk mitigation.
If you would like to discuss MUC risks, due diligence expectations, or our compliance framework in more detail, please feel free to contact us.
