Following on from our post Umbrella Companies after April 2026: A new PAYE risk for agencies and end clients, further change is ahead affecting the temporary worker market.

On 6 February 2026, the government launched its consultation, Make Work Pay: Modernising the Agency Work Regulatory Framework, signalling a significant overhaul of how temporary labour, agency work and umbrella companies are regulated in the UK. The proposals form part of the government’s wider “Make Work Pay” agenda and reflect its intention to modernise a framework widely seen as outdated and ill‑suited to today’s labour supply chains, ensuring a more unified, enforceable and transparent regulatory regime, designed to protect workers while supporting a flexible temporary labour market. 

The current regulatory framework was designed for a simpler worker-agency-hirer model. Today’s reality is that modern agency work often involves complex labour supply chains with multiple intermediaries and often with umbrella companies playing a central role in paying and employing workers. 

The government acknowledges that this complexity has created gaps in protection, inconsistent enforcement and opportunities for non‑compliance. It reports that evidence of opaque deductions, withheld holiday pay and unclear employment status has fuelled concerns that some workers are being left worse off.  

What is proposed?

The proposals aim to:

• Bring umbrella companies fully into scope of agency work regulation, ending the long‑criticised “grey area”.
• Strengthen worker protections, particularly around pay, holiday entitlement and non‑payment risk.
• Improve transparency, so workers can clearly see rates, deductions and their employment rights.
• Restore genuine choice, including proposals to stop agencies making work conditional on using a particular umbrella.
• Modernise and streamline the rules, removing process‑heavy requirements that add burden without improving outcomes.

Enforcement is also set to change, with oversight moving to the Fair Work Agency and stronger powers to tackle non‑compliance.

The consultation also invites views on whether aspects of the Agency Workers Regulations 2010 remain fit for purpose, such as the 12‑week qualifying period for equal treatment

What happens next?

The consultation is open until 1 May 2026, with responses sought from workers, agencies, umbrella companies, end‑hirers and representative bodies.