The introduction of the Fair Work Agency (“FWA”) marks a significant shift in the employment and labour market landscape. With expanded powers to enforce employment rights, tackle non-compliance, and hold parties accountable across complex supply chains, recruitment agencies are facing heightened scrutiny, and increased risk.
Against this backdrop, the choice of umbrella provider has never been more important. Working with a reputable, trusted and financially secure umbrella company can play a critical role in mitigating agency risk, while simultaneously offering tangible benefits to contractors.
Understanding the scope of the Fair Work Agency
The FWA is due to be established on 7th April 2026 according to the updated Employment Rights Act 2025 (“ERA”) timeline, and will be established to strengthen enforcement of workers’ rights and improve compliance across the labour market. It will bring together enforcement responsibilities of HMRC’s National Minimum Wage Compliance Team, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate. Its remit will cover areas such as:
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Correct payment of wages and holiday pay
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Employment status and rights
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Transparency and fairness within labour supply chains
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Accountability where multiple parties are involved in a worker’s engagement
For recruitment agencies, this means greater scrutiny; any weaknesses in payroll processes, employment practices, or supply chain governance poses greater risk of regulatory attention.
How engaging with an umbrella company can reduce agency risk
While compliance and risk mitigation are critical for agencies, umbrella companies also deliver clear benefits for contractors — particularly when compared to agency PAYE or assignment-by-assignment employment models.
Continuous employment is one of the most significant advantages. Under an umbrella model, contractors are employed by the umbrella company across multiple assignments, rather than being employed separately for each role. This continuity can support:
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Ongoing statutory employment rights
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Greater stability between contracts
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Simpler mortgage, tenancy, and credit applications
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A consistent employment record
For many contractors, this stability is a decisive factor, especially in markets where assignments can change frequently.
PayStream is approved on more PSLs than any other provider, meaning contractors who choose to work with us are more likely to remain continuously employed when switching assignments or agencies. This not only benefits contractors but also supports agencies by reducing onboarding friction and ensuring payroll continuity.
A safer, smarter supply chain
In an era of vast legislative change including, Joint & Several Liability, the ERA 2025 and the establishment of the FWA, agencies need payroll partners that understand compliance, employment law, and supply chain accountability, and can evidence best practice at every stage.
Umbrella companies offer a proven way to reduce risk, simplify operations, and protect all parties involved. When combined with scale, experience, and extensive PSL coverage, it creates an option that works equally well for agencies and contractors.
At PayStream, we work closely with recruitment partners to deliver compliant, transparent, and contractor-focused payroll solutions — helping agencies navigate regulatory change with confidence, while giving contractors the stability and continuity they value most.
