The NHS is poised to ensure that it only works with compliant PAYE Umbrella Companies as it seeks to improve transparency on its use of agency workers, a senior NHS Improvement (NHSI) official has told Recruiter magazine.

The NHS is under pressure to reduce its agency expenditure and increase its use of internal staffing banks. Yet it remains essential for service delivery to utilise the talents of contracting agency staff. To that end, NHSI is endeavouring to improve its transparency on agency worker pay, with demonstrably compliant Umbrella Companies being a key feature of that process.

Martin McInnes, NHSI’s senior lead for operational agency data and intelligence, told Recruiter that the NHS was probably around 18 months behind with Umbrella Companies than it was with recruitment agencies.

He said, “Like agencies, umbrellas have an important role to play as we go forward,” although conceded that is was not 100% clear about precisely what that role was going to be.

Innes confirmed a trend that has been noted elsewhere in the public sector: since IR35 reforms governing self-employment were introduced in April, the use of Umbrella Companies within the NHS had “definitely increased.”

While NHSI’s official policy is not to encourage the use of either Umbrella Services or personal service companies in Trusts, Innes conceded that for agency staff who were working for multiple recruitment agencies, Umbrellas were the best and most consistent way for them to be paid. He added, “So we want to do whatever we can to make sure that only compliant PAYE Umbrellas are operating in the sector.”

Noting the concerns of both HMRC and the NHS about the presence of non-compliant, rogue Umbrella Companies operating within the flexible staffing market, Innes acknowledged that more recruitment agencies were now implementing internal measures designed to ensure that recommended Umbrella Companies were fully compliant.

He confirmed that he had recently met representatives from one of the UK’s largest professional trade associations for Umbrella Employers and contractor accountancy firms, the Freelancer and Contractor Services Association (FCSA).

Speaking to Recruiter, FCSA CEO Julia Kermode said, “Overall, it was a positive meeting. NHSI is receptive to hearing about the positive role that compliant umbrella firms have to play in the supply chain.”

Ms Kermode nonetheless acknowledged that “a proliferation of dubious Umbrella firms with no track record” had come into the market following the IR35 reforms. At the NHSI meeting, she had stressed the importance of due diligence in minimising risk. She added:

“Since opening up the dialogue with NHSI, I am confident that they have a better understanding about umbrella firms and what good, compliant umbrella firms offer.”

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