The debating forum Recruitment Leaders, which was set up by RBS, Brabners, Saffrey Champness and Outsauce, raised concerns about rogue Umbrella Companies in the post-Legitas era during its latest meeting.

One of the keynote speakers at the forum, TEAM chairman Simon Garbett, noted that members of the forum had become more concerned about some Umbrella Services after the collapse of Legitas. Although many were fully compliant, he said that the Umbrella model remained relatively unregulated. This has led to anxiety amongst some recruiters that their reputations and financial security may be at risk if they inadvertently work with Umbrellas using dubious methods of employee payment, as indeed Legitas had done.

Mr Garbett did not mention, however, that the majority of HMRC-compliant, PAYE Umbrella Companies are a very safe option for recruitment agencies. Many of the larger and medium-sized Umbrellas have already complied with Real Time Information (RTI) requirements and are highly transparent in their taxation and payment models.

On a different note, Mr Garbett went on to suggest that recruiters should drop any expectation that the economy would return to normal, saying that now is the new normal. Agencies must alter their business strategies to take account of the changed economic environment and encourage growth rather than blame the economic downturn, he said. Despite the challenging conditions, Mr Garbett observed that there have been a number of success stories amongst agencies that have found new markets, pared back costs and grown stronger as a consequence.

Debates about Umbrella Companies would preferably be conducted in a calm and rational fashion that does not risk characterising all on the basis of a small number of rogue firms.

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