MPs Reject Lords’ Amendments to the Employment Rights Bill: Why Umbrella Regulation Cannot Wait

The Employment Rights Bill has once again dominated debate in Westminster — and the latest twist is worrying for contractors, agencies, and umbrella companies alike. Last week, MPs rejected a series of amendments proposed by the House of Lords.

Among the proposals voted down were:

 • A six-month qualifying period before unfair dismissal rights applied (instead of the government’s “day one” right).

 • A system where workers had to request guaranteed hours, rather than employers being compelled to offer them.

On paper, ministers argue this strengthens worker protections. But for those of us in the umbrella sector, the real issue is not simply when rights begin — it’s whether regulation and enforcement will ever catch up with the realities of our market.

During the Lords’ debate, Lord Holmes introduced an amendment to bring umbrella companies under a formal licensing regime. This would have drawn a clear line between compliant umbrellas — who play by the rules — and rogue operators who exploit loopholes, underpay contractors, and damage trust in the whole industry.

That amendment was ultimately withdrawn, and now MPs have closed the door on it for this round of debate. But let’s be clear: kicking licensing into the long grass only prolongs the problem.

Chris Bryce, Chief Executive of the Freelancer & Contractor Services Association (FCSA), has been unequivocal. The FCSA supported licensing under the Bill and continues to push for regulation through the government’s proposed Fair Work Agency (FWA).

Bryce has also raised serious concerns about “PAYE shift” — where tax and compliance responsibilities could bounce between umbrella, agency, and end client. Without clarity, compliant umbrellas risk being penalised, while the non-compliant operators continue to exploit the grey areas.

His message is one we share: umbrella regulation cannot be left half-done.

The Bill is entering its “ping-pong” stage, moving back and forth between the Commons and the Lords until agreement is reached. At some point, regulation for umbrellas will be added back into the mix — but until then, thousands of contractors remain exposed to bad practice.

This uncertainty helps no one. Agencies want clarity. Contractors deserve protection. Compliant umbrellas need a level playing field. Yet the political back-and-forth drags on.

At UmbrellaCompanies.org.uk, we believe:

 1. Licensing must be introduced to weed out non-compliant operators.

 2. Regulation must be clear and enforceable — not open to interpretation.

 3. Worker protections must be backed by action, not just parliamentary speeches.

Rejecting sensible amendments may look like tidying up legislation in Westminster. On the ground, it looks like another delay in fixing a sector crying out for proper oversight.

The government cannot afford to miss this opportunity. The time for regulating umbrellas is not “later” — it is now.