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The long-awaited overhaul of the Employment Rights Bill represents a generational shakeup of UK workplace legislation.
With over one million workers expected to gain more rights, the upcoming changes have been hailed by some as a positive turning point for the nation’s labour market.
At the same time, critics of the bill have labelled it ‘anti-business,’ and warned that the reforms will impose new costs and compliance pressures on employers.
What would it mean for the future of contract recruitment in the UK? Broadgate’s Daniel Tapsell explores the implications for the talent market in more detail below.
Umbrella Reform: Increased Accountability
Perhaps one of the most disruptive changes arrives in April 2026, when Umbrella Reform introduces joint and several liability for PAYE and NIC errors.
For the first time, end-clients and recruitment agencies will share tax responsibility for the actions of their umbrella partners.
This measure is designed to clean up a sector long criticised for opacity. Compliant, independently audited umbrella partners are expected to be best placed to thrive, and many agencies may take this as an opportunity to review and rationalise their supplier lists.
- What this means for contract hiring: We may see some contraction in the umbrella market before 2026, as smaller providers struggle to meet the new compliance demands. Larger umbrellas with the infrastructure, governance, and auditing controls to satisfy tougher standards are expected to consolidate their position, often inheriting contractors from those exiting the market.
- IR35 determinations will continue to influence how organisations engage contingent talent, making direct PAYE or fixed-term routes less clear-cut. Many firms may take this as an opportunity to review their supplier relationships and explore outsourcing certain projects under Statement of Work (SOW) frameworks. When designed well, these models can transfer delivery and compliance responsibilities (including IR35 and PAYE considerations) to the supply chain, provided there is a foundation of trust, clear governance, and ongoing oversight.
The Launch of the Fair Work Agency
At the centre of the Employment Rights Bill is the proposed Fair Work Agency, a single enforcement body, expected to launch in April 2026, that would consolidate oversight of pay, working hours, and labour-supply compliance.
The FWA would essentially simplify what is currently a fragmented enforcement landscape, bringing together functions that sit today with HMRC, the Gangmasters and Labour Abuse Authority, and other bodies.
For employers, it presents a direction of travel: a more unified, proactive regulatory framework designed to drive transparency and accountability throughout contractor supply chains.
- What this means for contract hiring: The FWA’s creation signals a continued move toward clearer, more transparent engagement models. Agencies with demonstrable audit trails and partnerships with vetted umbrella providers will be well placed as expectations rise.
- In many cases, it won’t mean a major change, but it could be a useful moment to review how transparency and governance feature in existing supply chains, and whether there’s scope to strengthen or simplify them ahead of the reforms.
The Employment Rights Bill Rollout
Rolling out across the next few years, the Employment Rights Bill introduces stronger day-one rights for workers, which include protections regarding predictable hours and a broader definition of fair work.
It extends traditional employment safeguards into parts of the labour market that have historically sat on the margins (agency, casual, and zero-hours arrangements).
For employers, this means that the compliance responsibilities, once limited to permanent staff, will increasingly apply to flexible work too.
- What this means for contract hiring: While the reforms may encourage some organisations to review how they engage short-term talent, no single model is likely to dominate. For many, properly vetted umbrella arrangements will remain effective and compliant, while others may look to diversify through direct PAYE or Statement of Work (SOW) routes.
- For organisations, the priority will be staying flexible while keeping trust at the centre of how they work with suppliers. It may be a good time to explore whether SOW models fit alongside existing routes. While these models can seem daunting at first, they ultimately focus on paying for outcomes rather than resources, an approach that could offer a different kind of agility for businesses rethinking how they deliver work in a more accountable environment.
Employment Status Review
Expected in late 2025, the Employment Status Review could narrow the legal distance between worker and contractor, which could draw more engagements into PAYE.
This would change how autonomy is evaluated, a subtle redefinition of who qualifies as being truly self-employed.
- What this means for contract hiring - Any changes to employment status rules are likely to evolve gradually rather than reshape the market overnight. Project-led and outcome-based roles should continue to sit comfortably within compliant frameworks when managed transparently. The key for organisations will be clarity, i.e., knowing why a role fits a particular model and being able to evidence that decision.
- Over time, we might start to see the ‘grey area’ in contracting shrink as organisations take a more deliberate approach to how flexible work is defined and managed.
Key Dates to Watch
The next two years will see a steady roll-out of reforms affecting how organisations hire, pay, and manage their contingent workforce. The timeline below outlines the key milestones currently expected, though dates may shift as legislation moves through Parliament, so it’s worth keeping an eye on updates.
Broadgate’s View: Compliance as a Competitive Edge
A strong compliance thread runs through the bulk of the upcoming reforms, with each measure appearing to push organisations toward more transparent employment models.
At Broadgate, we see 2025-26 as a pivotal point for contract hiring. We believe the best move is to stay curious when it comes to flexible employment models.
The organisations that stay open to testing new ways of engaging interim talent will be the ones who move fastest as the market evolves.
If you’d like to know more about how the reforms might affect your future hiring plans, including the best routes to staying flexible and compliant, our team would be happy to share what we’re seeing across the market.
To discuss what that could look like for your business, please get in touch with Daniel Tapsell directly: Daniel.tapsell@broadgatesearch.com.