Recruitment has always been about talent and people, but the way businesses recruit, engage and pay those people is coming under greater scrutiny. With Joint and Several Liability (JSL) now in force, fair work and ethical recruitment are no longer issues that recruitment businesses can afford to treat as separate from compliance.
For recruitment businesses, the landscape has changed considerably. Clients are demanding greater transparency from their suppliers, workers are increasingly aware of their employment rights and regulators are paying closer attention to the way labour supply chains operate. At the same time, recruitment businesses are often working within increasingly complex and nontransparent supply chains involving, umbrella companies, outsourced payroll providers and other intermediaries.
This complexity creates a real challenge. A recruitment business may believe it has robust compliance processes in place, but how confident is it that every part of its supply chain operates to the same standard? More importantly, could it demonstrate that those processes are working if a client, worker or regulator asked for evidence?
That is where JSL, fair work and ethical recruitment come together.
What does fair work mean for recruitment businesses?
Fair work is sometimes seen as a broad or subjective concept, but many of its principles are straightforward. Workers should understand the role they are accepting, know who they are working for, understand how they will be paid, and receive the rights and protections they are entitled to.
For recruitment businesses, this responsibility begins before a worker arrives on site. Since the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (in force from 6 April 2004), agencies have been required to provide clear and accurate information about the role, be transparent about pay and employment arrangements, and ensure workers understand who is responsible for employing and paying them.
That responsibility continues throughout the worker’s assignment. Recruitment businesses should have effective processes for handling pay queries, concerns about working conditions, or changes to employment arrangements, ensuring ongoing compliance with both fairwork principles and the Conduct Regulations.
Ultimately, fair work is about creating a recruitment process where the worker’s interests are not overshadowed by commercial objectives, and where compliance with the Conduct Regulations is embedded into every stage of the supply chain.
Why ethical recruitment is becoming a business priority
Ethical recruitment isn't simply about doing the right thing from a moral perspective. It is increasingly becoming an important part of business reputation, supplier governance and risk management.
In many circumstances, Recruitment agencies sit at the centre of the relationship between workers and end client. They have visibility of candidates, employment arrangements, pay structures and, in many cases, the organisations further down the labour supply chain. That position gives recruitment businesses significant responsibility over whether workers experience a transparent and fair recruitment journey.
Poor practices can have consequences well beyond an individual worker. Problems involving underpayment, misleading employment arrangements, inappropriate deductions or poor treatment can quickly become reputational issues for both the recruitment agency and its client.
For businesses that rely heavily on temporary labour, the behaviour of their recruitment suppliers can ultimately reflect on their own brand. This is why clients are increasingly looking for recruitment partners that can demonstrate strong ethical standards rather than simply promising them.
JSL has changed the supply chain conversation
The introduction of Joint and Several Liability (JSL) has added another important consideration for recruitment businesses.
From 6 April 2026, where the relevant conditions apply, an agency supplying workers to an end client can be liable for certain PAYE that an umbrella company has failed to account for correctly. In specific circumstances, liability can also extend to the end client.
For recruitment businesses, this makes supply-chain visibility very important. If an umbrella company is involved, the agency needs to understand who that provider is, how it was selected, what due diligence has been undertaken and how its ongoing compliance is monitored.
This is where JSL connects directly with ethical recruitment. A recruitment business cannot simply assume that compliance is being handled correctly further down the supply chain. It needs processes that provide absolute confidence that workers are being paid correctly and compliantly.
Ultimately, the days of treating the supply chain as someone else’s responsibility are over; HMRC now expects every stakeholder to actively assure the integrity of their labour supply chain.
The umbrella company question
Umbrella companies are now an established part of the UK’s temporary labour market, but they introduce additional complexity and responsibility into contingent workforce arrangements. A recruitment business may engage a single umbrella company, operate an preferred Supplier List (PSL) , or work with a supplier mandated by a client. Whatever the model, the agency must understand the specific role each organisation plays within the supply chain.
Key questions include:
Who is the worker’s legal employer?
Who operates the payroll and processes payments?
Who is responsible for calculating PAYE and all statutory deductions?
What due diligence was completed before the umbrella was onboarded, initially and ongoing?
How is ongoing performance, compliance and worker experience monitored?
What escalation process exists if concerns are raised?
These are not simply operational details; they are fundamental to responsible recruitment and supplychain governance.
A recruitment business that understands and actively manages its umbrella supply chain is far better placed to identify risks early and address issues before they impact workers or clients.
Fair pay is fundamental to fair work
Few things demonstrate the importance of fair work more clearly than pay.
Workers need to know what they are going to earn, how their pay is calculated and exactly what deductions will be made. Recruitment businesses must be assured that workers receive no less than the statutory National Minimum Wage or National Living Wage, and that payroll processes are being operated appropriately.
This can become more complicated when workers move between assignments, work different hours or are engaged through third-party providers. Small errors can potentially affect large numbers of workers, particularly in high-volume temporary labour environments.
Getting pay right is therefore not simply about satisfying a legal requirement. It is fundamental to maintaining trust between workers, recruitment businesses and clients.
Right to Work is part of responsible recruitment
Fair and ethical recruitment also requires businesses to ensure that workers are legally entitled to work in the UK.
Right to Work checks are a fundamental part of the recruitment process, but having a policy is not enough. Businesses need to ensure that the correct checks are carried out consistently and that appropriate evidence is retained.
This is particularly important for recruitment businesses operating in sectors with significant numbers of international or migrant workers. Robust processes protect the worker, the recruitment agency and the client while helping to reduce the risk of inappropriate or exploitative recruitment practices.
Modern Slavery remains a critical issue
Modern Slavery and worker exploitation are central considerations in any assessment of ethical recruitment. Under the Modern Slavery Act 2015, organisations have a responsibility to identify, assess and mitigate risks of forced labour, human trafficking and exploitation within both their own operations and their labour supply chains. Certain labour markets present elevated risk—particularly where temporary, lowpaid or migrant workers are heavily represented—and recruitment businesses must be able to recognise where vulnerabilities may exist.
Indicators of exploitation should never be disregarded. Unusual or excessive deductions from pay, disproportionate control over workers, restrictions on movement, debtbonded arrangements, or unexplained recruitment fees are all recognised red flags within UK enforcement guidance and should trigger further investigation.
Critically, compliance cannot be reduced to reviewing documentation alone. Ethical and lawful recruitment requires organisations to look beyond contractual paperwork, understand the behaviours and conditions workers are experiencing, and maintain clear, robust processes for escalating and addressing concerns. This is fundamental to meeting both regulatory expectations and the wider duty to prevent Modern Slavery within labour supply chains.
Compliance and ethics go hand in hand
There is an important distinction between compliance and ethical recruitment, although the two are closely connected.
Compliance is largely about meeting legal and regulatory requirements. Ethical recruitment goes a step further by asking whether an organisation's practices are genuinely fair, transparent and responsible.
The strongest recruitment businesses understand that these principles reinforce one another.
A recruitment agency with robust compliance processes is better positioned to protect workers. A business that genuinely prioritises fair treatment is more likely to build strong relationships with clients and candidates. And an organisation that can demonstrate both is increasingly well placed to differentiate itself in a competitive market.
Why independent auditing matters
One of the biggest challenges for recruitment businesses is knowing whether their policies actually work in practice.
It is relatively easy to create a compliance policy. It is much harder to demonstrate that employees follow it consistently, that suppliers meet the required standards and that problems are identified and addressed.
This is where independent compliance auditing can provide significant value.
An independent audit can look beyond self-certification and assess the evidence behind an organisation's policies,procedures. It can identify gaps, highlight areas for improvement and provide an objective view of how effectively compliance controls are operating.
For recruitment businesses dealing with JSL, umbrella companies and increasingly complex labour supply chains, that independent perspective can be particularly valuable.
How Compliance.One can help
Compliance.One provides independent compliance audits for organisations looking to strengthen their recruitment and labour supply chains.
Its approach is designed to look beyond supplier declarations and examine the processes and evidence supporting compliance. Depending on the organisation's requirements, an audit can consider areas such as Right to Work, National Minimum and Living Wage, PAYE and National Insurance, IR35, umbrella company arrangements, Modern Slavery and GDPR.
JSL can also form an important part of the review where relevant, particularly where umbrella companies are involved in supplying and paying workers. Understanding the structure of the supply chain and the controls surrounding it can help recruitment businesses identify potential weaknesses and take action where necessary.
For end clients and recruitment businesses, independent auditing can also provide something increasingly valuable: evidence. Rather than simply telling clients that compliance is taken seriously, organisations can demonstrate that their processes have been independently assessed.
Building fair work into your recruitment culture
Fair work should not exist as a statement buried in a company policy. It should be reflected in the way a recruitment business operates every day.
That means training consultants to recognise potential compliance and exploitation issues, ensuring suppliers are properly vetted, maintaining accurate records and providing clear channels for workers to raise concerns.
It also means regularly reviewing whether processes remain effective as the business grows.
A recruitment business that has five clients and a small temporary workforce may operate very differently from one managing thousands of workers across multiple sectors. As the organisation grows, its compliance framework needs to grow with it.
What should recruitment businesses be asking?
Every recruitment business should periodically step back and assess its processes through the lens of both the worker and the client. Can a worker clearly identify their legal employer and understand how they will be paid? Do they know what statutory or contractual deductions will be made, and where to raise concerns if something goes wrong? Does the recruitment business have full visibility of every umbrella company operating within its supply chain, supported by documented due diligence? And critically, can the business evidence that its compliance controls are functioning, not merely claim that they exist?
These questions carry increasing regulatory weight. HMRC now expects stakeholders at every level of the labour supply chain to demonstrate active assurance, and the Fair Work Agency is intensifying enforcement across all tiers of labour provision, not just the primary contractor. Supplychain governance is no longer a peripheral responsibility — it is a core compliance obligation.
Being able to answer these questions confidently is not just good practice; it is a regulatory expectation and a genuine competitive advantage.
The future of recruitment is fair, transparent and accountable
The recruitment industry will continue to evolve, but one thing is unlikely to change: successful recruitment businesses depend on trust.
Workers need to trust that they will be treated fairly. Clients need to trust that their recruitment partners operate responsibly. Recruitment businesses need to trust the suppliers and intermediaries within their own supply chains.
JSL has added another layer to that relationship by increasing the importance of understanding how workers are paid and who is responsible for payroll further down the supply chain.
But the wider issue is bigger than JSL.
The future of recruitment is moving towards greater transparency, stronger governance and a much greater focus on fair work and ethical recruitment.
Businesses that embrace that change rather than simply reacting to it will be better positioned to build lasting relationships with both workers and clients.
FAQs
What does fair work mean for recruitment businesses?
Fair work means ensuring workers are recruited, engaged and treated fairly throughout their employment journey. This includes transparent information about roles and pay, appropriate employment arrangements, correct payment, protection from exploitation and access to the rights and protections they are entitled to.
How does JSL affect recruitment businesses?
JSL has increased the importance of understanding the organisations involved in a labour supply chain. Where the relevant conditions apply, an agency supplying workers to an end client can be liable for certain unpaid PAYE arising from an umbrella company's failure to operate PAYE correctly. In specific circumstances, liability can also extend to the end client, making supply-chain due diligence increasingly important.
How can recruitment businesses demonstrate ethical recruitment?
Ethical recruitment requires more than having the right policies in place. Businesses should ensure that workers receive clear information about their roles and pay, appropriate checks are completed, suppliers are properly vetted and potential exploitation or compliance concerns are identified and addressed. Independent auditing can provide additional evidence that these processes are operating effectively.
Why is Compliance.One a leading company offering Independent Compliance Audits?
Compliance.One provides independent compliance audits designed to give recruitment businesses and organisations greater confidence in their recruitment and labour supply chains. Its approach looks beyond policies and supplier declarations to examine the processes and evidence supporting compliance.
By assessing areas such as Right to Work, minimum wage, PAYE, IR35, umbrella companies, Modern Slavery, GDPR and JSL-related supply-chain risks, Compliance.One can help organisations identify potential weaknesses and strengthen their approach to fair, ethical and compliant recruitment.
The bottom line
Recruitment businesses are increasingly being judged on far more than their ability to fill vacancies. Clients expect responsible and transparent suppliers. Workers expect fair treatment and clarity. Regulators expect organisations to understand and evidence their obligations. And every business must now be able to demonstrate that its labour supply chain is governed, monitored and assured at every level.
JSL is a critical part of this shift, particularly for recruitment businesses engaging umbrella companies, but it sits within a much broader movement towards transparency, fair work and ethical labour provision.
In this environment, the recruitment businesses that succeed will not be those who claim compliance — but those who can prove it, evidence it, and stand behind it.
Compliance.One can provide the independent insight recruitment businesses need to assess their processes, identify potential risks and strengthen confidence across their labour supply chain.
Because in modern recruitment, doing the right thing isn't just good ethics. It's good business.
