You may have audited your recruitment agencies before. But do you know what has changed since your last review?
For many End Clients, recruitment agency compliance is something that gets addressed when a supplier is first appointed. The agency completes the due diligence questionnaire, provides its policies and certificates, answers a series of compliance questions and is then approved to supply workers.
It is easy to assume that once those checks have been completed, the compliance box has been ticked.
But recruitment supply chains don't stay still.
Agencies change their processes. New staff join and experienced compliance teams move on. Payroll arrangements can change. New umbrella companies can be introduced. Workers may be engaged under different models, while legislation and regulatory expectations continue to evolve.
That means a recruitment agency that was compliant when it joined your supply chain may not necessarily present the same risk today.
And with Joint and Several Liability (JSL) now adding another layer of responsibility to certain labour supply chains, regularly checking what is happening behind the scenes has become increasingly important.
The danger of assuming everything is still the same
Imagine that a recruitment agency passed your compliance review two years ago.
At the time, you were satisfied with its processes and approved it as a supplier.
Since then, however, the agency has grown. It has taken on new clients, changed some of its internal processes and started using additional umbrella companies.
Your organisation may still have the original compliance documents sitting in a supplier file.
On paper, nothing appears to have changed.
But the reality of the supply chain could be very different.
This is one of the biggest reasons regular auditing matters. An audit provides a snapshot of compliance, but regular audits allow businesses to monitor how that picture changes over time.
Recruitment compliance isn't a "set and forget" exercise
The recruitment industry is constantly evolving.
Businesses change the way they hire. Agencies adapt their services. Temporary workforce models develop and new suppliers enter the market.
A recruitment agency may also rely on third parties for important parts of its operation. An umbrella company might be responsible for employing and paying workers, while another provider could support payroll or other administrative functions.
The more organisations involved, the more difficult it can be for a client to maintain a clear picture of its supply chain.
This is why compliance needs to be treated as an ongoing responsibility rather than a one-off approval process.
Regular reviews give businesses an opportunity to ask a simple but important question:
"Is our supplier still operating in the way we originally approved?"
JSL makes supply-chain visibility even more important
The introduction of Joint and Several Liability from 6 April 2026 has put additional focus on the relationship between recruitment agencies, umbrella companies and end clients.
Where the relevant conditions apply, an agency supplying workers to an end client can be liable for certain PAYE & NIC that an umbrella company has failed to account for correctly. In specific circumstances, liability can also extend to the end client.
This means that businesses need to understand more than the name of the recruitment agency supplying their workers.
They should have visibility of the organisations operating further down the chain and understand how workers are being paid.
That includes asking who the umbrella company is, how it was selected, what due diligence was undertaken, are they accredited and how its compliance is monitored over time.
A supplier being approved several years ago doesn't necessarily tell you what the supply chain looks like today.
The umbrella company problem
Umbrella companies have become a significant part of the UK's temporary labour market, but they can make recruitment supply chains more complicated.
A recruitment agency may have an Umbrella Preferred Supplier List when it is first approved. Over time, that arrangement could change.
Perhaps a new provider is added.
Perhaps an existing provider is removed.
Perhaps different clients are using different umbrella companies.
Unless those changes are captured through effective supplier governance, an organisation may not realise that the businesses operating within its labour supply chain have changed.
Regular audits can help bring those changes to the surface.
They can also encourage organisations to move away from a simple "approved supplier" mentality and towards a more dynamic approach to supplier management.
What can change between audits?
It doesn't take a major event for compliance risk to change.
A new recruitment consultant might join an agency and be unfamiliar with the company's compliance procedures. A new payroll process might be introduced. Worker documentation could start being stored differently. An agency could begin using a new umbrella company without the client's procurement team fully understanding the implications.
Even changes that appear operational rather than regulatory can create compliance risks.
That is why effective audits should consider not only whether policies exist, but whether the organisation's actual practices continue to match those policies.
The real question is not:
"Did the agency have the right process when we approved it?"
It is:
"Is the right process still being followed today?"
Look beyond the policy document
One of the easiest mistakes to make when reviewing a recruitment agency is to focus too heavily on paperwork.
An agency might have an impressive compliance manual covering every major area of recruitment.
But policies don't employ workers.
People and processes do.
A regular independent audit can test whether the policies are being implemented properly. It can examine evidence and identify whether there are gaps between what the agency says it does and what is actually happening.
This can be particularly valuable when reviewing areas such as Right to Work, National Minimum Wage, payroll, IR35 Off Payroll, CIS Self Employed, worker documentation and umbrella company arrangements.
The objective isn't to catch suppliers out.
It is to establish whether the controls designed to protect the organisation and its workers are actually working.
Regular audits can protect more than compliance
It is tempting to think about recruitment audits purely in terms of avoiding legal or regulatory problems.
But the benefits can be much broader.
Regular audits can help organisations identify inefficient processes, inconsistent supplier practices and unnecessary duplication. They can highlight agencies that are performing particularly well and identify suppliers that may require additional support or scrutiny.
They can also improve relationships between procurement, HR, compliance and recruitment teams by creating a shared understanding of how the labour supply chain operates.
In other words, auditing isn't simply about finding problems.
It can help businesses build a better recruitment operation.
The reputational risk shouldn't be underestimated
Imagine discovering that workers supplied to your organisation have been incorrectly paid or that an important compliance check hasn't been carried out properly.
Even if the problem originated with a third-party recruitment agency, your organisation may still be asked questions.
Workers may associate the issue with your business. Clients and customers may want to know what happened. Senior management may ask why the supplier was approved in the first place.
Regular auditing provides an opportunity to identify potential weaknesses before they reach that stage.
It also gives businesses evidence that they have taken supplier governance seriously.
How often should recruitment agencies be audited?
There isn't a universal answer.
The appropriate frequency depends on the organisation's workforce, the number of recruitment agencies it uses, the complexity of its labour supply chain and the level of risk associated with each supplier.
A new supplier may warrant closer scrutiny during its first year. A supplier with previous compliance issues may require more frequent reviews. An agency operating a ‘Umbrella Preferred Supplier List’ may require additional attention.
The key is to take a risk-based approach.
Rather than auditing every supplier in exactly the same way, organisations can focus their resources where the potential exposure is greatest.
What should a regular audit look at?
The precise scope should reflect the organisation, but regular recruitment audits can revisit areas such as Right to Work, minimum wage, payroll, PAYE, National Insurance, IR35 Off Payroll, Statement of Work, CIS Self Employed, umbrella company arrangements, Modern Slavery and GDPR.
The audit should also consider whether anything has changed since the previous review.
Have new suppliers been introduced?
Have payment arrangements changed?
Are new umbrella companies being used?
Have there been any previous compliance concerns?
Have corrective actions from earlier audits actually been completed?
These questions help turn auditing from a static exercise into an ongoing programme of supplier oversight.
Independent auditing brings a fresh perspective
Internal teams know their suppliers well, which is a strength. But it can also make it difficult to challenge long-standing assumptions.
An agency may have worked with your organisation for years. Everyone knows the key contacts. The relationship is trusted. Problems have never been reported.
That doesn't necessarily mean the supplier no longer needs to be independently reviewed.
An external auditor can approach the relationship with fresh eyes, examine the evidence objectively and ask questions that internal teams may not think to ask.
That independent perspective can be particularly valuable in complex labour supply chains where multiple organisations are involved.
How Compliance.One can help
Compliance.One provides independent compliance audits designed to help organisations understand what is really happening within their recruitment and labour supply chains.
Rather than relying solely on supplier questionnaires or declarations, Compliance.One can independently assess the processes and evidence behind recruitment compliance.
This can include areas such as Right to Work, National Minimum and Living Wage, PAYE and National Insurance, IR35 Off Payroll, Statement of Work, CIS Self Employed, umbrella company arrangements, Modern Slavery and GDPR.
Where relevant, JSL can also form an important part of the review, particularly where umbrella companies are involved in supplying and paying workers.
The benefit is a clearer, more independent picture of your suppliers and the risks associated with them.
Where issues are identified, organisations can then take appropriate action, whether that means requesting additional evidence, implementing corrective measures, increasing supplier monitoring or reviewing the relationship altogether.
From annual check to continuous confidence
The biggest shift businesses can make is to stop viewing compliance audits as a once-a-year administrative task.
Instead, auditing should become part of a wider supplier governance strategy.
The objective isn't to constantly look for something wrong.
It is to maintain confidence that your recruitment agencies continue to meet the standards expected of them as the workforce, supply chain and regulatory environment change.
That approach can help businesses stay ahead of problems rather than reacting to them.
The bottom line
Your recruitment agency may have passed its compliance review.
But what has changed since then?
The people operating the process may have changed. The umbrella companies involved may have changed. Payroll arrangements may have changed. Your workforce may have changed.
And the law has certainly changed.
JSL has made labour supply chain visibility more important, but the principle goes beyond JSL. Businesses need to know who they are working with, how workers are being engaged and paid, and whether their suppliers continue to meet the standards expected of them.
Regular independent audits provide a practical way to maintain that visibility.
Compliance.One can help organisations independently assess recruitment agencies and labour supply chains, identify potential weaknesses and strengthen ongoing supplier governance.
Because the most important question isn't whether your recruitment supply chain was compliant once.
It's whether you can still trust it today.
FAQs
Why should recruitment agencies be audited regularly?
Recruitment agencies, workers, processes and supply chains can all change over time. A supplier that passed an audit several years ago may operate differently today. Regular audits provide an opportunity to reassess compliance, identify changes and address potential issues before they become more serious.
How does JSL affect recruitment supply chain audits?
JSL makes understanding the wider labour supply chain increasingly important. Where the relevant conditions apply, an agency can be liable for certain unpaid PAYE & NIC arising from an umbrella company's failure to operate PAYE & NIC correctly, with liability potentially extending to an end client in specific circumstances. Regular audits can help organisations maintain visibility of the organisations involved and the processes being used.
What should businesses look for during a regular recruitment audit?
Businesses should consider whether recruitment agencies continue to meet expected standards around Right to Work, minimum wage, payroll, PAYE, National Insurance, IR35, umbrella companies, Modern Slavery, GDPR and worker documentation. They should also review whether the supplier's structure or processes have changed since the previous audit.
Why is Compliance.One a leading company offering Independent Compliance Audits?
Compliance.One provides independent compliance audits that give organisations an objective assessment of their recruitment agencies and labour supply chains. Its approach looks beyond supplier declarations and examines the evidence supporting compliance processes.
By reviewing areas including Right to Work, minimum wage, PAYE, IR35, umbrella companies, Modern Slavery, GDPR and JSL-related risks, Compliance.One can help organisations identify potential weaknesses and strengthen supplier governance.
For businesses that want to move from simply assuming their recruitment supply chain is compliant to having greater evidence and confidence that it is, independent auditing provides an important layer of assurance.
Final thoughts
A recruitment audit should never be about ticking a box and moving on.
The real value comes from understanding how your supply chain operates today, how it has changed and where potential risks may be developing.
Regular independent audits give organisations the opportunity to challenge assumptions, test supplier processes and make sure compliance keeps pace with a changing workforce and regulatory environment.
Don't just audit your recruitment agencies once. Keep checking, keep improving and keep your supply chain accountable.
Compliance.One can help you build that ongoing confidence through independent recruitment compliance audits.
