Labour's leaked manifesto has revealed plans to ban all umbrella companies.

In the document, leaked to several major news organisations this week, it said umbrella companies 'create a false structure to limit employers’ tax liabilities and limit workers’ rights'.

However, many in the industry have strongly disagreed with this statement, highlighting the work these companies do is a popular solution for the contractor and freelancer marketplace, enabling easy administration, secure collection of taxes, employment benefits and many other enhanced benefits.

According to Julia Kermode, CEO of the Freelancer & Contractor Services Association (FCSA), the government’s emphasis should be on ensuring organisations comply with current legislation rather than banning umbrella companies outright.

“Corbyn and others clearly don’t understand how umbrella works. Umbrellas allow contractors to be able to work independently for a number of end-hirers and provide contractors with full employment rights, all statutory benefits including holiday pay, maternity pay, paternity pay, sickness pay, pensions, redundancy pay and adoption pay.

“It would be foolhardy to ban umbrellas unilaterally considering that this sector is worth in excess of £3bn in tax and NI contributions to the Exchequer annually."

When asked about the party’s plans detailed in the document, a Labour spokesperson said: “We do not comment on leaked documents.”

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