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Construction workforce turnover is an assurance problem, not a productivity footnote

Mace has put a number on construction's revolving door. The harder cost sits in the paperwork that restarts every time a worker is replaced.
Workforce turnover in construction: a site supervisor checks a new worker's right-to-work document in a site cabin

News · End-Hirers & Agencies · OPRaaS Platform

Workforce turnover is a permanent feature of how large construction projects are staffed. People move between sites, subcontractors and payroll arrangements from one month to the next, and a scheme that starts the year with one crew can finish it with several.

A new report from Mace Construct puts a price on that movement. Writing on 1 July 2026 for Construction Management, Nicky Roger reports that the contractor’s Build Smart, Build Better study, drawn from more than 200 projects, estimates workforce turnover is costing the industry over £1.3bn a year in lost productivity, rising to almost £20,000 in lost output an hour on the largest schemes.

The report frames workforce turnover as lost knowledge and coordination. For anyone assuring a labour supply chain, that same movement carries a second cost. Every worker who leaves and is replaced restarts a compliance record, and that record has to be rebuilt correctly each time.

What the Mace report measures, and what it leaves out

Mace’s estimate is a productivity number. On its analysis, projects employing around 500 workers can lose roughly £2,266 in output an hour to workforce turnover, and that figure climbs steeply on the largest infrastructure schemes. The £1.3bn is the annual gap Mace suggests exists between projects with high and low workforce turnover across the UK pipeline.

The argument behind the number matters more than the number itself. Mace’s executive chair, Mark Reynolds, argues that the sector has to stop treating site labour as if it were endlessly interchangeable, because when workers leave a major site the project loses knowledge, coordination and momentum. Productivity, the report suggests, is largely settled before work starts, in design decisions, procurement strategy and how well the supply chain is integrated.

What the productivity view does not price is the compliance work that the same workforce turnover creates. A replacement worker is not only a gap in output. Each one is a fresh set of checks that a main contractor or its recruitment agency has to complete and be able to show. That cost rarely appears in a productivity report, but it falls on the same organisations.

Why a new face restarts the compliance clock

Consider what has to happen every time a worker is replaced. Their right to work has to be verified. Their employment status has to be established, because it decides how they are paid and taxed: agency worker, umbrella employee, self-employed subcontractor or a worker through their own company. For subcontractors, their status under the Construction Industry Scheme has to be checked with HMRC before a payment is made.

These checks are not optional, and they do not carry over from the last person in the role. Where workforce turnover is high, the volume simply multiplies. A gap in that record is not a vacancy that fills itself. It is missing evidence, and missing evidence tends to surface at the worst moment, when HMRC, a client or an auditor asks who was on site, how they were engaged and how they were paid.

Why construction workforce turnover is hardest to evidence

This is sharper in construction than in almost any other sector. Construction carries one of the highest rates of self-employment of any UK industry, on Office for National Statistics labour market figures, and it leans heavily on subcontracting, agency supply and umbrella payroll. The OPRaaS Labour Supply Chain Assurance course notes that umbrella and project-based workers are especially common on construction schemes.

That reliance on movement is exactly what makes workforce turnover so hard to evidence in construction specifically. Layers of subcontractors sit beneath the main contractor, and HMRC has been clear that the business at the top of the chain is expected to have visibility of the tiers below it.

The OPRaaS course sets this out plainly for construction: verify the VAT and CIS position of subcontractors, follow the money through the chain, and treat weak oversight as a live exposure rather than a paperwork detail.

For a public sector infrastructure client, the same pattern runs through every framework supplier and every tier beneath them. The people delivering the work change constantly. The obligation to know who they are does not.

Turning a moving workforce into a live record

The answer to workforce turnover is not to freeze the workforce. It is to hold a record that stays current as the workforce moves. The OPRaaS course frames contingent-workforce tracking as a live control, and poses one test that cuts to the heart of it: can you produce a compliant headcount report within twenty-four hours for audit purposes?

Most organisations carrying heavy workforce turnover could not, because their record is rebuilt after the fact rather than kept live. A live record, by contrast, holds a small number of things per worker and keeps them current:

  • A verified right to work and identity, dated, with a diary note for any time-limited status that needs re-checking.
  • A confirmed employment status and paying entity, so it is clear at any point whether a worker is agency, umbrella, CIS subcontractor or engaged through their own company.
  • The CIS verification reference for every subcontractor, held against the payments made to them.
  • A reconciliation of the workforce list to timesheets, invoices and RTI, so the people on site match the people being paid.

Kept this way, a replacement worker is a new line on a maintained record, not a reason to reconstruct the whole picture.

How the OPRaaS Virtual Compliance Director keeps the record current

This is the work the OPRaaS Virtual Compliance Director (OPRaaS VCD) platform is built to carry. It embeds senior governance leadership into an end-hirer or agency without the cost of a full-time director, and builds audit-ready controls across right-to-work, IR35, CIS, GLAA and modern-slavery duties that stay current as workers and suppliers change.

Two examples make it concrete. Right to work, identity, employment status and CIS position are captured at onboarding and re-checked on a risk-based cadence, with every change written into the worker’s evidence record. Each supplier agency and umbrella is monitored against Companies House for director and ownership changes, and against Creditsafe for credit-risk moves such as county court judgments and financial-strength downgrades.

OPRaaS, On-Pay-Roll-as-a-Service, is a systemised governance and workforce management partner for organisations that rely on temporary, contractor and contingent labour, from recruitment agencies and end-hirers to umbrella companies, managed service providers and public sector buyers. It is approved on the UK Government Commercial Agency (formerly Crown Commercial Service) frameworks including RM6310 Audit & Assurance Services (Lots 2 & 4), RM6219 and RM6237 Learning & Training Services DPS.

Why lower workforce turnover is easier to assure

Mace’s own answer to workforce turnover is to invest in permanent capacity, direct employment and apprenticeships, and to reform procurement so that it rewards workforce stability. That case is made on productivity grounds. It holds on assurance grounds too.

A stable, directly employed workforce is simply easier to evidence than one that turns over every few weeks. Fewer onboarding events mean fewer chances for a right-to-work check or a CIS verification to be missed.

For end-hirers and public sector clients weighing how to assure their labour supply chain, workforce stability and supply chain assurance are two readings of the same decision. The harder the workforce is to keep still, the more the record has to do the standing still for it.

For construction end-hirers and the agencies that staff their sites, the operational version of this discipline sits in Module 3 of the OPRaaS Labour Supply Chain Assurance Self-Certification Course, where contingent-workforce tracking is treated as a live control rather than an annual reconciliation.

Every replacement worker is a fresh compliance record. Where workforce turnover is high, the question is not whether the checks were done, but whether you can show them.

Compliance is your asset. Evidenced daily.

Read next

“Own your compliance as an asset.“

Drawing on Nicky Roger, published on 1 July 2026 for Construction Management; the Mace Construct Build Smart, Build Better report; Office for National Statistics labour market data; HMRC guidance on the Construction Industry Scheme and right-to-work checks; and the OPRaaS LSCA Self-Certification Course Module 3.

Talk to OPRaaS about your supply chain.

Use the contact form in the sidebar to the right of this article, or email info@opraas.co.uk.

This article is editorial commentary by OPRaaS Limited (On-Pay-Roll-as-a-Service), drawing on published industry reporting. It is general information, not legal, tax, employment or compliance advice. Obligations vary by organisation and engagement. Speak to a qualified professional before acting on any specific position.

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LSCA Glossary of Terms

Glossary of Terms

Comprehensive definitions for Labour Supply Chain Assurance compliance terminology

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Acronym Full Term Definition
CFA 2017 Criminal Finances Act 2017 UK legislation introducing Corporate Criminal Offence (sections 45/46): failure to prevent the facilitation of tax evasion. Requires businesses to implement 'reasonable prevention procedures' (RPP). The only defence is having adequate RPP or showing it was not reasonable to expect such procedures.
MSA 2015 Modern Slavery Act 2015 UK legislation mandating supply chain transparency and worker safeguarding. Section 54 requires commercial organisations with ≥£36m turnover to publish annual modern slavery statements (board-approved, signed by director, published on website with prominent homepage link).
IR35 Off-Payroll Working Rules Tax legislation determining whether a contractor should be treated as employed or self-employed for tax purposes. Since April 2021, medium and large private sector clients must determine contractor status and deduct employment taxes if inside IR35. Requires Status Determination Statement (SDS).
JSL Joint & Several Liability 2026 legislation imposing strict liability on agencies and end-hirers for umbrella company tax debts, even where due diligence checks have been undertaken. Makes supply chain participants jointly responsible for unpaid PAYE taxes.
AWR Agency Workers Regulations 2010 UK regulations giving agency workers the right to the same basic working and employment conditions as permanent employees after 12 weeks in a qualifying assignment (12-week parity rule).
Good Work Plan Good Work Plan 2020 UK employment law reforms requiring written 'section 1 statement' of employment particulars to be given to employees and workers on or before day 1 of engagement (effective 6 April 2020). Sets out key terms but is not itself the contract.
Construction Act Housing Grants, Construction and Regeneration Act 1996 UK legislation governing payment practices in construction contracts. Section 113 renders "pay when paid" clauses ineffective (except where upstream payer is insolvent). Requires clear due dates, final dates for payment, and compliant payment/pay less notices.
Pensions Act 2008 Pensions Act 2008 UK legislation establishing workplace pension auto-enrolment requirements. Employers must automatically enrol eligible workers into qualifying pension schemes and make minimum contributions.
Acronym Full Term Definition
HMRC HM Revenue & Customs UK government department responsible for tax collection, payment of tax credits and benefits, and enforcement of tax law. Operates PAYE, CIS, RTI systems and conducts compliance audits. Business Tax Account provides reconciliation data.
GLAA Gangmasters and Labour Abuse Authority UK government body regulating labour providers in certain sectors (agriculture, horticulture, shellfish gathering, food processing/packaging) and investigating worker exploitation. Operates licensing regime and has criminal investigation powers. Hotline: 0800 432 0804 (03000 718234 out of hours).
ICO Information Commissioner's Office UK independent authority upholding information rights. Enforces UK GDPR and Data Protection Act 2018. Personal data breaches must be reported to ICO within 72 hours where there's risk to individuals' rights. Provides guidance on lawful bases, DSARs, and data-sharing.
CITB Construction Industry Training Board Industry body that collects levy from construction employers (payroll ≥£80k in PAYE in last tax year, or ≥£80k net CIS payments) and provides training grants. CITB levy compliance is audited in construction-focused compliance audits.
Acronym Full Term Definition
PAYE Pay As You Earn HMRC's system for collecting Income Tax and National Insurance Contributions from employees' wages. Employers deduct tax before paying employees, then remit to HMRC. Operates under Real Time Information (RTI) reporting requirements.
CIS Construction Industry Scheme Tax deduction scheme for payments to subcontractors in construction industry. Contractors must verify subcontractors with HMRC before first payment and make deductions (20% for verified, 30% for unverified) on labour element only (excluding VAT and allowable materials). CIS300 returns due by 19th following tax month.
GPS Gross Payment Status CIS status allowing subcontractors to be paid without deductions. Must apply to HMRC and meet compliance tests (business test, turnover test, compliance test). Contractors must verify GPS and keep evidence; continue to file CIS300 but make no deduction.
CIS300 CIS Monthly Return HMRC return submitted by contractors detailing total payments made to each subcontractor and CIS tax deductions applied. Must be filed by the 19th following the tax month (6th–5th). Should reconcile to subcontractor statements and bank payments.
CIS340 CIS340 Guidance HMRC's official guidance document defining what constitutes 'construction operations' for CIS purposes. Only work qualifying under CIS340 can legitimately be paid through the Construction Industry Scheme. Includes site preparation, construction, alteration, repairs, demolition.
RTI Real Time Information HMRC system requiring employers to report PAYE information at or before each pay run. Consists of Full Payment Submission (FPS) for regular pay data and Employer Payment Summary (EPS) for adjustments/recoveries. Must reconcile to payslips and Business Tax Account.
FPS Full Payment Submission RTI submission reporting gross taxable pay, Income Tax, and NICs for each employee on each payday. FPS values must match payslips. Should not be used to mask under-deductions.
EPS Employer Payment Summary RTI submission used only for adjustments, such as recoveries, statutory payments, employment allowance claims, or apprenticeship levy. Should not be used to mask PAYE under-deductions.
Bacs Bankers' Automated Clearing Services UK electronic payment system used for direct debits and credits, including salary payments. Net pay on payslip must match Bacs transfer to worker's bank account. Never use "BACS" (incorrect).
UTR Unique Taxpayer Reference 10-digit number issued by HMRC to identify individuals and businesses for tax purposes. Required for CIS verification and self-assessment tax returns. Note: UTR alone isn't proof of CIS verification; contractor must verify with HMRC before first payment.
NIC / NICs National Insurance Contributions UK social security tax paid by employees (via PAYE), employers (as on-costs), and the self-employed (Class 2/4 via self-assessment). Funds state benefits including state pension, statutory sick pay, and maternity allowance. CIS deductions are payments on account of Income Tax and Class 4 NICs.
NMW National Minimum Wage Legal minimum hourly rate employers must pay workers in the UK. Rates vary by age band. Post-deduction pay (after deductions for employer's own use/benefit) must not fall below NMW. Records must be kept for 6 years.
NLW National Living Wage Higher rate of National Minimum Wage for workers aged 21 and over. Often referred to together as "NMW/NLW". Different from voluntary Real Living Wage calculated by Living Wage Foundation.
AE Auto-Enrolment (Pensions) Workplace pension scheme where employers must automatically enrol eligible workers (aged 22+ to state pension age, earning ≥£10k annually) into a qualifying pension. Minimum contributions, opt-out rights, and re-enrolment (every 3 years) required.
P45 P45 (Leaving Employment) HMRC form given to employees when they leave employment, showing pay and tax details for the year to date. New employer uses P45 to operate correct tax code. Emergency codes (e.g., 1257L W1/M1) apply without P45/P6.
Acronym Full Term Definition
DRC Domestic Reverse Charge (VAT) VAT mechanism for construction services where the customer accounts for VAT instead of the supplier. Applies to most construction services under CIS340. Designed to combat missing trader fraud in construction supply chains.
Kittel Kittel Principle EU/UK legal principle that a taxpayer who knew or should have known their transaction was connected to VAT fraud may be denied the right to deduct input VAT. Creates due diligence obligations for supply chain participants.
DR Disguised Remuneration Tax avoidance arrangements designed to pay individuals while avoiding income tax and NICs, often involving loans, offshore entities, or trusts. HMRC actively targets such schemes. Loan charge applies to outstanding loans.
Acronym Full Term Definition
SDC Supervision, Direction or Control Key factor in determining employment status under agency rules (ITEPA 2003 s44). If a worker is under supervision, direction or control by any person (client, agency, end-hirer) over how they work, PAYE must be operated. SDC alone is not the general CIS status test—apply usual status tests (control, substitution, mutuality).
MOO Mutuality of Obligation Employment status indicator examining whether the employer is obliged to provide work and the worker is obliged to accept it. Absence of MOO suggests self-employment; presence suggests employment.
SDS Status Determination Statement Document required under IR35 reforms (April 2021) where medium/large clients must provide written reasons for their determination of a contractor's employment status for tax purposes. Must be given before contract starts or worker begins work.
CEST Check Employment Status for Tax HMRC's online tool for determining whether a worker should be classified as employed or self-employed for tax purposes. Results are binding on HMRC if information provided is accurate and not relating to highly complex arrangements.
PSC Personal Service Company Limited company through which a contractor provides their services. Often used by contractors working outside IR35, but subject to IR35 rules if the underlying relationship is one of employment. Requires SDS from medium/large clients.
KID Key Information Document Plain-English factsheet (not a contract) that agencies must give to workers before they agree to an assignment (Conduct of Employment Agencies and Employment Businesses Regulations 2003). Includes worked pay illustration, deductions, who pays the worker, benefits. Must be updated within 5 working days of any change.
ITEPA 2003 Income Tax (Earnings and Pensions) Act 2003 UK tax legislation governing employment income. Section 44 contains agency rules requiring PAYE where worker is under SDC. Section 61N–61R cover off-payroll working (IR35) for public sector and (from 2021) medium/large private sector.
DBS Disclosure and Barring Service UK government service providing criminal record checks for employment purposes (particularly roles working with children or vulnerable adults). Processing DBS data requires DPA 2018 Schedule 1 condition and appropriate policy document.
Acronym Full Term Definition
Umbrella Umbrella Company Employment intermediary that employs agency workers and contractors. Handles PAYE, pension, and employment administration while the worker performs assignments for end-clients arranged through agencies. Employer NICs/apprenticeship levy must be funded from assignment rate, not charged to workers as deductions.
MUC Mini Umbrella Company Fraudulent scheme where multiple small umbrella companies are created to exploit employment allowances and avoid tax obligations. Often phoenixing after accumulating tax debt. A significant compliance risk that supply chain audits help detect.
Phoenix Phoenix Company Scheme Fraudulent practice where a company accumulates tax debts, is dissolved, and re-emerges as a new entity to escape liabilities. A key risk factor in supply chain due diligence. Tolerance of phoenix suppliers by end users enables fraud cycle.
Purported Purported Umbrella Company Entity presenting itself as a legitimate umbrella company but failing to meet compliance standards, potentially operating tax avoidance schemes or misclassifying workers.
Hybrid Hybrid Payment Model Pay arrangement combining different payment methods (e.g., PAYE + CIS, or PAYE + PSC). Requires careful status assessment to avoid disguised remuneration or employment status breaches.
Acronym Full Term Definition
UK GDPR UK General Data Protection Regulation UK data protection law (retained EU law post-Brexit) governing processing of personal data. Requires lawful basis (Art 6), data minimisation, security, transparency (Arts 13-14), and respect for data subject rights. Works alongside Data Protection Act 2018.
DPA 2018 Data Protection Act 2018 UK legislation supplementing UK GDPR. Schedule 1 sets conditions for processing special category data (health, biometric, union membership) and criminal offence data (e.g., DBS checks). Provides exemptions (crime prevention, tax collection, legal professional privilege).
DSAR Data Subject Access Request Individual's right under Art 15 UK GDPR to obtain copy of their personal data. Must respond within one month (extendable by 2 months for complex requests). Usually no fee. Must verify identity proportionately.
DPO Data Protection Officer Required role for public authorities or organisations conducting large-scale systematic monitoring or processing special category data (Art 37). Oversees data protection compliance, advises on DPIAs, and acts as contact point for ICO and data subjects.
LIA Legitimate Interests Assessment Assessment required when relying on legitimate interests (Art 6(1)(f)) as lawful basis. Three-part test: identify legitimate interest → demonstrate necessity → balancing test (interests vs individual rights). Appropriate for audit/assurance; avoid consent for audits.
DPIA Data Protection Impact Assessment Required assessment where processing is likely to result in high risk to individuals (Art 35). Must complete for large-scale, systematic monitoring or extensive special category data processing. Documents risks, mitigation measures, and necessity/proportionality.
RoPA Records of Processing Activities GDPR requirement (Art 30) documenting all personal data processing activities. Must include purposes, lawful bases, data categories, recipients, retention periods, security measures, and international transfers. Must be available to ICO on request.
IDTA International Data Transfer Agreement UK mechanism for lawfully transferring personal data outside the UK (replacing EU Standard Contractual Clauses post-Brexit). Required unless recipient country has adequacy decision or other derogation applies. Alternative: UK Addendum to EU SCCs.
SCCs Standard Contractual Clauses EU Commission-approved contract templates for international data transfers. For UK data exports, use UK Addendum to EU SCCs or UK IDTA.
Art 28 DPA Article 28 Data Processing Agreement Mandatory contract between controller and processor (Art 28 UK GDPR). Must cover: subject matter, duration, data types, processing instructions, confidentiality, security, sub-processors, data subject rights assistance, breach notification, data deletion/return, audit rights.
Art 26 Article 26 (Joint Controllers) UK GDPR provision for parties who jointly determine purposes and means of processing. Requires arrangement setting out respective responsibilities, data subject rights, and contact points. Different from controller-processor (Art 28) or controller-controller data-sharing.
Controller Data Controller Organisation that determines the purposes and means of processing personal data. Bears primary GDPR obligations. Agencies, umbrellas, and end-hirers usually act as independent controllers for their own audit/compliance purposes.
Acronym Full Term Definition
LSCA Labour Supply Chain Assurance Due diligence framework ensuring compliance with tax, employment, and ethical standards throughout the labour supply chain. Covers PAYE/CIS compliance, modern slavery, CFA 2017, worker rights, and IR35. Aims to detect exploitation, fraud, and phoenixism.
PSL Preferred Supplier List Vetted list of approved suppliers (typically umbrella companies or agencies) that meet compliance standards. Key governance control for managing supply chain risk. Should be reviewed regularly and require re-certification.
End-Hirer End-Hirer / End Client The organisation where agency or contract workers ultimately perform their work. Under current regulations, medium/large end-hirers have IR35 status determination responsibilities and supply chain due diligence obligations.
CCO Corporate Criminal Offence CFA 2017 offence: failure to prevent facilitation of tax evasion by an associated person. Three-stage liability: (1) taxpayer evades tax, (2) associated person criminally facilitates it, (3) organisation failed to prevent. Only defence: reasonable prevention procedures (RPP).
RPP Reasonable Prevention Procedures The only defence to Corporate Criminal Offence under CFA 2017. HMRC's six principles: risk assessment, proportionate procedures, top-level commitment, due diligence, communication (training), monitoring & review. Must be risk-based and documented.
SRO Senior Responsible Owner Senior person accountable for CFA 2017 compliance, risk assessments, and implementation of reasonable prevention procedures. Provides top-level commitment and board oversight.
MSAT Modern Slavery Assessment Tool UK Government tool (Home Office/Cabinet Office) for assessing modern slavery risks in supply chains. Free to organisations registered on UK Government Supplier Registration Service.
Acronym Full Term Definition
ASCA Agency Self-Certification Audit Most comprehensive audit form with 174 questions across 18 sections. Enables recruitment agencies to self-assess compliance with tax, employment, and supply chain obligations including PAYE, CIS, Modern Slavery, CFA 2017.
AUCIS Agency Umbrella CIS Audit Audit evaluating recruitment agencies' compliance with CIS requirements when engaging umbrella companies, ensuring proper tax treatment and supply chain integrity.
AUPAYE Agency Umbrella PAYE Audit Audit assessing recruitment agencies' oversight of umbrella companies' PAYE compliance, including tax deductions, National Insurance contributions, and payroll accuracy.
EHUCIS End-Hirer Umbrella CIS Audit Audit evaluating end-hirers' due diligence when engaging umbrella companies under CIS, ensuring supply chain compliance and proper contractor treatment.
EHUPAYE End-Hirer Umbrella PAYE Audit Audit assessing end-hirers' oversight of umbrella PAYE arrangements, covering payroll transparency and worker rights compliance.
EHSA End-Hirer Self-Assessment Audit Audit enabling end-hirers to self-assess their compliance with supply chain, tax, and employment obligations.
EHAA End-Hirer Assurance Audit Audit providing end-hirers with an independent assessment of their supply chain compliance, risk management, and due diligence practices.
UMBCIS Umbrella CIS Audit Audit evaluating umbrella companies' compliance with CIS requirements, including proper contractor treatment, tax deductions, and verification processes.
UMBPAYE Umbrella PAYE Audit Audit assessing umbrella companies' PAYE compliance, payroll integrity, and worker protection standards. Contains 21 sections (Section 1 info-only, Sections 2-20 audit, Section 21 declaration) vs 18 for most other audits.
Self-Cert Self-Certification Audit Generic term for labour supply chain compliance audits where organisations self-assess against tax, employment, and ethical standards. Provides documented evidence of due diligence for HMRC inspections.
Acronym Full Term Definition
Instance Audit Form Instance Individual audit submission. Users can create unlimited instances, each stored as WordPress custom post type with responses in wp_opraas_audit_responses table. Assigned to logged-in user via post_author field.
Completion Completion Score Frontend metric showing percentage of questions answered (any answer counts). Includes ALL sections: Section 1 checkbox, Section 2 (8 fields), Declaration (7 fields), and all audit questions. N/A responses count as answered.
Compliance Compliance Score Backend metric measuring quality of compliance. Scoring: Yes=5 points, No=0 points, N/A=0 points (excluded from maximum), Don't Know=1 point. EXCLUDES Sections 1, 2, and Declaration entirely. ≥80% = Compliant, 60-79% = Partially Compliant, <60% = Non-Compliant.
Evidence Evidence Files Supporting documents uploaded to substantiate audit responses. Stored in AWS S3 via WP Offload Media plugin, with Evidence Table providing S3-aware ZIP downloads that temporarily download from cloud before adding to archives.
Red Flags Red Flags Warning indicators in audit questions identifying practices that may indicate non-compliance, fraud risk (phoenixism, MUCs, disguised remuneration), or regulatory breaches requiring immediate attention and remediation.