What is an umbrella employer?
An umbrella company employs contractors and freelance professionals who complete numerous different assignments at various locations for recruitment agencies and/or end hirers. The umbrella company enters into an employment contact with the worker, and a service contract with the agency.
This contractual arrangement is far preferable to the alternative which would be to process a significant amount of paperwork each and every time a temporary worker wishes to be redeployed to a different role, agency or hirer. In a fast-paced project-driven environment where workers frequently change assignments, the resulting red tape of treating each change as a new employment would quickly become unmanageable.
Key benefits of umbrella employment to the worker
Employment rights, Contractors working for an umbrella firm are by definition employed by that umbrella firm, and therefore have access to all statutory rights and benefits of employment. This includes annual leave, maternity, paternity, sick pay and pension contributions, and all of these rights are provided for by the umbrella firm.
- Employment history whilst working on a contingent, multi-location basis (notably to support access to finance, housing/mortgages, etc.)
- Joined up pay from fragmented working:
- Many workers will perform multiple assignments during a week or a month
- Umbrellas consolidate their workers earnings and ensure appropriate taxes are paid
- Peace of mind that tax is paid appropriately, with no need to submit an annual self-assessment return to HMRC
- Employee/HR support, in the unlikely event that an individual needs HR advice, such as a grievance case, as their employer the umbrella firm will have processes to support them
- Ability to claim travel and subsistence expenses subject to status
How pay is calculated
The umbrella firm receives assignment income paid by the agency for the work undertaken. Like any employer, the umbrella must cover employment costs which includes employer’s national insurance, holiday pay and pension contributions. These employment costs are deducted from the assignment income. Umbrellas also retain a small margin to cover their costs for the services they provide. This is also deducted from the assignment income, and the balance is the worker’s gross pay.
The Agency Workers Regulations 2010 provide that umbrella employees receive at least equivalent rights to their full-time equivalents, including pay. This means that the assignment rate must usually be greater than the rate which the equivalent employees of the recruitment agency or hirer receive in order to achieve that.
How much will I be paid?
We will provide you with a general financial illustration of how an umbrella employee would typically be paid. if you require an example tailored to your circumstances please let us know.
What happens next?
On joining the Company you will be provided with an overarching employment contract which will provide you with a guaranteed minimum of 336 hours of work per annum contract of employment and a copy of our Employee Handbook (which includes our Disciplinary and Grievance procedures).
You will be required to provide proof of your identity and your Right to Work in the UK.
Depending on the nature of the work undertaken by you, you may be able to claim expenses in accordance with our expenses policy. Legislation changes introduced in April 2016 mean that if you are not subject to the right of “supervision, direction or control” (“SDC”) as to the manner in which you work, tax deductible travel and subsistence expenses can be paid to you.