As part of our role within a wider educational charity, for some time now LITRG has wanted to do more to support temporary workers who are having to grapple with working through an umbrella company. We are therefore very pleased to announce the launch of a new factsheet on ‘working through an umbrella company’ which we have created in partnership with PRISM, a not for profit umbrella company representative body.
The new ‘working through an umbrella company’ factsheet offers guidance to those working through an umbrella company around their tax and employment status and provides practical tips to help them avoid any problems with their pay and deductions. It has been written with the low-paid in mind – recognising the specific risks that they may face when working through an umbrella company – but may certainly be useful more widely.
The factsheet covers a range of issues on which workers are likely to have questions including holiday entitlement and other employment right issues, the availability (or otherwise) of travel expense relief and why they may have been handed over to an umbrella company by an agency in the first place. It includes a helpful diagram explaining how umbrella companies work, a sample payslip to help demystify the sometimes confusing payslip entries and links to more help.
Very importantly, it includes a ‘ready reckoner’ to help workers understand whether the rewards they are being offered through an umbrella company are roughly equivalent to what they might have otherwise received, once the various deductions the umbrella company has to make have been considered.
LITRG has worked with PRISM on the factsheet, who among other things have provided invaluable, up-to-date information as to trends in the ever-moving temporary worker sector to ensure the factsheet is current and relevant. The plan is that PRISM will also help distribute the factsheet to workers via their network of umbrella company contacts.
Anne Fairpo, Chair of LITRG, commented:
“From researching and writing our 2014 report ‘Travel expenses for the low paid – time for a rethink?’, in which we looked at the use of umbrella schemes in detail – particularly the pay day by pay day variant, we recognise the proliferation of, and people’s involvement with, umbrella companies is really very complex.
“While we might prefer an employment landscape where low paid and sometimes vulnerable workers were not having to grapple with confusing employment arrangements involving intermediaries, we are where we are, and our concerns are – as ever – about the practicalities.
“This factsheet has been created to help workers inform, navigate and protect themselves and we hope that in time it will lead to more transparency within the sector and fewer troublesome providers. Our wish is that it is considered a useful and worthwhile resource and that it is not long before it is well in use among workers.”
The factsheet 'Working through an umbrella company' can be found on our website.