Umbrella company users handed 'practical' factsheet

A factsheet on working through an umbrella company is being handed out to temporary workers “having to grapple” with the common but complex PAYE employment structures.

Penned by a tax charity with help from employment intermediary body PRISM, the four-page guide follows reports that the number of newcomers to umbrellas has soared since April.   

Although aimed at the low-paid, the guide’s authors point out that it covers issues that are universal to all users of umbrella companies, such as their tax and employment status.

It also provides practical tips to help users with their pay, rules like the AWR and, a big issue since April, deductions which the umbrella company makes -- often a surprise to new users.

There is help too on the thorny issue of holiday entitlement; employment rights; expenses and the whys of getting handed over to an umbrella company (by a recruiter) in the first place.

But rather than rake over old ground, such as examining the frameworks that have led workers to use umbrellas, PRISM and The Low Incomes Tax Reform Group try to take a forward-thinking approach.

“The proliferation of, and people’s involvement with, umbrella companies is really very complex,” said LITRG chair Anne Fairpo.

“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.”

A sample pay-slip with explained entries is provided in the factsheet, as is a ‘ready-reckoner’ -- a way to see if the “rewards” via their brolly are equivalent to what a worker might have otherwise received. The factsheet is being distributed but is also available online.

Editor’s Note: Related –

What the umbrella company bashers just don’t get

Why clients and agents are now vital for expenses

Corbyn in vow to ban all umbrella companies