Where the FCSA’s new ‘Upload your Payslip’ service falls short

It’s been hailed online as a “good initiative”. But to me, the FCSA’s ‘Upload your Payslip’ service risks looking like a glorified payroll calculator which simply confirms that the 'backward calculation' used by its members and other umbrella companies is correct, writes former HMRC inspector and ex-umbrella company owner Carolyn Walsh, the managing director of Oblako Ltd.

Not a bad idea on paper, the association’s Contractor Payslip Review will not and cannot provide umbrella company employees with an accurate understanding or even confirmation of their true pay rate -- which is a protected employment right of all employees. That’s right -- even umbrella company employees!

Confirmation, correctness and costs (which fluctuate)

When looking at the figures provided by an umbrella member company this (or any other) payslip checker will confirm that the basic pay rate as derived from the umbrella pay rate for the week under scrutiny, to be correct.

However, another pay week may see the umbrella company employer costs fluctuate, and this will be adjusted from the worker’s basic pay and holiday pay, which should actually remain static once a pay offer has been accepted. 

Here’s an experiment for umbrella company employees that will prove the point. If your pay fluctuates week-by-week, look at a set of payslips and record only your basic pay, divide this by the number of hours or days worked. Does your hourly/daily rate fluctuate? It probably does, only by a few pence per hour, but over the course of a year this adds up. 

A breach, with far-reaching effects

However, it’s not so much about the loss of wages, it’s about the breach of your entitlement to an accurate pay offer before you agree to work. And the result of that? Well, apart from it being unjust, umbrella contractors will never be in a position to effectively negotiate on pay rates before accepting work contracts.

No other employee in the UK has their basic pay or salary adjusted by a few pounds week-by-week, simply to enable their employer’s costs to remain static. Believe it or not, changes in employment legislation actually gave agency/umbrella workers additional protected employment rights to ensure they can expect the same.

So the question is, with all the well-intentioned work being done by the FCSA and other bodies, along with their members and representatives, which aims to address umbrella company employees' concerns, why is this issue not being attended to, or even recognised and addressed? My guess is because it’s not fixable. Nonetheless, it would be upstanding of payslip checker services like this latest one, to make an acknowledgement that an umbrella company employees' basic pay fluctuates to accommodate the employer’s costs. It simply has to happen when the umbrella company takes a set margin. Recognising this, rather than leaving it as an elephant in the room, would be more in line with the transparency to the umbrella sector which many are trying to rightly usher in.

Systematic discrepancies will be probed

To do my own bit for that transparency effort, I should end by saying I was pleased to see the FCSA state online that, should their payslip checker reveal discrepancies which look “systematic,” an investigation into the umbrella inputted into the checker will be launched. In that sense the checker is welcome tool, because it should surely spot some disguised remuneration schemes that are masquerading as bonafide umbrella companies.

But if warning people of the underhanded is the aim, why isn’t it being shouted from the rooftops that it's a breach of an employee's right to not be paid at the rate that he/she has been offered before agreeing on a work contract?

Not until a government body takes an umbrella company to task about this do I expect to see resolution, partly because the monies may not appear to be a big deal, financially, and because it would be a big deal, financially and otherwise, to stop now. Umbrellas would all have to spend a boat of money updating their payroll software, and someone, somewhere, has taken a decision that it’s not worth it. So for now, they are doing like sheep by all following along nicely as most umbrellas prefer not to open up to this reality of working through their business.