Contractors' Questions: Do umbrellas cover interview expenses and maternity leave?

Contractor's Question: It's probably not what most people consider when they're about to start contracting, but if I use an umbrella company can I claim interview expenses? In addition, as an umbrella company contractor, would I qualify for maternity leave, given that I understand I'd be an employee of the umbrella?

Expert's Answer: An umbrella company effectively becomes your employer upon signing up with them. This means that the same procedures followed by an employer will also apply to your umbrella company when assessing your entitlement to Statutory Maternity Pay (SMP). To be entitled to SMP the following criteria must be met:

1. You must have been continuously employed for at least 26 weeks up to and into the 15th week before the week your baby is due.
2. Your average earnings must be at least equal to the lower earnings limit for National Insurance (£95 per week for 2009/2010).
3. You must present your employer with the correct paperwork (MAT B1 Certificate) and sufficient notice confirming your intended maternity leave start date.

If entitled to SMP, you will receive 90% of your average weekly earnings for the first 6 weeks of leave, after which you will be entitled to £124.88 per week (2009/2010) for the remaining 33 weeks.

You can also use HM Revenue & Custom's calculator for further clarification (although as of 16-02-10 it does not include the rates for 2009/2010).

If you are not entitled to SMP, then form SMP1 should be provided by your employer/umbrella company. This form will tell you why you are not entitled to SMP from your employer and can be used to claim Maternity Allowance.

As regards interview expenses, most umbrella companies will reimburse only 'employed' type expenses that are "wholly exclusively and necessarily incurred in the performance of your contractual duties". As your attendance at an interview is not incurred in the performance of your contractual duties this criteria will not be met, so you will not be able to recoup costs from attending interviews.

The expert was Paul Mardel, finance director of Liberty Bishop Contractor Services, an umbrella company.

Useful links:

Directory of umbrella companies

Click here for our umbrella company guide.