Choosing an umbrella company?
Discussion
I should have a new job starting shortly as a contractor, it falls within IR35 and the recruiter has advised that they have a few preferred umbrella companies that they work with. He has sent me the list with contact details, and asked that I pick one. Not having worked through an umbrella company before, I have a few questions:
1. Do I have to accept to go through an umbrella company?
2. Can insist to go with an umbrella company that isn't on their list?
2. How do I choose which umbrella company to go for?
1. Do I have to accept to go through an umbrella company?
2. Can insist to go with an umbrella company that isn't on their list?
2. How do I choose which umbrella company to go for?
1. No, there are other options, whether the client will let you choose them is another matter.
2. Its considered good form to pick one on their list, but they cannot say “thy shalt use this umbrella”. If you have one in mind that you are perfectly happy with, use that one.
3. Ask them to give you a full breakdown of what they charge, why, expenses claimable etc..
I was “forced” to use an umbrella last year for a contract (which they couldn’t do – but hey ho) and they cocked up everything they touched of my business and the contractor who sat next to me. Tax was all over the place, lost pension payments etc… take home pay, you name it.
My pension chap informed me that the umbrellas now have to pass muster as reputable organisations for the large pension providers to take payments from them, no dodgy dealings etc.. let’s put it this way- mine didn’t. It was the main reason why I left the contract and told the client and the agency that- stressing the due diligence bit. The other contractor, on the back of this, managed to move his umbrella dealings elsewhere.
Sorry to stress this, but you need to do your homework, as some of them are total scum. The contractor forums are full of people complaining about their treatment from these umbrellas.
So, you end up doing what everybody else does, take the contract, and keep looking for one that’s outside IR35. Companies are getting better working towards this. They also realise if they don’t, they have to put £10/hr on the rate to recruit someone. In some cases, £15/hr.
IR35 takes a genuine £10/hr off your rate, unless you are hammering your pension like I am, which in that case, I have never paid less tax than I am paying now!
It depends how powerful the HR people are in the organisation. In the main, HR hate contractors, and will do what they can to piss in your kettle. HR like IR35 as it was supposed to force contractors out of self-employment and into their welcoming/controlling arms. It hasn’t.
PM if you want
2. Its considered good form to pick one on their list, but they cannot say “thy shalt use this umbrella”. If you have one in mind that you are perfectly happy with, use that one.
3. Ask them to give you a full breakdown of what they charge, why, expenses claimable etc..
I was “forced” to use an umbrella last year for a contract (which they couldn’t do – but hey ho) and they cocked up everything they touched of my business and the contractor who sat next to me. Tax was all over the place, lost pension payments etc… take home pay, you name it.
My pension chap informed me that the umbrellas now have to pass muster as reputable organisations for the large pension providers to take payments from them, no dodgy dealings etc.. let’s put it this way- mine didn’t. It was the main reason why I left the contract and told the client and the agency that- stressing the due diligence bit. The other contractor, on the back of this, managed to move his umbrella dealings elsewhere.
Sorry to stress this, but you need to do your homework, as some of them are total scum. The contractor forums are full of people complaining about their treatment from these umbrellas.
So, you end up doing what everybody else does, take the contract, and keep looking for one that’s outside IR35. Companies are getting better working towards this. They also realise if they don’t, they have to put £10/hr on the rate to recruit someone. In some cases, £15/hr.
IR35 takes a genuine £10/hr off your rate, unless you are hammering your pension like I am, which in that case, I have never paid less tax than I am paying now!
It depends how powerful the HR people are in the organisation. In the main, HR hate contractors, and will do what they can to piss in your kettle. HR like IR35 as it was supposed to force contractors out of self-employment and into their welcoming/controlling arms. It hasn’t.
PM if you want
bucksmanuk said:
Thanks, i've been following that one.Coming back to this... The recruitment agency had given me a few choices. I didn't like the look of any of them. So I asked them to go with Paystream which wasn't on their list. They're now saying that this can't be done and I have to pick an umbrella from their list. Do I have a leg to stand on?
I'm somewhat surprised that Paystream isn’t on the list - but I think I’m right in saying that Paystream have had some issues recently….
They should have told you this right at the beginning, as it does make a difference with your decision as to whether you take the contract or not. As stated elsewhere and by others, some of them are scum and are pulling fast ones.
Do you have a leg to stand on?
Legally – yes
In reality – no
I am NOT a contract law/employment specialist
The agent and the client have to determine if the umbrella are of merit and are not going to run off with your/their money. One could argue that most of them are doing that anyway… Therefore, they submit a list of suitable umbrellas that you may choose from. Get them to do this before you even interview, as their list may be full of charlatans in your eyes. Of course, you tend to only find out they are charlatans when you are in the position of choosing one.
There is a huge amount of “due diligence” stated that’s been done on selecting the umbrella providers as they want “their” contractors to be looked after in the appropriate manner. This Is BS. This relationship between clients and agents is ripe for backhanders and always has been in the 36 years I’ve been in engineering. Throw in umbrellas and I’m under no illusions that it hasn’t all been cleared with the IR35 crap.
The umbrella must also pass muster with the pension providers and there is a test they must go through, with rewards prior history of the directors etc.… shareholders and so on. If they don’t pass this test, they don’t get approval. My first umbrella didn’t… I left.
e.g., my current umbrella pay the pension out on a monthly basis. However, it doesn’t get paid out direct debit, it has to go via the normal BACS routine, and the pension provider has to be told its on its way and they allocate the payment to the pension pot. As of Friday morning, £12K had gone missing, and as of right now, £4K is still unaccounted for….. it will get sorted out, it’s the fact that it has to be sorted out in the first place….
This is a big umbrella organisation.
They’re also charging me for this “service” at £5/week.
They should have told you this right at the beginning, as it does make a difference with your decision as to whether you take the contract or not. As stated elsewhere and by others, some of them are scum and are pulling fast ones.
Do you have a leg to stand on?
Legally – yes
In reality – no
I am NOT a contract law/employment specialist
The agent and the client have to determine if the umbrella are of merit and are not going to run off with your/their money. One could argue that most of them are doing that anyway… Therefore, they submit a list of suitable umbrellas that you may choose from. Get them to do this before you even interview, as their list may be full of charlatans in your eyes. Of course, you tend to only find out they are charlatans when you are in the position of choosing one.
There is a huge amount of “due diligence” stated that’s been done on selecting the umbrella providers as they want “their” contractors to be looked after in the appropriate manner. This Is BS. This relationship between clients and agents is ripe for backhanders and always has been in the 36 years I’ve been in engineering. Throw in umbrellas and I’m under no illusions that it hasn’t all been cleared with the IR35 crap.
The umbrella must also pass muster with the pension providers and there is a test they must go through, with rewards prior history of the directors etc.… shareholders and so on. If they don’t pass this test, they don’t get approval. My first umbrella didn’t… I left.
e.g., my current umbrella pay the pension out on a monthly basis. However, it doesn’t get paid out direct debit, it has to go via the normal BACS routine, and the pension provider has to be told its on its way and they allocate the payment to the pension pot. As of Friday morning, £12K had gone missing, and as of right now, £4K is still unaccounted for….. it will get sorted out, it’s the fact that it has to be sorted out in the first place….
This is a big umbrella organisation.
They’re also charging me for this “service” at £5/week.
It will primarily be a business decision between the agency and the umbrella to pass on all clients to them, they will probably not be allowed to use anyone else, or have a selection you can choose from, but they will all offer the same deals as they know which job you are likely to be ringing about.
LukeBrown66 said:
It will primarily be a business decision between the agency and the umbrella to pass on all clients to them, they will probably not be allowed to use anyone else, or have a selection you can choose from, but they will all offer the same deals as they know which job you are likely to be ringing about.
By 'business decision' do you mean 'agency gets a kickback from the umbrella for each worker employed' ? This can and does happen.I would imagine so, why else would a company refuse to let you use a company of your choice? I have asked this question numerous times to agencies and been told there are only 2 r 4 you can use, they will come up with bull about why, but it is bound to be a commission based thing I would imagine.
Back in the day I was offered 6 different ones, ranging from very professional to a bloke with a mobile who basically said " here is my rate and you aint seen or heard of me right"
Back in the day I was offered 6 different ones, ranging from very professional to a bloke with a mobile who basically said " here is my rate and you aint seen or heard of me right"
So what am I to do about getting them to go with an umbrella of my choice? They are saying that Paystream is non-compliant with HMRC and IR35. What's that about?
Edit: I've managed to make contact with the agent who has explained that Paystream is not compliant as above. I've explained that I have no confidence in the companies that they have recommended to me. They have explained that they are willing to look at other companies of my preference.
Edit: I've managed to make contact with the agent who has explained that Paystream is not compliant as above. I've explained that I have no confidence in the companies that they have recommended to me. They have explained that they are willing to look at other companies of my preference.
Edited by goldar on Thursday 4th August 11:43
I would imagine they are busy scrambling around trying to find a clause in the contract that doesn’t let you choose your own umbrella, and yet isn’t flouting any rules/laws.
Or matey boy has just seen his Christmas bonus/hamper vanish, c/o the umbrella, into the ether and is ringing round trying to find a replacement.
Or he is trying to explain to the client why you are no longer suitable despite the small issue of you requesting use your own umbrella rather than the one he is thrall to because of the above hamper issue or an ability to spend 2 weeks in the umbrella boss’s villa next summer. This was a real case scenario for an HR manger in the past who was a little too close to one of the recruitment agencies…
Or matey boy has just seen his Christmas bonus/hamper vanish, c/o the umbrella, into the ether and is ringing round trying to find a replacement.
Or he is trying to explain to the client why you are no longer suitable despite the small issue of you requesting use your own umbrella rather than the one he is thrall to because of the above hamper issue or an ability to spend 2 weeks in the umbrella boss’s villa next summer. This was a real case scenario for an HR manger in the past who was a little too close to one of the recruitment agencies…
I'm just about to make my first foray into the world of contracting and am completely ignorant of the pitfalls so an advice whatsoever is much appreciated.
Initially a 6M contract (but may offer a perm contract in 6-12M) on a day rate. What considerations should I be looking at?
Foretwo's website is helpful and looks straightforward but what are the things that I should be looking at/for?
Initially a 6M contract (but may offer a perm contract in 6-12M) on a day rate. What considerations should I be looking at?
Foretwo's website is helpful and looks straightforward but what are the things that I should be looking at/for?
Tyre Tread said:
I'm just about to make my first foray into the world of contracting and am completely ignorant of the pitfalls so an advice whatsoever is much appreciated.
Initially a 6M contract (but may offer a perm contract in 6-12M) on a day rate. What considerations should I be looking at?
Foretwo's website is helpful and looks straightforward but what are the things that I should be looking at/for?
fees and user reviews, those are the main things. Initially a 6M contract (but may offer a perm contract in 6-12M) on a day rate. What considerations should I be looking at?
Foretwo's website is helpful and looks straightforward but what are the things that I should be looking at/for?
I think you can nominate whichever umbrella you choose but if it isn't on the client/agency's list already then it could delay proceedings
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff