Umbrella company ban called for after BBC probe

A BBC investigation into umbrella companies has been seized on by unions as evidence that all such firms should be outlawed.

The well-timed call for the abolition of umbrellas -- it comes just before Budget 2017 is finalised -- has been condemned by umbrella trade bodies and temporary work bosses.

But equally strong condemnation has been directed at the BBC news item on its probe, which reported claims that brollies operate illegally; unfairly deduct wages and strip users of rights. 

“It would be very useful for once if the media actually got their facts right about ‘true’ umbrella companies,” said Lucy Smith, of All Umbrella Companies Are Equal (AUCAE).

“If [umbrella companies] are operating compliantly, then the worker does get statutory employment rights.”

Smith’s clarification was backed by payroll firm ePayMe, which explained it “constantly” has to demystify how umbrellas pay their users, especially with terms like ‘gross rate’ and ‘pre-deductions.’

The former, out of which income tax and employee’s NI is paid, is legally subjected to the latter -- deductions, such as the brolly’s margin for their services and any holiday pay amounts.

These subtractions disappointed workers quoted by the BBC -- “my payslip looks like a shopping catalogue;” said one, and “[umbrellas] are pirates making money out of my hard work”, alleged another.

The definition of an umbrella company that the BBC offers is less easy to fathom, as it defines it as a “business that acts as a third party between a contractor and an employee.”

It actually acts as a third-party PAYE outfit between the worker using the umbrella (who is technically an employee of the company), and the organisation they work at.

The three BBC reporters behind the article, which effectively sums up the findings of the probe by BBC Yorkshire, then claim MPs will “investigate umbrellas after [the] worker complaints.” 

“Workers have complained to the BBC about the deductions that some umbrella companies have made to their wages, calling them unfair,” their article states.

To evidence its claim of MP scrutiny (implied to be as a result of its probe), the BBC says that the Business, Energy and Industrial Strategy Committee will look into brollies.

Citing an enquiry called the Future World of Work, the article says a Labour MP, Ian Wright, will specifically investigate whether umbrella workers have been “ripped off.”

But the enquiry was actually launched back in November, and always had umbrella companies in its sights because its objective is to explore the “rapidly changing nature of work”.

Nevertheless, the Unite union is energised by the BBC probe. “Umbrella companies are highly immoral and rip-off workers.

“The government need to end the misery of umbrella company workers by outlawing this practice and all forms of bogus self-employment.”

It added: “If the government fails to act, we will step up pressure on all public and private sector organisations to ban these sinister organisations.”

AUCAE is unimpressed. “And Unite are [at it] again,” said Smith, alluding to a 2014 campaign by unions against umbrella companies. “At some point it would be nice for them to sit down with us and HMRC to actually understand how we operate.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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