Updates for umbrella company contractors go live, in reflection of ongoing ‘turmoil’

A flurry of umbrella company updates from industry and government departments is complementing HMRC’s payslip guidance refresh following ‘salary skimming’ allegations.   

On the same day as HMRC’s refresh, business officials unveiled an entirely new guide to help agency workers paid through umbrella companies grasp Key Information Documents.

Since April 6th 2020, employment businesses have been required to provide a KID to agency workers when they register, and before work-finding services for them are undertaken.

'Umbrella-specific KID guidance'

The regulation, by the Business, Energy and Industrial Strategy department, covers umbrella contractors too, but officials believe such workers could do with the coverage being clarified.  

A KID should contain a range of pay-related details, including the minimum rate of pay that the agency worker can expect; who should pay them, how often, and if there are deductions.

But as both IWORK’s Julia Kermode and Champion Contractors’ Chris Bloor pointed out to their online followers, the new BEIS guidance is “specifically” for umbrella company users.

'Pile of work'

“[It’s a] nice bit of advice,” reflected a contractor. “[But] I suspect all agencies [I know of] fail on [their obligation to give] documents when a worker registers with an agency.

“[So] it makes things clear [for workers like me], but it adds a pile of work [for my contractual partners] as part of the initial registration process.”

As to why entirely new guidance on KID for brolly employees has emerged now, many in the umbrella market are saying the same thing.

'Not a great few weeks'

“I think it's fair to say the last couple of weeks have not been great for the umbrella industry, nor the recruitment industry in general,” says WTT Consulting’s Tom Wallace. 

“Umbrellas have been removed from the FCSA, claims of impropriety continue to circulate, and more non-compliant umbrellas have been named by HMRC.”

With over 20 years’ experience in the payroll industry, John Bounds, a director at Azure Global confirmed: “There's a lot of turmoil in the umbrella market at the minute.

“Umbrellas pulling services, [often on the back of allegations that] umbrellas have done this, they've done that, [and] they've done the other [thing]!”.

'Change how to choose umbrella companies to engage'

The turmoil is such that agencies are reassessing their options – on top of outright removing umbrella companies from PSLs should they suspect improper actions, or perceive others to.

“I'd really like to change the way we determine which umbrella companies we engage with,” fessed up Jeni Howard, director of risk and compliance at Evolution Recruitment Solutions.

“I've used…accreditation as an entry point for a long time, but now in light of recent events, it's time to improve.”


But Keith Rosser says that improvement is already underway – and refreshingly, it’s umbrella companies apparently initiating it.

“We have been overwhelmed at the volume of enquiries from umbrella companies wanting to partner [with my charity JobsAware],” said Rosser, chair of the charity which strives for safer employment.

He explained last night in a statement to ContractorUK: “The value of [partnering with the charity] for legitimate umbrella companies is…[that] it shows a level of support and care.

“But also it enables a broader picture of increased reporting and intelligence from contractors, that is used to help ‘level-up’ the market by taking action against non-compliant businesses.”

'Umbrella market has been in turmoil for a year'

A director of risk at recruitment giant Reed, Rosser argues that quite apart from a tumultuous few moments, or weeks, it has been challenging for the umbrella sector for the last “year.”

“As we are also a place to report issues,  we are receiving between five and 10 reports a day of labour abuses relating to non-permanent work.”

In his statement to ContractorUK, Rosser continued: “Our primary aim is to support workers, but also to use worker-led intelligence to help level the playing field by targeting the unscrupulous operators.”

The targeting of unscrupulous operators comes after HMRC yesterday updated its list of avoidance schemes, enablers and promoters, which the tax department says contractors should withdraw from using.

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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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