Contractors' Questions: Is my agent's umbrella mandatory?

Contractor's Question: Can a recruitment agency force a contractor to use its affiliated umbrella company? And what is the best response, legally-based or otherwise, to deter an agent from strong-arming me, a self-employed limited company contractor, into using the agency's umbrella?

Expert's Answer: Despite the obvious anxiety this can cause, the good news is that this is a relatively straightforward issue. Of course the recruitment agency cannot force you, or any other IT contractor, to use its affiliated umbrella company. However should you refuse, then equally there is nothing to stop them giving the contract to someone that will.

This, then, is more a matter of bargaining strength and tact. If you are a particularly specialist IT contractor, then you may be able to offer a 'take it or leave it stance.' The same approach can be applied if you have used the agency previously and have impressed them, or are highly experienced in your field, or have skills currently in demand.

But if you are relatively inexperienced and work in a highly populated sector, then you will have little going for you. In these circumstances, you might try to put across the benefits using your limited company will have for you. However if the agency insist on their umbrella, then you will have little comeback.

The expert was Ben Evans, partner at Lawdit Solicitors , a legal firm specialising in intellectual property, internet and technology law.

Useful links:

Contractors' Questions: Can my agency insist on their umbrella?

Directory of umbrella companies

Click here for our umbrella company guide.

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