FCSA argue the true value of umbrellas for contractors.

Umbrellas have certainly come under some fire over the past year and we’ve all read and heard some bad press portraying them all as the ‘baddies’ who just want to take their cut and deprive the contractor of hard-earned money.  They just process the payroll and expenses, right? WRONG!  They do a whole lot more than that and are key to supporting and sustaining a strong flexible workforce that is vitally important to the growth and success of UK plc.

From a contractor’s perspective, umbrella employers provide contractors with full employment rights, all statutory benefits including holiday pay, maternity pay, paternity pay, sickness pay, pensions, redundancy pay and adoption pay.  A contractor is an employee of its chosen umbrella employer and with that relationship comes a responsibility for the umbrella firm to provide professional advice and an HR service to its contractors – a responsible umbrella company cares for its employees, the contractors.

“As a contractor’s employer the umbrella firm keeps a record of the contractor’s full employment history which serves to help someone who works on multiple contracts to access personal finance solutions such as mortgages and loans.”

It has been some 18 months since the mortgage market review (MMR) came into force and lenders tightened their purse strings. Now contractors have to share details of bank statements, credit card bills and life plans and prove that they can easily afford the mortgage repayments – umbrellas can help provide a complete employment picture to support any mortgage application to make the process much smoother for contractors.

And, when it comes to pay, umbrellas provide a joined-up service as a contractor’s employer.  Individuals who work at multiple locations over short periods of time can rely on the umbrella company to join up the process so that they receive one pay cheque on a regular basis.  For anyone who gets called to work at short notice, this is an important service so that they can simply get on with their jobs they are trained to do with no risks attached.

Contracting could be a risky business without the help and advice of umbrella employers  – commercial risks, employment risks and statutory risks could certainly put off a contractor working for him or herself.  And let’s not forget health & safety!

Umbrellas are responsible for the health and safety of their employees when working at or travelling to/from an end-client’s premises, giving extra protection and peace of mind.

By working for an umbrella, a contractor is protected from the risks.  So, if an umbrella employee makes a mistake the umbrella employer is insured to cover that mistake whether that is at work or when it comes to taxation – for example, the umbrella would step in to support a contractor through any HR tribunal case and also ensure that a contractor’s tax and national insurance is paid at the correct rates – the umbrella is liable for any errors which must be hugely reassuring to any contractor.

“From a recruiter’s perspective a fully compliant umbrella employer managers the commercial, employment, taxation, and statutory risks associated with the use of temporary workers for the supply chain.”

It is clear that umbrellas are a valuable part of the supply chain and a relationship between contractors, umbrellas and recruiters should be seen as a partnership.  One could argue that a symbiotic relationship between all three parties is obligate; they all rely on each other and it is vital that they all work together to foster a good working relationship for the benefit of all…

Words of Julia Kermode, FCSA

Published on: 20 November 2015 - By: First Freelance

I'm an accountant myself but I must say I couldn't have done without the support of First Freelance. – Mugu S.

What I love is that they took the time to meet me in person. I certainly feel I can trust them. – Nadia D.

First Freelance have provided me with excellent support every step of the way. They genuinely care. – Bhargavi P.

The team are knowledgeable and their customer service is outstanding! – Chieme M.

I've worked with many accountants over the years. None have come close to First Freelance. – Daniel J.

They genuinely care about my business and personal finances. – Jennifer W.

First Freelance have provided me with an outstanding level of expertise. I highly recommend them! – Linda P.

I love having 24/7 visibility of my business finances. The 'live' business bank feed is an excellent feature. – Guido M.

What I love is that they took the time to meet me in person and explain everything clearly. – Olufunmilayo A.


Joining First Freelance couldn't be simpler, please provide some basic details and a member of the team will be in touch with you shortly!

Fill out this form to request a callback

You may want to consider:

There are additional factors you may wish to take into consideration. Simply fill in the
form below for a free personalised report tailored to your personal circumstances.

Sign up to our newsletter to receive important tax updates and news that is relevant to you.
We promise to never spam you!