Many agency workers are advised by colleagues or friends to work through an umbrella company, but what does this mean? We have asked our recruitment consultants the most frequent questions that they get asked when it comes to umbrella companies and answered them below.
What is an umbrella company?
Umbrella companies employ agency workers on behalf of recruitment agencies, essentially acting as intermediaries between you and us.
How does the umbrella company work with my recruitment agency?
Once you have chosen an umbrella provider, they will sign an agreement with us, and you will then become an employee of the umbrella company. Your recruitment consultant will ask you to provide your worked hours each week as well as any expenses you want to claim. We will then pay the umbrella company which will then pay you through PAYE income, like any other employee.
How is my pay calculated?
You will get paid your hourly rate for the hours that you have worked each week, the umbrella company will then deduct the administration fee, income tax and National Insurance contributions, ensuring that you are compliant with HMRC. They may also deduct holiday pay or any other amounts to cover specific costs if required. Before you start working for an umbrella company, they will let you know what your take-home pay will be, along with a full breakdown. You will then get payslips sent over each time you get paid so you can make sure everything is correct.
Can I claim relief on my expenses?
Yes, you can claim expenses such as mileage and temporary accommodation or any other expenses that are provided by the umbrella company and agreed between you and your recruitment agency. Umbrella companies will provide you with an expense guide and expense claim forms to fill out each week if required.
How is my holiday pay calculated?
Usually, umbrella companies give you 28 days’ holiday as part of your employment contract. Your holiday pay will be deducted each time you get paid and will clearly be stated on your payslip. To work this out, you divide your statutory entitlement figure (5.6 weeks) by your total working year (46.4 weeks), which is 12.07% of your gross taxable pay. Umbrella companies will retain this money and pay you when you are on holiday or not working. Remember that holiday pay works the same as in any company, where you must take your holiday within the holiday year, or it will get lost. You can opt-out of this at any time and back in if you wish.
How do I know what umbrella company to use?
Your recruitment consultant will be able to advise you on umbrella providers that are safe and compliant with legal procedures. HMRC also has many tools that you can use to help you spot a trustworthy umbrella. We have also put together a whole handbook about what to look for when choosing an umbrella company, red flags to be aware of and more information about how umbrella companies work, click here to view it.
Many agency workers are advised by colleagues or friends to work through an umbrella company, but what does this mean? We have asked our recruitment consultants the most frequent questions that they get asked when it comes to umbrella companies and answered them below.
What is an umbrella company?
Umbrella companies employ agency workers on behalf of recruitment agencies, essentially acting as intermediaries between you and us.
How does the umbrella company work with my recruitment agency?
Once you have chosen an umbrella provider, they will sign an agreement with us, and you will then become an employee of the umbrella company. Your recruitment consultant will ask you to provide your worked hours each week as well as any expenses you want to claim. We will then pay the umbrella company which will then pay you through PAYE income, like any other employee.
How is my pay calculated?
You will get paid your hourly rate for the hours that you have worked each week, the umbrella company will then deduct the administration fee, income tax and National Insurance contributions, ensuring that you are compliant with HMRC. They may also deduct holiday pay or any other amounts to cover specific costs if required. Before you start working for an umbrella company, they will let you know what your take-home pay will be, along with a full breakdown. You will then get payslips sent over each time you get paid so you can make sure everything is correct.
Can I claim relief on my expenses?
Yes, you can claim expenses such as mileage and temporary accommodation or any other expenses that are provided by the umbrella company and agreed between you and your recruitment agency. Umbrella companies will provide you with an expense guide and expense claim forms to fill out each week if required.
How is my holiday pay calculated?
Usually, umbrella companies give you 28 days’ holiday as part of your employment contract. Your holiday pay will be deducted each time you get paid and will clearly be stated on your payslip. To work this out, you divide your statutory entitlement figure (5.6 weeks) by your total working year (46.4 weeks), which is 12.07% of your gross taxable pay. Umbrella companies will retain this money and pay you when you are on holiday or not working. Remember that holiday pay works the same as in any company, where you must take your holiday within the holiday year, or it will get lost. You can opt-out of this at any time and back in if you wish.
How do I know what umbrella company to use?
Your recruitment consultant will be able to advise you on umbrella providers that are safe and compliant with legal procedures. HMRC also has many tools that you can use to help you spot a trustworthy umbrella. We have also put together a whole handbook about what to look for when choosing an umbrella company, red flags to be aware of and more information about how umbrella companies work, click here to view it.