ContractorUmbrella Ltd has emerged as outright winners of the ‘Best Umbrella Company’ category in the industry renowned reader’s awards, hosted by ContractorUK, the UK’s largest contractor website.

Thousands of visitor’s flock to ContractorUK’s website everyday and they have picked ContractorUmbrella, a previous winner of the award, as the umbrella company that surpasses all others.

•  “Contractor Umbrella Ltd are consistently responsive, very helpful, polite – they go the extra mile. I can call in a flap and have my concern looked at immediately. They are also very friendly and very ‘human’ – I know someone will listen, I know I’ll get a follow up, and it’s personal. The way it should be.”
•  “Contractor Umbrella – everything happens near instantly, reliably and first time with cheerful communication at a great price. What more do you want from an umbrella?”
• “Contractor Umbrella Limited are always extremely helpful, rapid to respond and follow up and have a real personal touch. Though I’ve never met the people I deal with at the company, they feel like friends.”
• “It’s a pleasant surprise to have a real ‘body’ on the end of the phone that is proactive and understands your situation.”

Lisa Keeble, managing director commented “We are absolutely delighted with the results. There are over 250 umbrella companies in the UK and to be voted as Best Umbrella Company by our core market ‘contractors’, really means a great deal to us”

To benefit from our award winning service, please contact a member of the team on 01206 713 680 or email info@contractorumbrella.com.

Alternatively you can visit our website http://www.contractorumbrella.com.

The Agency Worker Regulations have definitely got the industry talking since they came into force on 1^st October and more questions have been raised than answered. ContractorUmbrella would like to redress the balance so here are the answers to the current Top 10 questions about the AWR.

If you have any further questions please do not hesitate to contact a member of our team on 01206 761 326 or info@contractorumbrella.com.

In reverse order, at number 10 we have:

Q. What solutions are there to the AWR and how do we build in an opt-out to the contract?

A. There are no solutions to the AWR, it is enshrined in law and has to be complied with as it stands. Unlike the Conduct of Employment Agencies and Employment Businesses legislation of 2003, no opt-out has been negotiated and any attempt to avoid responsibility would be viewed by the powers that be as avoidance.

Coming in at number 9…………………………..

Q. Is the Swedish Derogation a loop-hole that will put all our contractors outside scope of the AWR?

A. The Swedish Derogation Model is a very strange name for something that umbrella companies have pretty much been doing for the last few years. Umbrella companies must offer employment under a full contract of employment which has provision for payment between assignments in order to satisfy mutuality of obligation as laid down by HMR&C. This was an existing business model, which is why section 10 was included in the legislation; it is most definitely not a loophole and is recognised by the Government, the British Retail Consortium and the CBI as a legitimate option for temporary workers.

New in at 8……………………………………………..

Q. If I ask workers to sign a disclaimer declaring that they are outside the scope of AWR I should be covered shouldn’t I?

A. Definitely not. Whether or not someone falls inside the scope of the AWR will be determined by their working practises. Ultimately a tribunal will make the final decision and using such a disclaimer would not alter their decision; it could make your position worse.

Dropping 2 places at number 7………………………………….

Q. As long as I make sure the contractor is earning 10% more than someone in a permanent position there won’t be any pay claims will there?

A. Pay is defined very clearly with the AWR so rough calculations are likely to cause problems. All of the following need to be taking into consideration when working out a pay comparator:

• Basic Pay based on the annual salary an agency worker would have received if recruited directly
• Overtime payments
• Shift allowances
• Unsocial hours allowances
• Risk payments for hazardous duties
• Payment for annual leave
• Bonus or commission payments attributable to the quantity or quality of work done by the individual.
• Non-contractual payments which have been paid with such regularity that they are a matter of custom or practise
• Vouchers or stamps which have a monetary value.

Up 1 at number 6……………………………………..

Q. Does all this mean that temporary workers will have to be given company cars and will be entitled to redundancy pay?

A. Don’t panic! The AWR do not give all the rights of a permanent worker to temporary workers. Temporary workers will have no entitlement to occupational sick pay, occupational pensions, occupational maternity, adoption or paternity pay (statutory rights are no affected) and will have no entitlement to redundancy pay either contractual or statutory. You also won’t need to provide company cars or offer loans for season tickets.

Straight in at number 5………………………………………………..

Q. How are we going to make sure that Day 1 rights are in place.

A. Day 1 rights are the responsibility of the Hirer and therefore all you can do is let the Hirer know what those rights are and ask for confirmation that your temporary workers will have the same access to facilities and information about job vacancies as permanent workers at the site.

A non-mover at number 4…………………………………………

Q. The umbrella company we work with has offered a complete indemnity against any claim under the AWR so I don’t need to worry do I?

A. Yes I am afraid you do. If you have not fulfilled your own obligations under the legislation and a claim is brought against you either for unequal treatment or avoidance, a tribunal will decide who is liable and apportion financial penalties accordingly. Indeed, blanket indemnities may well be viewed as an attempt to abdicate responsibility.

New in at number 3……………………………………..

Q. The hirers we work with are very large organisations and use a lot of temporary workers. Surely if we move them around the individual companies in the group or from division to division we shouldn’t fall foul of the AWR should we?

A. Yes you will. Companies which form part of the same legal entity will be considered to be one company for the purposes of the legislation and moving a temporary worker between sites will only affect their rights under the AWR if the roles are substantively different.

A non-mover at number 2…………………………..

Q. We have suggested that all contractors operate through a Limited Company so that they will be outside scope. We will have no liability will we?

A. Probably. Limited Company contractors will not automatically be outside the scope of the AWR. This issue is very specifically dealt with in the guidance published alongside the Regulations; there would need to be no supervision, direction and control of the worker in order for them to be considered outside scope; the tests used to determine status will be the same as those used for IR35. As with IR35, it will not be sufficient for a contract to be written with the intention of putting the individual outside the scope of either the legislation or IR35, an investigation or claim would result in the necessity of providing proof that the contract was representative of reality.

And at number 1……………………………………………………

Q. Nothing will happen until there has been a test case so why should I bother doing anything until then?

A. A legal precedent will clarify the position for everyone but doing nothing is really not an option. The legislation is in depth and complicated and will require extensive additional administration from everyone and, unfortunately, getting it wrong or doing nothing is likely to attract financial penalties. Compensation that can be awarded to an individual has no maximum but a minimum award of 2 weeks pay, there is the potential for class action suits and the penalty for avoidance is £5000 per infringement.

Working with a compliant umbrella company can certainly help relieve some of the stresses associated with this new legislation; two heads are better than one after all! ContractorUmbrella has been working extensively with specialist employment lawyers Blake Lapthorn so that we could be in a position to offer advice and reassurance to our recruiter partners.

We know that our Top 10 doesn’t even scratch the surface for most of you but our top team of advisors, including an ex senior HMR&C inspector, will be more than happy to answer any other questions that you have. 

Visit our website www.contractorumbrella.com. Alternatively you can speak to one of our expert advisors on 01206 761 326 or email us at info@contractorumbrella.com

In short the simple answer is no, an Umbrella Company cannot indemnify a company against being called to an employment tribunal brought about by a claim under the AWR. To quote the AWR guidance directly:

“The Regulations ensure that any party in the chain of relationships (i.e. a hirer or a TWA) can be named at the outset or joined to a claim and be liable to the extent that the Tribunal finds they are to blame for the infringement”

An Umbrella Company could put a spin on it and offer to cover the costs of an employment tribunal, but this something quite different to offering indemnity. This does however place a huge risk on the part of the Umbrella Company, as without any legal precedent set out in case law, the potential liability and legal costs could be massive.

Rather than offer this type of uncertain guarantee, ContractorUmbrella follows a policy of ‘best business practice’. We ensure that both ourselves and our agency partners are fully compliant and have taken all of the ‘reasonable steps’ that the legislation requires so that there is nothing to fear from a claim being brought. To this end, we have adapted our administrative and procedural instruments in preparation for October and are happy to work with our recruiting partners to secure mutual compliance.

If you would like to discuss any aspect of the AWR you can contact one of our expert advisors on 01206 713 680 or email us at info@contractorumbrella.com.

Below are the 5 most common questions that recruiters ask us about the AWR. If you have any further questions you can visit our website www.contractorumbrella.com or contact a member of our team on 01206 761306 or info@contractorumbrella.com

Is the Swedish Derogation model a viable alternative to AWR?

The SDM is NOT an alternative to the AWR it merely provides an ‘opt-out from section 5 of the regulations in as much as they relate to pay.

Will contractors be classed as Agency workers if they run their own business ie a limited company?

Unless the contractors working practices will be outside IR35 they will fall under the scope of the legislation. It doesn’t matter what is stated in the contract – if they are found to be inside IR35 they would fall under the scope by default and any attempt to manipulate a contract to say that contractors are outside when they are inside will be viewed as avoidance.

What are ‘day one’ rights?

Day one rights are the responsibility of the Hirer and they relate to onsite facilities such as parking spaces, crèches, prayer rooms etc and access to information about job vacancies at the hirer’s premises. The legislation is intended to ensure equality for agency workers it is not intended to give them rights which are not afforded to permanent employees.

How can we keep track of the qualifying period if the worker is engaged with multiple agencies?

The rights come into force after the contractor has been at the client site or a site that is part of the same legal entity, in the same or similar position for a period of 12 weeks; the contractor should be asked to disclose their work positions and locations when registering with an Agency.

Can I move my temps to a PSC?

You can move temps to PSC but, unless their working practices fall outside of IR35, they will still fall within the scope of the legislation.

Following extensive consultation with specialist employment solicitors, Blake Lapthorn, Contractor Umbrella Ltd will be adopting the Swedish Derogation Model to meet the requirements of the Agency Workers Regulations (AWR).  The legislation aims to protect vulnerable workers from exploitation. It ensures that 12 weeks after starting a placement, they are afforded the same basic employment rights as their permanent counterparts – including the right to equal pay, working hours and holidays.

• Recruiters referring to ContractorUmbrella will be assured that their candidates will be working under a contract of employment and receiving a salary, even when between assignments.
• Contractor Umbrella, in collaboration with our Recruiter partners, will be making every effort to ensure that on completion of an assignment further suitable employment is sourced.
• Furthermore, ContractorUmbrella will obtain detailed site specific information including location, hours & nature of every assignment. Stringent checks and controls are being put in to place to ensure that the 12 week qualifying period is being evidenced in each and every case.

The Swedish Derogation Model is a natural evolution for Umbrella Companies; the employees of compliant umbrella companies have been working under a contract of employment for several years, this legislation merely reinforces this position. All employees will be paid a regular salary and will have full employment rights with regard to all Statutory payments relating to sickness, maternity/paternity, adoption and holiday. Potentially damaging equal pay claims will not be a consideration for any Recruiter working with a SDM Umbrella Company and relationships will be strengthened by the requirements within the legislation to maintain continuity of employment.

Additionally it should be noted that if a Contractor is working through a Limited Company (or PSC), unless they are genuinely in business on their own account, their working practices will fall inside of the IR35 legislation and will also fall inside the scope of the AWR. – if individuals are found to be inside IR35, any attempt to manipulate a contract to say that contractors are outside IR35 when they are in-fact inside will be viewed as avoidance.

As a demonstration of its position as market leader; ContractorUmbrella have been very diligent in swiftly implementing the changes and ensuring absolute compliance with the new regulations.

In a recent interview, Lisa Keeble, Managing Director at Contractor Umbrella Ltd was quoted as saying:

“This is an excellent way to go forward and an amazing opportunity for both Agencies & Contractor Umbrella Companies to formulate closer working relationships. Given the tight deadlines, we have been industrious in implementing the new changes to ensure that we continue the exceptional Customer Service that we have always provided.”

Visit our website www.contractorumbrella.com. Alternatively you can contact one of our expert advisors on 01206 713680 or email us at info@contractorumbrella.com.

A number of Umbrella Companies claim to be ‘approved’ but just who is approving them and is there any real meaning to the status? Whilst there is bound to be some form of review process, it is always worth checking out whether there is any commercial interest for the parties involved. As the following information suggests, there usually is:

Umbrella Company Comparison Websites

Comparison websites will ‘approve’ Umbrella Companies but it’s usually the advertisers that are favoured and feature at the top of their league table regardless of the service they offer. More worryingly, you will frequently find companies advertising schemes that could land contractors in hot water, offering unrealistic take-home pay percentages through various mechanisms.

Independent Audits

There are several organisations that claim to be independent and unbiased but have actually been founded by other Umbrella Companies. In essence, the founding companies are setting their own bench marks that other Umbrella organisations will need to pay annually to remain ‘approved’. This is hardly unbiased as one would have to presume that the bench marks are set against their own standards otherwise they themselves would fail to make the grade!

‘HMR&C Approved’

HMR&C doesn’t ‘approve’ Umbrella Companies. HMR&C will grant an Umbrella Company a dispensation but this is where the misleading advertising starts. A dispensation is purely to save the Umbrella Company extra admin – all large Umbrella Companies have a dispensation! Without this, the company would need to see receipts for every single expense claim that they process. The dispensation gives maximum amounts for the most commonly claimed expenses, for which the Umbrella Company won’t need to see receipts.

Furthermore; service providers who advertise that their tax-saving scheme have been fully disclosed to HM Revenue & Customs have neither its ‘approval’ nor its acceptance according to tax avoidance manual Spotlights:

“Please note that the issue of a SRN (Scheme Reference Number) does not mean either that HMRC ‘approves’ the scheme or that HMRC accept that the scheme achieves its intended tax advantage.”

The document further warns against a number of tax planning schemes to be wary of as they are likely to be challenged by HMR&C.

Tax QC Approved

A number of schemes claim to have been approved by a leading tax counsel – details are disclosed to the tax QC and they give their opinion as to whether they believe the scheme works.

Sadly, an opinion is just that, an opinion. Was the QC given full details of how the scheme operates and what was their actual opinion? Regardless, the opinion is not something you could rely on in court when HMR&C are trying to recover the underpaid tax.

The phrase ‘approved’ is used to sound very reassuring to new contractors but ultimately offers no protection what so ever.
In the case of the first two scenarios, it usually means that the Umbrella Company has simply paid to gain the status – it doesn’t sound quite so reassuring now does it?

Unless the Umbrella Company has been reviewed by an independent, professional body, with no links to any other Umbrella Company or someone who has an interest in the industry, the status of ‘approved’ is virtually meaningless and should be taken with a pinch of salt.

In the cases of the third and forth scenarios, the best advice we can give is – if it sounds too good to be true, it usually is!

If you have any questions about what you have read you can contact one of our expert advisors on 01206 713 680 or email us at info@contractorumbrella.com. Alternatively you can visit our website www.contractorumbrella.com.

A free umbrella company sounds like an extremely tempting prospect but is it an offer that is just simply too good to be true?

The important thing to remember is that these companies are there to make money in the same way as any other business. They must be making money somehow otherwise that company just wouldn’t be able to exist.

We have researched these claims of being free and have discovered the following hidden secrets behind the so called ‘free’ Umbrella Company.

Inflated NI Costs

The company charges you inflated Employers National Insurance contributions then just passes on the correct amount to HMR&C. The difference is retained by the company as their margin.

Admin Charge for Expenses

The company won’t charge a fee for processing your money through their payroll however, if you have any expenses, they will charge you an admin fee to include these with your pay.

Underpaying your Hours

The contract of Employment that the Umbrella Company holds with you is for reduced hours. For example, you are employed under a 30 hour per week contract and any hours you work over this are retained by the company.

The free Umbrella Company is simply a clever marketing ploy to attract new contractors and the age old saying is true – if it sounds too good to be true…it usually is!

Even if an Umbrella Company is offering reduced fees, the company will have to put their charges up at some stage as it’s just not a sustainable business model otherwise. To boot, it’s more than likely that the company’s standard fees are higher than everyone else to make up for the shortfall during the reduced fees period.

As a final thought, you could even question why a company would need to offer reduced fees or giving away money for simply registering with them?

For a completely transparent service and straightforward fee structure visit www.contractorumbrella.com. Alternatively you can contact a member of the team on 01206 713 680 or email us at info@contractorumbrella.com

On 26th April Glen Reeve, with the support and sponsorship of ContractorUmbrella, will be running for 26 miles; just imagine running 26 miles! For most of us the thought of running for a bus is exhausting – the marathon course is further than the distance between England and France ! So why is Glen doing this? And more to the point why is he doing it when he’s over 50 years old (sorry Glen).

This is why: In February 1987 Paul O’Gorman died of Leukaemia; he was just 14 years old. Within the same year his sister Jean was also killed by Cancer, a devastating blow to the O’Gorman family. Despite these tragedies Paul and Jean’s parents began fundraising so that they could help other children with Leukaemia and also fulfill a promise that they had made to Paul before he died. Paul continues to inspire the work of CHILDREN with LEUKAEMIA. What started as a small memorial charity is now the UK ’s leading charity dedicated to the conquest of childhood leukaemia through pioneering research, new treatments and the support of leukaemic children and their families. The incredible scientific advances made have ensured that 4 out of 5 children now survive Leukaemia but, alarmingly, incidence of Leukaemia have been rising steadily for the last 50 years. Glen would like your help to raise money for this wonderful cause and therefore we would ask you to donate as much or as little as you can afford.

Please click the following link and ContractorUmbrella will match all donations made pound for pound – http://www.contractorumbrella.com/charities.html

In 2010 our members of staff will be either running, walking, jumping out of planes or hosting an online silent auction depending on their age, fitness, ability and degree of sanity. To make things even more interesting (or possibly dangerous) we are asking for suggestions for fund raising events that we can carry out over the course of the year.

ContractorUmbrella’s chosen charities for 2010 are Children with Leukaemia and Cancer Research UK and we are determined to raise as much cash as possible for these 2 incredibly worthwhile organisations.

For more details or to make a fundraising suggestion please visit http://www.contractorumbrella.com/charities.html.

I for one, consider it good news that HMR&C are considering asking for receipts to prove scale rate expense claims are warranted. This might help to put an end to the misleading marketing claims made by certain Umbrella Companies who are making promises of 80 or even 85% of their gross income value.

HMRC originally introduced scale rate charges to reduce the burden of reimbursing costs to their own staff. If the staff member has incurred a cost during the course of their job, that is greater than the cost that they would normally incur, then that person is entitled to claim the full scale rate allowance regardless of their actual expenditure. Any false claims would mean that the employee would run the risk of dismissal, criminal proceedings, imprisonment etc.

The same scale rate allowances have been applied to Umbrella Company dispensations and some are using it as a carte blanche to allow all of its contractors to claim the full allowance, regardless of whether or not the criteria above has been met.

If these expenses are processed without asking the contractor whether or not they have actually spent that money, the individual, not the Umbrella Company, may be liable for an additional income tax liability. To quote directly from HMR&C’s website:

 “Scale rate payments are only paid when the employee has incurred an allowable expense. A scale rate payment which is paid irrespective of whether the employee has incurred an allowable expense is simply a payment of earnings”

This means that, if an Umbrella Company is automatically processing a daily allowance for their employees as an expense, when they actually haven’t spent that money, HMR&C will consider it to be earnings and therefore subject to tax.

Therefore, before you join an Umbrella Company, you should ask them whether or not they process daily amounts automatically and whether these amounts are subject to tax relief or not. Just 6 months of claiming £35 per day expenses for costs that you haven’t incurred could leave you with a tax bill of £1,820.00.

Visit our website www.contractorumbrella.com. You can contact one of our expert advisors to discuss expenses on 01206 713 680 or email us at info@contractorumbrella.com.