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Common Questions About Umbrella Company Contracts of Employment

Umbrella Company

A good, compliant umbrella company will have a standard contract of employment (COE) that is by necessity designed to cover many different circumstances. It will not usually be possible to negotiate the details of your COE, and there should be no need to do so, because it’s specifically written for your benefit as a contractor and to fit in with any assignment you might take on. In this article we’ll cover what you need to know about umbrella company employment contracts, relating specifically to Orange Genie’s contract of employment.

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How an umbrella company COE works

There are three main areas to cover, and tackling those goes a long way to resolving most queries about umbrella company contracts:

We are your employer

Many contractors may not expect to be employed, and many of the queries we receive about our COE stem from this. We’re not pretending to be your employer or exploiting a legal loophole – you are genuinely employed by us in every sense, and the COE reflects that reality.

You will have one COE to cover all your assignments

Having one COE across all your assignments allows a single period of employment, which guarantees you the corresponding rights, protections and benefits enjoyed by permanent employees.

Obviously, the details of your assignments may vary, and an umbrella company COE is written to accommodate that variation. This means it will differ in some respects to contracts you may be used to seeing in traditional employment.

We have a separate contract with your agency/client for each assignment to supply your services

Each assignment you complete during your employment gives us contractual obligations to meet, and these obligations may also vary from one assignment to another. As you might expect, the COE requires you to meet those varied obligations on our behalf.

How the COE relates to your pay rate

Because the assignment rate we receive from the agency/client will vary from one assignment to another, the COE gives your pay rate as “the applicable national minimum wage or national living wage (NMW) for hours actually worked on assignment”. This is because we know your pay will be at least this much, and this allows a single COE to cover all your assignments.

The rest of your pay is made up of a discretionary profit sharing bonus, which will be the amount  we receive, less our costs and the amount paid as NMW. The contract is worded to allow flexibility in calculating the bonus, as this again enables a single COE to cover a wide range of different circumstances.

The COE does not confirm specifically what you will be paid for each assignment. However, before your first assignment with Orange Genie we will provide you with a pay illustration giving an accurate idea of what you can expect to be paid. Similar illustrations for subsequent assignments can be provided on request. 

How the COE relates to your hours of work

Because of the variable nature of contracting work, it is not possible to include your actual hours of work in the COE. Instead, your hours are given as “such hours as we may specify from time to time to be required for the current Client Assignment, subject to variation as reasonably required.”

Specific hours may be stated in our contract with each agency/client, and again the COE is worded to allow for this variation.

Sourcing new assignments

The COE states: “Your responsibilities include an ongoing duty to use your best endeavours to develop and extend our business, and to take all necessary steps to source new business for us in the form of suitable Client Assignments for you to perform under contracts between us and third parties.”

This reflects the fact that:

  • You are responsible for sourcing your own assignments.
  • There is an expectation that you will complete a succession of assignments during your employment with us. This does not mean you are required to complete more than one assignment, only that this is the expectation.
  • You are employed by us and we supply your services to the agency/client involved in each assignment. When you source new contracting work, you are effectively sourcing new business for us, as engaging agencies on assignments is how an umbrella company generates its income.

How the COE relates to your holiday entitlement

As our employee you are entitled to 5.6 weeks/28 days paid holiday per year.

  • You accrue 0.4667 working weeks’ paid holiday per month, or 0.1077 working weeks per week. This means you’ll accrue the statutory minimum of 5.6 weeks  (28 days) over a normal working year.
  • When you take your paid holiday is entirely up to you, as long as the requirements of the assignment are met, and you give us enough notice to pay you holiday pay for the time you are taking off.
  • If you have no paid holiday accrued you can still take time off as unpaid leave
  • It’s your responsibility to make sure you take your holiday entitlement each year and we strongly encourage you to do so.

If you have questions or if we can help in any way, please call our expert team on 01296 468 483 email info@orangegenie.com.

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