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How Recruiters Can Get the Best from Working with Umbrella Companies

If you’re a recruiter dealing with Public sector contracts, the chances are you’ve recently seen some changes in how your contractors want or need to be paid. Those who have been deemed to be inside IR35 will usually be better off with umbrella employment, so you could find that you’re dealing with more umbrella companies than ever before.

If you’re only used to paying contractors’ individual PSCs, it’s well worth making some adjustments to make sure you get the best out of your relationship with the umbrella company. Doing so could save both you and the umbrella a lot of work, and make your payroll processes leaner and more robust in the process.

Create an umbrella PSL.

Using a preferred supplier list has two important effects. Firstly, it allows you to choose which umbrella companies you work with. This is important because anyone can call themselves an umbrella company, and working with the wrong one could leave you at risk. A PSL enables you to vet your umbrella partners in advance, so you know who they are and you can be confident that they do things properly. We’d recommend looking for accredited FCSA members, as they’re reviewed regularly against the toughest compliance standards in the industry.

The second effect of using a PSL is that it allows you to choose how many umbrella companies you work with. Each umbrella will have their own systems and processes, so working with fewer companies will simplify things for your accounts team. This will also allow you to form closer relationships with the companies you do work with, which will naturally make things work more smoothly.

To extend this principle to its natural conclusion, using one trusted supplier will give you just one set of processes to work with, and just one relationship to manage. Orange Genie Umbrella work with a number of agencies in just this way and it’s by far the smoothest way to work.

Pay once per umbrella, not once per contractor.

In the past, you’ve made payments to individual PSCs, so you’ve received a separate invoice for each contractor, and you’ve paid each one individually. As you’re already set up to work in this way, it might be tempting to ask your umbrella partners to invoice individually for each contractor, and to pay each invoice separately just like you always have. However, there is a better way.

If you’ve taken our advice and created an umbrella PSL, all your umbrella contractors will be employed by a handful of umbrella companies. You can consolidate the process, so each umbrella sends you a single invoice, and accepts a single payment. This cuts down the workload for you and the umbrella, and it makes errors less likely and easier to track.

Join up your contracts process.

Again, when you’re dealing with PSCs, each contractor has their own company, and you need to have a contract with each one. With umbrella, individual contractors have a contract of employment with the umbrella company and your contract for services is with the umbrella. As you’re only dealing with a few well-chosen umbrella companies, there’s a lot of scope to streamline your contracts process. By having a standing agreement with each umbrella company with agreed terms and conditions, each individual assignment can be set up using a simple one or two page assignment schedule, rather than a full twenty page contract. This simplifies and speeds things up for you, the umbrella and your contractors.

Use your umbrella’s expertise.

You went to a lot of trouble to choose the umbrella companies on your preferred supplier list. You’ve chosen experienced operators with a sound compliance record and a history of providing excellent service to agencies and contractors. A side effect of this is that you now have important partnerships with employment law and payroll experts. Allow them to help you with your reporting requirements, AWR, National Minimum Wage, SDC and all your other compliance issues. Given the rapid pace of legislative change in the contracting sector, it’s never been more important to have experts on your side and a strong relationship with well-chosen umbrella partners will ensure that you have access to their expertise when you need it.

For more information about umbrella companies or to find out how Orange Genie can help you, please call our expert team on 01296 468 483 or email



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