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Umbrella Companies: Frequently Asked Questions

Umbrella Companies

If you’re new to umbrella company employment, it’s only natural that you will have questions about how umbrella companies work. With this in mind, here are the answers to the most common questions asked by new umbrella company employees.

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Do you charge a joining or leaving fee?

You wouldn’t usually expect to be charged a fee when you start or leave employment, and the same is true when you join or leave Orange Genie. We’re aware that some umbrella companies do charge such fees but we don’t agree with this practice and we will never charge them ourselves.

What is my relationship with my umbrella company?

We’ve mentioned employment a few times already, and there’s a good reason for that. When you join our umbrella company you become our employee and we become your employer. From our legal responsibilities, to our moral obligations and our duty of care, we provide everything you would expect from an employer, and more than many traditional employers do.

However, as an umbrella company employee you are still responsible for sourcing your own contracting work, and you still get to decide which assignments you accept. This gives you the flexibility and autonomy that is so important to many contractors, along with the security and benefits of genuine employment.

Do you charge a fee when I get paid?

The umbrella company’s margin is often incorrectly described as a fee charged to the employee, but this is not the case. As a compliant umbrella company, we generate our income by charging out our employees to agencies and end clients at a profit.

  • The agency/client pays us the agreed assignment rate for your work
  • We make a small margin and cover our costs of employing you from this amount
  • The remaining amount is your gross pay for the period

This question is most often asked when contractors are trying to work out what their take home pay will be as our employee. The best way to answer that is to ask us for a pay illustration, so we can give you an accurate idea of what you’ll be paid.

Why am I paying employment costs?

Our employees don’t pay employment costs, but we understand why you might think you do. We usually receive this question when people have been given the assignment rate as the amount they will be paid, which is not correct.

As we are charging you out to the agency/client, the assignment rate is the amount paid to us from which we calculate the costs of employing you, our margin and your gross pay for the period.

Before you join us we will provide you with a detailed pay illustration so you know exactly what to expect.

Since April 2020 agencies are required to provide you with a Key Information Document that will also demonstrate how your pay is to be calculated from the umbrella company’s income.

Do I have to buy my own insurance?

As an employee of Orange Genie, you are covered by our insurance. We have Professional Indemnity, Public Liability and Employer’s Liability insurance covering all our employees.

Our standard policies are more than sufficient for the vast majority of contractors, agencies and clients. If you require specific cover for an unusual risk, for example because of your field or the environment you work in, please contact us to check if you are, or can be, covered by our insurance.

Do you provide a workplace pension?

As a UK employer we are required to provide and contribute to a workplace pension for all our qualifying employees. You will be automatically enrolled onto our pension scheme once you have been in our employment for three months unless you ask us to enrol you earlier.

Auto-enrolment is a legal requirement, but you can choose to opt out once you’ve been enrolled if you want to.

You also have the ability to contribute to a pension of your choice via salary sacrifice, whether or not you choose to opt out of our pension scheme.

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

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