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Why a Recruiter Would Outsource Employment to an Umbrella Company

Umbrella Company

When your contractors are employed by an umbrella company, they benefit from full employment rights, and if they choose the umbrella company well they may also receive a host of other benefits. Obviously, you want your contractors to be happy and well looked after, and this is enough for many recruiters to recommend a good umbrella company, but is there anything in it for you?

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Outsourcing the cost and risk of employment

Being an employer in the UK comes with a host of legal obligations, including costs like sick pay, holiday pay and maternity/paternity pay. UK employers also have to provide and contribute to a workplace pension scheme for all qualifying employees. Where contractors are engaged via the agency PAYE route, it can be unclear which responsibilities apply, as individual engagements are often very short. This uncertainty is obviously less than ideal for contractors, and for recruiters too.

Once employment is outsourced to an umbrella company, this potential confusion is effectively cleared up. The contractor is employed, and the umbrella assumes all the responsibilities of a UK employer, including all those additional costs.  

You will have less work to do

In a competitive and challenging market, the last thing you want is to waste time dealing with payroll queries for your contractors. A good umbrella company specialises in high-volume payroll, which means the vast majority of payments will be made correctly and on time, and they’ll have open lines of communication with your contractors. This means your contractors will know what to expect, and any queries they do have will be dealt with by the umbrella company’s specialist team, freeing you up to concentrate on sourcing talent for your clients.  

Your contractors will be more engaged

Your contractors will stay with you for longer, take less time off, do a better job for your clients and create less work for you when they’re confident they’ll be paid on time and happy that they’re well treated and valued. Any good umbrella company should be able to arrange the first, with robust, flexible systems and well trained specialist payroll teams. Not all will be able to arrange the second, but if you recommend the right umbrella company, you can cover that as well.

For example, all Orange Genie employees get access to Orange Genie Edge, our amazing employee benefits platform. Edge is packed with benefits and services to help your contractors make their money go further, take care of themselves and their families, and get more out of life as a contractor. Edge has been very well received, and has markedly improved satisfaction and engagement among our employees.

You will have access to specialist expertise

As a recruiter working in the contracting industry, you will be well aware that constant change is a fact of life for your clients and your contractors. Relevant legislation is continually being updated, and making sure everyone understands their position and is following the current rules and guidance is, in itself, a full time job.

Fortunately, working closely with a good umbrella company gives you access to payroll, HR and compliance experts who will make sure you know about up-coming changes, answer any questions you might have, and help you manage the transition where necessary.

What is a “good” umbrella company?

We’ve detailed several advantages of working with a “good” umbrella company, and it’s important to note that not every umbrella will be trustworthy or competent enough to help you in this way. In this context, a “good” umbrella company is a professional employer, with years of experience employing thousands of contractors and processing high-volume payroll. The very least you should look for, before recommending an umbrella, is accreditation by FCSA, but we also suggest you look for an established umbrella company who care enough to offer additional benefits to your contractors.

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

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