Why We’re Always Defending Umbrella Companies

Umbrella Companies

Umbrella companies often get a bad press and it seems like we’re constantly making the same arguments in their defence. It can feel like we’re being ignored, that we’re a fragile voice of reason being drowned out by the rabid mob. It’s tempting to ask why they hate us, why they’re lying, and what’s so very bad about employing contractors anyway?

Guide to Choosing the Right Umbrella Company: Click here to download >>

Of course, the truth is no-where near this dramatic. There are a number of perfectly sensible reasons why some stakeholders, some even within the contracting industry, have a picture of umbrella companies that doesn’t look like our business.

Some “umbrella companies” are bad

Much as we wish it was not the case, there are companies operating in the UK right now, calling themselves umbrella companies while behaving in a way that we can’t and shouldn’t defend. Contractors are being misled and exploited, recruiters are being put at risk, and there is widespread tax avoidance and evasion.

This is who the press mean when they print stories about contractors being ripped off. These are the people politicians are talking about when they promise to “ban umbrella companies”. We’d like to be rid of them too, and we’ve been calling for additional regulation and better enforcement for a long time.

While we wait, contractors and recruiters can protect themselves from this kind of company by insisting any umbrella company they work with must be accredited by the FCSA.

The rapid pace of change

Before April 2016 the vast majority of umbrella company employees could legitimately claim expenses for their journey to work, and for food and drink while they were away from home each day. Many contractors could significantly reduce the amount of tax they paid, thus increasing the amount of money they took home.

To Orange Genie and those like us, umbrella employment was always more than a vehicle to allow expenses claims, but many in the industry saw that as our purpose.

When the rules changed in April 2016 and most of those expenses claims were no longer allowed, the end of umbrella companies was widely predicted. Obviously, we’re still here and that’s because expenses claims were never the most important part of our job. There are some in the industry, though, who never moved past the change in the expenses rules and are wondering why we’re still around.

Misinformation for competitive advantage

The contracting industry is a competitive marketplace, so it is perhaps not surprising that we’ve seen attempts to exploit this confusion. Some recruiters have claimed that even accredited umbrella companies are exploitative, bringing nothing of value while “skimming off” money that would otherwise have been paid to contractors.

These claims are based on a misrepresentation of how umbrella pay works, intended to spin the recruiter’s decision not to work with umbrella companies into a competitive advantage. Fortunately, you don’t have to put up with this kind of nonsense, because we explain how umbrella pay really works here.

What we actually do

Of course, not all umbrella companies are “bad”, we always offered far more than just expenses claims and the idea that we offer nothing of value but still survive in this competitive industry is laughable. So, what can you expect from a “good” umbrella company?

FCSA accredited umbrella companies support recruiters and contractors with outsourced employment, so you can expect specialist expertise in this field.

For recruiters, this means handing the legal, financial and legislative risks of employing contractors into expert hands. This protects their business, and improves efficiency by allowing them to concentrate on their core business.

Contractors benefit from full employment, including rights like sick pay, maternity/paternity pay, access to a workplace pension and paid holiday.

At Orange Genie we take this a step further by looking after our employees in ways that many conventional employers have never considered. We offer a range of additional benefits and services designed to improve our employees’ experience and safeguard their health and wellbeing. These include 24/7 access to healthcare and professional counselling, free tools to help maintain a healthy lifestyle, a comprehensive discount outlet, and specialist support for carers.

Engaged, contented contractors do a better job, take less time off and stay for longer, so our recruiter partners also benefit from this improved contractor engagement and satisfaction.

If you have any questions or if we can help in any way, please contact our expert team on 01296 468483 or email info@orangegenie.com.


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