Legal Query

[Protagoras]

As an aside. I am fascinated as to what mechanism you believe the agency to recover anything from an umbrella employee.

My view is that directly, the supply chain above the umbrella has no mechanism to recover anything from the umbrella employee.

Therefore, only the losses of the umbrella company could be recovered, but that may include liabilities passed to the umbrella company by upper B2B contracts. We're really in the domain of scenarios though, and one might expect that umbrella company B2B contracts would limit their liability.

[JustKeepSwimming]

My view is that directly, the supply chain above the umbrella has no mechanism to recover anything from the umbrella employee.

Therefore, only the losses of the umbrella company could be recovered, but that may include liabilities passed to the umbrella company by upper B2B contracts. We're really in the domain of scenarios though, and one might expect that umbrella company B2B contracts would limit their liability.

AFAIK all umbrella companies have standard notice periods to terminate employment, like 4 weeks.

Provided you give that, and willing to work it, then there is no breach of contract between employee and umbrella. Any losses Umbrella/Agency/Client suffers has nothing to do with the employee. Which is where OP is.

They can't have their cake and eat it too.

[northernladuk]

Very coincidently there is an interesting article about contract breach and umbrellas on CUK as we speak. It's the other way around with the agency not paying to agree terms though. Still an interesting read.

https://www.contractoruk.com/umbrell...h_of_4205.html

[northernladuk]

AFAIK all umbrella companies have standard notice periods to terminate employment, like 4 weeks.

Provided you give that, and willing to work it, then there is no breach of contract between employee and umbrella. Any losses Umbrella/Agency/Client suffers has nothing to do with the employee. Which is where OP is.

They can't have their cake and eat it too.

But that's employment with the employee. Fk all to do with the upper contract between agency and umbrella which is the one that will be breached.

[Protagoras]

They don't pay the last invoice.

Where the umbrella employee has performed the work, evidenced by a signed timesheet, there is a view that the umbrella employee will get paid irrespective of whether the umbrella company is paid (absent umbrella company insolvency)

Umbrella employee income typically has three parts;
(a) PAYE, usually hours worked at national minimum wage
(b) Bonus payment
(c) Pension payment, which may include an element of salary sacrifice of (b)

(a) will be paid because all umbrella companies know that an ET would certainly enforce payment of this (unlawful deduction)
(b) and (c) should be paid because where the employee has been getting paid these for months on end before hand, there's a view that these are a normal part of employee's remuneration. This would be a matter for the ET.
(This was discussed in a previous thread, last year).

[JustKeepSwimming]

But that's employment with the employee. Fk all to do with the upper contract between agency and umbrella which is the one that will be breached.

Which has nothing to do with the employee.

Very coincidently there is an interesting article about contract breach and umbrellas on CUK as we speak. It's the other way around with the agency not paying to agree terms though. Still an interesting read.

https://www.contractoruk.com/umbrell...h_of_4205.html

I disagree with his thoughts on the bonus. The umbrella has the agency debt on it's books, that's an asset. It's a simple unjust enrichment claim to get that paid over.

[Protagoras]

Very coincidently there is an interesting article about contract breach and umbrellas on CUK as we speak. It's the other way around with the agency not paying to agree terms though. Still an interesting read.

https://www.contractoruk.com/umbrell...h_of_4205.html

Thanks for pointing that out.

It's a reminder that umbrella workers are "taxed like an employee" and paid "like a B2B contractor" with extended terms, rather that being paid to a fixed weekly or monthly schedule.

Personally, I think that umbrella companies should be legally required to pay their employees like employees and to surcharge agencies etc to cover the factoring costs.

[northernladuk]

Where the umbrella employee has performed the work, evidenced by a signed timesheet, there is a view that the umbrella employee will get paid irrespective of whether the umbrella company is paid (absent umbrella company insolvency)

Umbrella employee income typically has three parts;
(a) PAYE, usually hours worked at national minimum wage
(b) Bonus payment
(c) Pension payment, which make include and element of salary sacrifice of (b)

(a) will be paid because all umbrella companies know that an ET would certainly enforce payment of this (unlawful deduction)
(b) and (c) should be paid because where the employee has been getting paid these for months on end before hand, there's a view that these are a normal part of employee's remuneration. This would be a matter for the ET.
(This was discussed in a previous thread, last year).

Can't disagree with that. The article I mentioned does cover some of this which is useful.

So if the worker fell out with the umbrella the amount the worker would be able to claim against the umbrella would be the amount which the contractor was, strictly speaking, legally entitled. That amount may be not much and may be far removed from the amount due to the agency

But key point is...

This is money due from the agency to the umbrella, and the latter working as they do will not generally expect to fund contractors out of their own pocket, rather they will expect to operate on a pay when paid basis. Technically, this may therefore be a breach of the Conduct of Employment Agencies and Employment Business Regulations 2003, if the umbrella falls within the definition of an employment business for the purposes of those regulations. Of course the umbrella is likely to argue that it does not fall within that definition. But even if the umbrella is in breach of its obligations towards the individual, that breach is only going to extend to the amount paid to which the individual is entitled

So if the agency doesn't pay the brolly then it's likely the brolly believes it doesn't have to pay the contractor and a legal battle will ensue. But, to answer a point earlier, the contractors action is likely to affect his pocket (rightly or wrongly).

So when you say

Personally, I think that umbrella companies should be legally required to pay their employees like employees and to surcharge agencies etc to cover the factoring costs.

It would appear they are legally required to but the brollies won't agree. Needs a case to go the whole way to get the answer I guess.

[northernladuk]

So back to the original post. Answer to OP is to negotiate out and don't breach contract because it's a bloody minefield.

[JustKeepSwimming]

The Umbrella will say they don't agree. Sure as hell bet they will pay up rather than even risk the chance of getting a judgement telling them they are wrong. Especially if they are big player.