Not getting paid....heyalp!

[Big Bird]

Career Hazard

Gratz.. in 15 posts. That is quite impressive.

As a consultant, I am used to leading blind clients through the mine fields, I guess I am doing the same to you smart guys here.

[Big Bird]

What do you say?

This is from wikipedia:

An umbrella company is a company that acts as an employer to agency contractors who work under a fixed term contract assignment, usually through a recruitment employment agency in the United Kingdom. Recruitment agencies issue contracts to a limited company as the agency liability would be reduced. It issues invoices to the recruitment agency (or client) and, when payment of the invoice is made, will typically pay the contractor through PAYE with the added benefit of offsetting some of the income through claiming expenses such as travel, meals, and accommodation.

Would anybody bother to go correct this paragraph?

[Big Bird]

What do you say 2?

This is from Umbrella Company | A guide to UK Umbrella Companies

The Umbrella Company will invoice the agency for the contractor’s hours and will then pay the contractor on receipt of payment. While the contractor will be subject to paying PAYE, which will be deducted by the Umbrella Company, they will benefit from being able to deduct certain expenses incurred during their contract, such as travel costs, food and any necessary accommodation costs.

More to correct!

[Wanderer]

Unlike agencies who take a big margin to factor the payments, Umbrellas take a small fee (typically £100/month) to run payroll so they pay the worker when they get paid. There's no way Umbrellas could factor payments for the small fee they take.

Parasol: "All you have to do is enter your timesheets and claim your expenses on our secure portal, then we invoice the agency or client and pay your money into your bank account just as soon as we receive it."

Contractor Umbrella: "We will make payment to you the same day recognized funds clear in our bank account."

Giant: "All your allocated funds received 1 working day before your payroll process date are paid to you"

Orange Genie doesn't make it all that clear, but then again they don't say how much they charge either.

I really don't know why everyone is giving Big Bird such a kicking. I think you are all well out of order.

[Old Greg]

Unlike agencies who take a big margin to factor the payments, Umbrellas take a small fee (typically £100/month) to run payroll so they pay the worker when they get paid. There's no way Umbrellas could factor payments for the small fee they take.

Parasol: "All you have to do is enter your timesheets and claim your expenses on our secure portal, then we invoice the agency or client and pay your money into your bank account just as soon as we receive it."

Contractor Umbrella: "We will make payment to you the same day recognized funds clear in our bank account."

Giant: "All your allocated funds received 1 working day before your payroll process date are paid to you"

Orange Genie doesn't make it all that clear, but then again they don't say how much they charge either.

I really don't know why everyone is giving Big Bird such a kicking. I think you are all well out of order.

Agree that the kicking is a little excessive. What surprises me (I've only ever worked as a Ltd.) is the belief that you have no comeback against your employer. Can this really be so?

The umbrella employee has no contract with the agency or client so cannot take legal recourse against them. The umbrella has no incentive to take legal recourse. Therefore the only route for the employee is to take legal action against the employer. The contractor has undertaken the work for the employer's client. The employer has not received payment from its client. I'm struggling to see how any contract of employment can result in the employee receiving no wages.

[LisaContractorUmbrella]

Agree that the kicking is a little excessive. What surprises me (I've only ever worked as a Ltd.) is the belief that you have no comeback against your employer. Can this really be so?

The umbrella employee has no contract with the agency or client so cannot take legal recourse against them. The umbrella has no incentive to take legal recourse. Therefore the only route for the employee is to take legal action against the employer. The contractor has undertaken the work for the employer's client. The employer has not received payment from its client. I'm struggling to see how any contract of employment can result in the employee receiving no wages.

Basically it can't - if there is a proper over-arching contract of employment in place, the employee would be entitled to receive a salary payment even if the umbrella hadn't received funds - it's an HMR&C requirement for compliant brollies. It's also a big business risk for us (we have lost money when agencies have gone down the tubes ) but you have to do what you can to mitigate the risk which means having effective credit control in place and maintaining a good relationship with the agencies you work with.

[Churchill]

OK, having in the past worked through a couple of Umbrella Companies - I don't anymore but that's a different kettle of fish, I thought I'd add my twopenneth...

Most Umbrella Companies I have worked through have paid me either the day that they get cleared funds or the day after.

One notable exception is "Giant" who with certain larger agencies used to pay me the day that they (Giant) get notification from the agency that the Invoice has been accepted and is due to be paid.

Now obviously that situation will only happen with agencies that have a trustworthy relationship with Giant.

I must agree with "Big Bird" and "Wanderer", Umbrella Companies are not there to factor anything, they're a glorified payroll processing organisation.

I must just add one thing, be very careful which Umbrella you go with as I've had 2 go bust on me and although I only lost a few grand in each case, it's not a nice thing to have happen to you.

[Wanderer]

the employee would be entitled to receive a salary payment even if the umbrella hadn't received funds

I don't think this "salary" is what people think it is though. My understanding is that you get a minimum wage by the umbrella to satisfy legal employment requirements and then some sort of "bonus" or "commission" on top of that based on how much the client/agency pays the umbrella in fees. This is why people often come on here saying they can't understand their umbrella's payslip.

To put a direct question to you Lisa, if the client/agency is invoiced £10k for the services of an umbrella worker and they don't pay because they ceased trading, how much "salary" would your umbrella pay the worker? How much would they be contractually obliged to pay the worker in this case?

[LisaContractorUmbrella]

I don't think this "salary" is what people think it is though. My understanding is that you get a minimum wage by the umbrella to satisfy legal employment requirements and then some sort of "bonus" or "commission" on top of that based on how much the client/agency pays the umbrella in fees. This is why people often come on here saying they can't understand their umbrella's payslip.

To put a direct question to you Lisa, if the client/agency is invoiced £10k for the services of an umbrella worker and they don't pay because they ceased trading, how much "salary" would your umbrella pay the worker? How much would they be contractually obliged to pay the worker in this case?

You are right Wanderer - the salary is based on minimum wage and then a profit related bonus which is dependent on us (the umbrella company) receiving funds from the agency - any other kind of contractual arrangement would be impossible. If an agency went bust owing £10k, the contractor would get around £900 (depending on hours worked in the month) which is not the full amount obviously but more than he would get as a one man Limited Company in the same situation. I should also add that the umbrella company should not have deducted anything from the contractor to cover this eventuality; it should be a cost of business to them. As I said, a good umbrella company should be doing what they can to mitigate risk, not only for themselves but also for the contractor so the chances of this scenario occurring are fortunately slim.