Agency tied in to Umbrella company

**The Agents View** · 30 September 2011, 15:34

Originally posted by bsol View Post

I've just got a new contract and the agency is compelling me to use one of the umbrella company on its approved supplier list. is this legal and has anyone come across this before?

Ultimately, the contract is with the umbrella company, and recruitment companies are well within their rights to dictate who they will and won't do business with.

If there's no compliance issue then they should let you use whoever you want, but it's certainly not illegal to restrict it.

**istvan** · 30 September 2011, 15:45

I think it is in the best interest of an agent to deal with an umbrella company that they trust and will not be troublesome to the contractor. A happy contractor is not only good for the client, but also profitable for the agent. Well, one would assume.

**SallyPlanIT** · 30 September 2011, 16:04

Originally posted by bsol View Post

I've just got a new contract and the agency is compelling me to use one of the umbrella company on its approved supplier list. is this legal and has anyone come across this before?

We are seeing a lot of this from agencies in the last few weeks/days.
Many smaller agencies are wary of the AWR and how it related to Ltd Cos, so putting contractors to umbrella's mitigates their liability with regards to AWR.

Explain to them (assuming you are ) a genuine business trading outside of IR35, and therefore outside the scope of the rules, ask your accountant to liaise with them to assure them. Some agencies with Ltd's outside IR35 are still asking the Ltd to indemnify the agency in their contracts.

**malvolio** · 30 September 2011, 17:04

Originally posted by SallyPlanIT View Post

We are seeing a lot of this from agencies in the last few weeks/days.
Many smaller agencies are wary of the AWR and how it related to Ltd Cos, so putting contractors to umbrella's mitigates their liability with regards to AWR.

As in there isn't any, it rests with the end client. Jeez...

Explain to them (assuming you are ) a genuine business trading outside of IR35, and therefore outside the scope of the rules, ask your accountant to liaise with them to assure them. Some agencies with Ltd's outside IR35 are still asking the Ltd to indemnify the agency in their contracts.

Which is fair enough if totally pointless.

Perhaps the agencies could try reading the PCG or REC's explanations of the rules. Or perhaps we shouldn't expect them to understand their own business...

Agency tied in to Umbrella company