So I worked before as a contractor using a Limited company but when the IR35 rules changed I converted to permie since the offer was good, it suited my lifestyle at the time and wanted to avoid the hassle. I am looking to move into contracting again and have been reading how the umbrella company contracting option works and I was a bit puzzled in that it seems any contractor working via an umbrella company signs to no actual contract. When using a limited comopany the relationship between the contractor and client (usually an agency) is pretty clear. The agency issues a contract for the limited company and the contractor name is in the contract. However when working via an umbrella company the contract is between the agency and the umbrella company. The contractor is an "employee" of the umbrella company. While the relationship of the contractor with the umbrella company is "permanent" (ie until contrator decides to leave the umbrella company), the umbrella company will only pay you when you work for a client. I found this arrangement a bit weak. If the agency goes bankrupt will the umbrella company pay whatever fees you are due from your client? It seems the only thing contractors get from the agency is a "work schedule" which details the work terms, but that's not a binding contract is it?
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Umbrella = No contract
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Might I suggest you start from here and then ask better questions (there will be some!).Blog? What blog...? -
When I signed up to an umbrella a while ago (now back outside ir35) the umbrella had an employment contract that covered most of the basics. The rest was covered by the schedule for the client project which I had to (electronically sign) separately, which included the rate, location, notice period etc for that client. Between both of these it covered everything I could think of tbh.Comment
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Originally posted by cdturri View PostIf the agency goes bankrupt will the umbrella company pay whatever fees you are due from your client?
(a) Payment at NMW for hours worked (PAYE)
(b) Bonus payment (PAYE)
(c) Pension payment (employers plus any salary sacrifice)
In the event of default, you're likely to get PAYE for hours worked paid at NMW, plus outstanding holiday pay and employer's pension.
It's one reason to seek weekly payment and prompt payment terms.
It may be possible to insure against the default risk; this may not fully cover losses.Last edited by Protagoras; 3 December 2022, 17:15.Comment
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