"Employment Rights" for Umbrella Employees

[DrStrange]

Say for example one signs an employment contract with an umbrella in April, but doesn't start the assignment until May.

Assume the end client has 60 day payment terms and settles the May invoices on July 28th

When does the contractor start having the "same employment rights as a normal employee"?

Is it arguable that, given the employee has provided services to the employers end client in May, they are entitled to at least the minimum wage in May? I'd say that the fact the employers client have yet to settle isn't the responsibility of the employee.

It seems to me the physical reality of umbrella companies and the legal reality are still in conflict, and phrases such as "umbrella employees have the same employment rights as normal employees" are just nonsense, so I'm trying to understand how the umbrella companies get away with this (ignoring for now the understandable reasons they have to do it this way).


If we expand the example further and say the employee works May and June but by Sept still hasn't been paid - why can't he take the brolly to an ET for beach of minimum wage rules?

[northernladuk]

I think you are confusing emplyoment rights with payment shedules. You signed a contract with a 60 day payment schedule so you'll get paid when the money arrives. I'm pretty sure the umbrella Key Information Document would have this noted as well. If you got employed normally you might be on a week or a monthly cycle so you have to work for nothing until the first cycle hits. Yours is 60 days. So you've all agreed to the payment schedule so you have to wait until then. You are asking the brolly to factor payments when they've not been paid. I don't think that's anything to do with employment rights. You are still employed, just have no money to distribute until it arrives.

As mentioned could say it's the same situation as someone starting a job on minimum wage on Monday but doesn't get paid until Friday. Should they get paid daily until the agreed payment schedule comes up? They could argue they've done 4 days work. In your case it 60 days before the first one, not a week as in this example. So I don't think your situation has anything to do with employment rights.

You can't really compare umbrellas to being employed by a proper company. They are just an intermediatary offering a payment method. It's just not the same some difficult to compare side by side with employment in some cases.

[DrStrange]

"You can't really compare umbrellas to being employed by a proper company."

Why not? Isn't the whole point that the brolly is legally my employer and I have the same employment rights as everyone else?

My employer's terms with their client are nothing to do with me. I work for my employer and they should pay at least the minimum wage for hours worked at the agreed frequency (monthly) - where in the rule book does it say a proper company is in breach of contract but a brolly isn't?

If I'm waiting in a restaurant and the table runs off without paying, am I not to be paid minimum wage for hours worked as the restaurant's clients haven't paid up?

What's the difference?

[Protagoras]

Why should anyone working as an 'employee' not be paid weekly or monthly like all other employees?

Extended payment terms are a feature of B2B contracts; so I'm with the OP, Umbrella companies should not be paying employees on extended terms.
Extended credit terms also represent a risk where someone in the supply chain fails to pay.

I once worked for a well known consulting firm as an employee and was paid for the month within 10 days of the month starting.

[eek]

Why should anyone working as an 'employee' not be paid weekly or monthly like all other employees?

Extended payment terms are a feature of B2B contracts; so I'm with the OP, Umbrella companies should not be paying employees on extended terms.
Extended credit terms also represent a risk where someone in the supply chain fails to pay.

I once worked for a well known consulting firm as an employee and was paid for the month within 10 days of the month starting.

If you want to be paid quickly you are going to have to work via an agency that pays weekly on 7 day terms or an umbrella that is paying the worker before the umbrella is paid.

I personally wouldn't be going for option 2 as that only requires a different agency not to pay on time for the umbrella to have big (possibly fatal) problems...

Basically if you want to be paid quickly you need to find out the payment terms of the agency because that is far more important than anything else...

[DrStrange]

It's not just about being paid quickly; it's being paid full stop.

The brolly is saying that, legally, they don't have to pay me if their client does not (or cannot) pay them.

Economically, I understand that.

Legally, I don't.

If I'm legally their employee, and the law says there's a minimum wage per hour worked, how are they able to get out of their legal obligations to pay me what the law says they must?

What's to stop 'proper companies' simply reclassifying themselves as 'umbrella companies' to avoid the minimum wage laws?

[eek]

It's not just about being paid quickly; it's being paid full stop.

The brolly is saying that, legally, they don't have to pay me if their client does not (or cannot) pay them.

Economically, I understand that.

Legally, I don't.

If I'm legally their employee, and the law says there's a minimum wage per hour worked, how are they able to get out of their legal obligations to pay me what the law says they must?

What's to stop 'proper companies' simply reclassifying themselves as 'umbrella companies' to avoid the minimum wage laws?

And finally in post 6 we start to get to the actual issue.

So what type of contract did you sign with the umbrella an employment contract or a contract for services...

But if they aren't paying you and have accepted your submitted timesheets speak to ACAS and then an employment tribunal..

Oh and please name the umbrella because I find 20 question type threads very annoying...

[Protagoras]

It's not just about being paid quickly; it's being paid full stop.

The brolly is saying that, legally, they don't have to pay me if their client does not (or cannot) pay them.

Economically, I understand that.

Legally, I don't.

If I'm legally their employee, and the law says there's a minimum wage per hour worked, how are they able to get out of their legal obligations to pay me what the law says they must?

What's to stop 'proper companies' simply reclassifying themselves as 'umbrella companies' to avoid the minimum wage laws?

This has been covered before and the view on here has been an Umbrella company will pay up before ET. Is this a real situation you're describing or a hypothetical one?

[WTFH]

There appear to be bits of your story missing.
In March you were looking at using Paystream.
In June you were wanting to set yourself up as your own 1-person umbrella.
Now you are saying you started a contract in April, but you're unsure what you signed.

[eek]

And here’s an article from today about this exact issue https://www.contractoruk.com/umbrell...ntractors.html