Umbrellas for irregular contracts

[alexp78]

It is occasionally mentioned that umbrellas are beneficial for someone who only expects to work irregularly, or "part-time", on IT contracts.

With a Ltd Co, accountancy costs continue without regard to contracts awarded. But what is the situation for someone who has signed a contract of employment with an umbrella? Will charges continue during out-of-contract periods?

Also, it seems the ARW Swedish Derogation Model will be totally inappropriate as salary payment is required to continue, presumably funded by the other working contractors.

[Steven@Parasol]

It is occasionally mentioned that umbrellas are beneficial for someone who only expects to work irregularly, or "part-time", on IT contracts.

With a Ltd Co, accountancy costs continue without regard to contracts awarded. But what is the situation for someone who has signed a contract of employment with an umbrella? Will charges continue during out-of-contract periods?

Also, it seems the ARW Swedish Derogation Model will be totally inappropriate as salary payment is required to continue, presumably funded by the other working contractors.

Hi there

I can only speak from our point of view but I know some of the other leading umbrellas share the same view.

We charge contractors on a time sheet basis. If you don't submit a timesheet they you won't be charged and this will still be same after the introduction of the AWR on 1st ocotber.

With regards to the pay between assignments, we will be implementing a model based on the swedish derogation and this is a decision we have made based on a risk analysis of our existing customer base.

We currently have around 9,000 contractors working via our umbrella and have done so for the last decade. Our analysis suggests that the majority of these contractors go from one contract to another with a maximum of three weeks on the bench. based on this, we believe we can afford to offer the swedish derogation model.

our fee will be going up by a small amount (pence not pounds) to cover the extra admin etc.

one analogy I've used to describe it is that is is similar to the insurance industry. The premiums of the many pay for the claims of the few.


As a result of the AWR, in addition to paying contractors in between assignments we will also have to help you find your next role as well.

[LisaContractorUmbrella]

Hi there

Under the Swedish Derogation payment is due for periods between assignments. however, even if you only work part time or odd hours you will still be working under a single assignment rather than being 'between jobs' so to speak.

[alexp78]

OK.

But what if it is the intention of the contractor NOT to work full-time.

Maybe a four month stretch off, or even working just a few isolated weeks a year. i.e. to have total flexibility without obligation. It sounds as if the Swedish model, and the future umbrella model, is to expect the "employee" to work continuously.

[alexp78]

Hi there

Under the Swedish Derogation payment is due for periods between assignments. however, even if you only work part time or odd hours you will still be working under a single assignment rather than being 'between jobs' so to speak.

For the avoidance of doubt about the meaning of this, if I were to join your umbrella company with the intention of working 1 week every month, would you pay me continuously? What would the payment be for the periods not working?

Assume that a client offer is ready, and that I would not want to work, or be expected to look for work, in the intervening periods.

I am trying to get clarity on what can be real situations. It has to clear all round what the obligations are before signing up.

Thanks.

[LisaContractorUmbrella]

For the avoidance of doubt about the meaning of this, if I were to join your umbrella company with the intention of working 1 week every month, would you pay me continuously? What would the payment be for the periods not working?

Assume that a client offer is ready, and that I would not want to work, or be expected to look for work, in the intervening periods.

I am trying to get clarity on what can be real situations. It has to clear all round what the obligations are before signing up.

Thanks.

To be honest, if your contract was direct with a number of clients and you were picking and choosing when to work for them on a very part time basis you would be better to work as a sole trader; in your circumstances, if I have understood you correctly, umbrella would not be the way to go.

[alexp78]

It is near impossible to work as sole trader in IT. It was effectively banned along time ago.

Limited company looks over the top if work is not continuous, especially the extra administration.

Umbrella initially looks appropriate. One option might be to simply join and leave for each assignment - albeit this would generate a lot of P45s.

But you haven't answered whether the umbrella would pay continuously under the Swedish model? Would an umbrella mandate continuous working, and force someone to unwillingly accept an assignment? What else would the umbrella do to an "employee" who is by choice "part-time"? Why would umbrella not be the way to go?

[LisaContractorUmbrella]

It is near impossible to work as sole trader in IT. It was effectively banned along time ago.

Limited company looks over the top if work is not continuous, especially the extra administration.

Umbrella initially looks appropriate. One option might be to simply join and leave for each assignment - albeit this would generate a lot of P45s.

But you haven't answered whether the umbrella would pay continuously under the Swedish model? Would an umbrella mandate continuous working, and force someone to unwillingly accept an assignment? What else would the umbrella do to an "employee" who is by choice "part-time"? Why would umbrella not be the way to go?

If you are not working through a recruitment agency but are contracting direct with the client then there is no reason why you cannot act as a sole trader. A limited company would be an option but it would depend on the level of work that you are talking about and, really, the same things applies with an umbrella company - would you be working a couple of hours a day or would it be a couple of days once every few months and would it all be for the same client????? If the work was all for the same client it would be a single assignment and therefore there would be no obligation for continuous payment as, even though the work would be sporadic, you would not be between assignments. If it was the case that you worked for 2 or 3 days for different clients a couple of times a year then your employment would cease at then end of each assignment; the umbrella company is your employer and is obliged to source work and you would be obliged to accept it or tender your resignation.

Hope this makes things a bit clearer for you

[alexp78]

Yes that's much clearer.

The pertinent point is that a new employment would start for each new contract lasting weeks/months after any unspecified break, and then probably cease for the next break. And variations on this for work that may be only days, and/or fragmented over some other period.

So presumably there is no ongoing cost in between contracts, assuming no tie-in period or starting/leaving charge.



One additional question of fine detail for this scenario: as each employment is potentially for one client, are tax-deductable expenses (travel, accommodation) still allowable by hmrc?



Thanks.

[LisaContractorUmbrella]

Nope under these circumstances you would not be able to claim expenses as, from the offset, your intention would be to have only one assignment during the course of the employment - your workplace would then automatically be considered by HMR&C to be permanent.

Good questions - you've obviously done your research