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What are some of the risks of working through an umbrella company?
Workers need to be very careful when looking at this kind of arrangement, which is often designed to minimise an employer’s liabilities to workers and to HMRC – for example to pay employer's national insurance.
Construction workers union UCATT reports that despite pay rates being advertised at a much higher level, the worker is often only paid the National Minimum Wage and that earnings are then boosted by mechanisms such as expenses and performance related pay.
Gains for the worker can prove illusory. For example, workers can lose out on:
- Holiday pay;
- Pension contributions;
- Access to earnings-related benefits, such as Statutory Sick Pay or Statutory Maternity Pay; and
- Statutory rights, such as the right to claim unfair dismissal or a redundancy payment.
Payslips can be so complicated that it becomes very difficult to understand the deductions that are being made from your pay.
Hours are often irregular, as this kind of arrangement often goes hand-in-hand with zero hours contracting.