Umbrella Company trade association PRISM, in collaboration with the Low Income Tax Reform Group (LITRG), took a significant step forward in helping workers engaged through Umbrellas to understand their entitlements by publishing a new factsheet.

The factsheet follows the recommendation of the Matthew Taylor Report on Good Work for greater transparency and provides guidance to people working as Umbrella Company Employees on their tax and employment status. It also offers practical suggestions to help flexible workers avoid glitches with their pay and deductions.

Given that some rogue operators in the market have been taking advantage of low paid workers, the factsheet represents a timely intervention to help them recognise the risks they face from a minority of unscrupulous firms. However, PRISM believes it will be more widely useful, including for skilled professionals embarking on their independent contracting careers.

The issues addressed in the factsheet include holiday privileges and other employment rights, the conditions under which Umbrella Company Employees may claim travel expense relief (as well as when they may not), and clarification as to why they may have been placed with an Umbrella Company by a recruiter in the first place.

The document includes a clear diagram illustrating how Umbrella Companies work, which also presents a sample payslip to help workers understand the confusing entries sometimes found on them. There are also links to additional help.

Furthermore, the sheet contains a “ready reckoner” to assist workers in weighing up whether the rewards on offer from the Umbrella they are with are roughly the same as what they may otherwise have received after the Umbrella has made its various requisite deductions.

Commenting on the initiative, PRISM CEO Crawford Temple said, “This is an important step in bringing more transparency to the market. Providers are encouraged to voluntarily supply a copy of this fact sheet to all new umbrella workers they engage. Responsible compliant providers should embrace this development as it sends a clear message to Government on the professionalism of the sector.”

Anne Fairpo, Chair of the LITRG, said that her organisation had researched the use of Umbrella Companies in detail in 2014 for its report “Travel expenses for the low paid – time for a rethink?” It was obvious then that the proliferation of Umbrella Companies, and workers’ involvement with them, “is really very complex.”

She added:

“This factsheet has been created to help workers inform, navigate and protect themselves and we hope that in time it will lead to more transparency within the sector and fewer troublesome providers.”

The “Working Through an Umbrella Company” factsheet is available as a pdf download from the PRISM website here.

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