What is Umbrella?
Definition of an Umbrella Company
An umbrella company is an employer of contractors and freelance professionals assigned to carry out short-term placements at various work locations for recruitment agencies and/or end clients.
How does it work?
- The umbrella company engages with the recruitment agency and/or end client to carry out services at the temporary work location, the "Service contract".
- The umbrella company engages with you, the employee to carry out these and future services, "the "Employment Contract".
- You perform the services at the temporary work location.
- You submit a timesheet as well as a valid claim for expenses incurred in performance of these services.
- The recruitment agency and/or end client approves the timesheet and pays the umbrella company.
- The umbrella company pays you, directly into your bank account, making the appropriate taxation and national insurance deductions and allowing for approved expense claims. The umbrella company sends you a detailed pay statement.
What are the main benefits of working under an Umbrella Company?
- You can expect a higher "take home pay" than simply being paid on the payroll of the recruitment agency and/or the end client.
- As an employee you will receive the protection, statutory rights and other benefits associated with employment. These include insurance cover, company pension, maternity pay, paternity pay, statutory sick pay as well as access to a childcare voucher scheme and ride to work scheme.
- You can expect a simple, hassle-free way of working. The administration involved in contracts, invoicing , VAT, Pay As You Earn taxation, national insurance, auto-enrolment and end of year tax submissions are all taken care of by the umbrella company.