We’ve put together a section to help answer our most frequently asked questions (FAQs). If you still cannot find the answer to any of your queries or would like us to go into more detail, then don’t hesitate to call us. We’re always happy to hear from you.
An umbrella company provides employment services to contractors that work on a series of contract assignments which, in most but not all cases, are arranged via a recruitment agency. As the employer, the umbrella company provides its employees with the security of an employment contract and access to employment rights.
Contractors typically choose to work through an umbrella company as an alternative to setting up their own Limited company. Being an employee of an umbrella company results in minimal administrative responsibilities, no directorial responsibilities, and none of the more costly fees associated with running their own Limited company. Umbrella company employment also offers contractors maximum flexibility, allowing them to terminate their employment by the umbrella company at short notice without any ongoing penalties or responsibilities. Such flexibility means that umbrella company employment is often a fantastic option for those engaged on short-term assignments or those that are working on a temp-to-perm basis and only require employment support as a contractor for a short period.
A worker is employed by an umbrella company. It is as a consequence of this employer/employee relationship between the umbrella company and the contract worker that the umbrella company can offer the level of support that it does. Without being the employer, the umbrella company could not provide employment support with respect to employment rights nor could it collect payments from the agency/client on behalf of the worker and make relevant Income Tax and National Insurance deductions.
If you gain work via a recruitment agency then in most cases you will not be able to supply your services as a sole trader. Most agencies will not have contract terms designed to deal with non-Limited company situations, and legislation also dictates that any worker that provides their services whilst under supervision, direction, and control (or the right, thereof) as to the manner in which they provide those services must be treated as an employee and taxed accordingly.
Via our umbrella company you are covered by our Employers Liability (£10m), Public Liability (£5m), and Professional Indemnity (£1m) insurances. So unlike operating your own Limited company, you will not need to source insurance cover at extra costs to you.
No, as an employee of our umbrella company you will be paid via PAYE and pay employment levels of tax and National Insurance. The worry of IR35 status simply does not apply when operating as an employee of an umbrella company.
We process your payment via faster pay as soon as we receive the contract income from your recruitment agency or client. A payslip will be emailed to you at the same time detailing a full breakdown of earnings and deductions.
You can begin the process of leaving our umbrella company at any point. To ensure that we can meet our contractual obligations to an agency / end client, you must first notify us that you wish to terminate your assignment so that we are able to give appropriate notice to the agency / end client as required in our contract with them. Once an assignment is terminated you are free to terminate your employment contract with our umbrella company and we can make any final payments due to you and issue your P45.
The Pay As You Earn (PAYE) system is a method of paying Income Tax and National Insurance contributions. The umbrella company – as your employer – will account for all tax and National Insurance contributions from the contract income it receives from your agency or client. This means that you will not have any outstanding tax liabilities and any money that you receive in payment from the umbrella company is a “net” retention which you can spend as you see fit.
The amount of money that you receive as a “net” take home pay when working as an umbrella company employee is the amount remaining from the total contract income received from the agency or client after all appropriate employer and employee deductions are accounted for.
Contact us today for a pay example breakdown tailored to your specific circumstances. Calculate
To help provide clarity and transparency we show all costs associated with your employment on your payslips. Employer Costs will be shown on your payslips in the section headed ‘Allocation of Company Income’. This section shows how the income received by Liberty Bishop (UK) Ltd has been allocated. The amount shown as Employer Costs will typically include the Apprenticeship Levy and Employers National Insurance (if your salary exceeds the threshold on which National Insurance becomes payable).
The amount shown as Paid to Employees in the Allocation of Company Income section is the balance of income received by Liberty Bishop (UK) Ltd after all employment costs have been provided for. This balance is your gross taxable pay which is typically made up of Basic Pay, Holiday Pay and Commission. A full breakdown of your taxable pay is shown in the section headed ’Employee Payments’.
Other costs that may be shown in the Allocation of Company Income section of your payslip include:
- Allowable expenses reimbursable to you
- Liberty Bishop’s margin for the supply of your services
- Any holiday pay that has yet to be paid to you
- Any Pay Between Assignments provision that has yet to be paid to you (for Swedish Derogation contracts only)
- Employer pension contributions
Please note that not all of the above elements may be relevant.
As an employee of our umbrella company you may be entitled to SSP if you meet certain qualifying criteria. More details can be found at https://www.gov.uk/statutory-sick-pay
As an employee of our umbrella company you may be entitled to SMP if you meet certain qualifying criteria. More details can be found at https://www.gov.uk/maternity-pay-leave.
Yes, as an employee of our umbrella company you are entitled to holiday pay. We roll-up your holiday pay with each payment received and this amount is clearly stated on your payslip under the heading “holiday pay”. If you would prefer not to receive rolled-up holiday pay, please speak with us about the option of having your holiday pay withheld by Liberty Bishop and then paid out at a later date.