The head of a leading umbrella compliance firm urges contractors to be cautious if they receive unsolicited calls from umbrella company brokers.
According to Professional Passport, an independent assessor of payment intermediary compliance, more and more contractors are receiving unexpected sales calls.
Data protection and non-compliance concerns
This trend is concerning in several ways. Firstly, how do the brokers get hold of contractors’ contact information? And secondly, are these brokers peddling the services of unscrupulous umbrella schemes?
Crawford Temple, CEO of Professional Passport, commenting on the “alarming” increase in these sales calls, urges contractors to be cautious:
This practice not only raises serious data protection concerns but also potentially exposes workers to non-compliant umbrella schemes. We urge contractors to be vigilant and always verify the legitimacy of these calls with their recruitment agencies.
Temple says that umbrella brokers offer recruitment consultants substantial kickbacks for referring contractors to specific umbrella companies. In some cases, this can amount to up to £500 per referral or a percentage fee per timesheet.
Legitimate PAYE umbrella companies work with minimal margins and are less likely to be able to fund such hefty referral fees.
On the other hand, unscrupulous umbrellas can more easily fund such fees by engaging in a range of unethical practices. These include salary skimming or overcharging contractors for unnecessary services.
Only use a trusted PAYE umbrella
If you need to sign up with an umbrella company, the advice is always the same – whether you choose an umbrella from a recruiter’s preferred supplier list (PSL) or independently via sites like ours.
- Only use a UK-based PAYE umbrella company. If you are tempted to join an offshore payment vehicle, the repercussions will likely be very serious. If you’re still not convinced, find out about the loan charge.
- Don’t be tempted by payment schemes which offer unrealistic net take-home pay numbers.
- The only difference between your rate of net pay between umbrellas should be the margin (fee) charged by the umbrella.
- Take time to research the umbrella market. Read reviews, check for comments on contractor forums, and ask other contractors for their recommendations.
It is hard to believe that the umbrella industry remains unregulated, although the government promises future action. Thankfully, several payroll auditing companies have emerged over the past few years, offering security to recruiters and contractors.
Many leading umbrella companies now use payslip verification tools to ensure that there are no irregularities in their workers’ net take-home pay calculations.
This means that workers know that tax has been deducted and paid to HMRC correctly, and no shady practices have taken place. You can read more here.
If you have concerns that a particular umbrella company is operating unscrupulously, you can get in touch with Professional Passport directly via email, in confidence, at reportaconcern@professionalpassport.com
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