With tales of malpractice by some unscrupulous umbrella companies coming to light over the past few months, what can you do to make sure that your payslips aren’t hiding any hidden (possibly unlawful) deductions?
It is an uncomfortable truth that some umbrella companies – including some of the biggest ones – have been making money on the side from their employees for many years.
In fact, cases of ‘salary skimming’, amongst other forms of malpractice, have become so widespread that the Government has launched a consultation into imminent regulation of the umbrella company industry.
The trouble is, there are so many deductions involved – from national insurance to pension contributions – that even a small regular ‘additional’ deduction of a few pounds per week – would be hard to spot.
Tools and services to highlight payslip irregularities
Thankfully, over the past year or so, several new payslip checking services have been launched which can highlight any irregularities immediately.
Given the contracting industry’s appetite to clean up malpractice in the umbrella company market, these new products and tools could be game-changing.
We’ve listed some of these services here.
- Government’s payslip checking tool.
- Payslip Buddy (recommended)
- SafeRec
- veriPAYE
- PayePass.
- Other useful payslip checking resources.
Official payslip checking tool
The Government published new guidance on umbrella companies in December 2024, which includes a new payslip checking tool to help you make sure your provider is legitimate, and not making incorrect deductions from your pay.
However, as Chris Bryce, CEO of the FCSA points out, the new tool rolls up holiday pay into its calculations – and this isn’t always the method used by all umbrella companies.
There are also some other nuances that the tool doesn’t capture, which may result in providing higher net take-home pay estimates than the actual pay.
Therefore, while the calculator provides an estimation, it may not always reflect a precise or fully accurate amount. We will continue to work with HMRC to help them improve their calculator.
Payslip Buddy
Created by the team behind SafeRec (see below), the take-home umbrella calculator shows exactly what you should expect to be paid – net – following various deductions.
It’s a perfect tool – and flexible too. You can enter a range of variables, including student loan and pension deductions.
SafeRec
SafeRec provides forensic audits of payslips to protect agencies, candidates, and clients from umbrella company malpractice. It’s the software of choice for many.
According to the website:
SafeRec AI technology protects your agency and candidates against umbrella companies by performing real-time forensic audits of all payslips, ensuring your candidate’s payments are processed compliantly.
For umbrella companies, this technology allows payslips to be processed compliantly in real time – reassuring everyone else in the supply chain – including contractors, of course.
veriPAYE (via FCSA)
If you want additional assurance that an umbrella payslip is accurate, veriPAYE (part of FCSA’s Diligence Hub) provides real-time verification direct from source payroll data.
It cross-checks gross-to-net, PAYE and NIC deductions, holiday pay and pensions, and confirms the engagement model used.
Recruitment agencies can access veriPAYE at no cost, and umbrellas can integrate their payroll software to enable secure, encrypted verification for workers and clients.
Find out more here.
PayePass
PayePass provides auditing software to verify that umbrella companies’ payroll data is fully compliant.
According to their website, the software:
Calculates to the penny whether all calculations have been correctly undertaken and all correct payments have been made.
…randomised sampling is performed by our accountants and payroll experts by applying the Financial Reporting Council International Standard on Auditing (UK) 500…
What’s more, we provide a detailed audit report to reinforce your verification award; a report that you can proudly show to the entire supply chain.
You can check if your umbrella has passed the verification process by typing in their unique ID to the PayePass website here. You’ll have to ask the umbrella for their ID first.
Useful online guides
Although you could argue that successive governments have been fairly useless when it comes to overseeing the umbrella industry over the past 15+ years, there are several official guides which umbrella workers might find useful, including:
Check your payslip if you work via an umbrella company.
Read some of our handy guides to make sure the deductions on your payslips are correct:
How to understand your umbrella payslip (including a walkthrough).
Umbrella company employment costs – what are they?
Why using a cheap umbrella isn’t necessarily the best option.
To sum up
To ensure that only legitimate deductions have been made from your hard-earned contracting income, firstly ask your umbrella company if its payslips are professionally audited via one of the services listed above (or something similarly robust).
We’d be surprised if this type of auditing software isn’t widely used across the contracting industry within 12 months.
If not, submit one of your payslips using the FCSA service above.