Umbrella companies act as an intermediary in the supply chain of temporary workers for payroll purposes. By joining an umbrella company, a temporary worker (usually a contractor or freelancer) becomes an employee of the umbrella, and the umbrella becomes the employer.
Upon registration, the temporary worker is required to go to their place of work as usual and complete the tasks expected of them. They’ll need to submit the hours they’ve worked by completing timesheets, and these need to be shared with the umbrella and recruitment agency.
The umbrella company receives the worker’s funds from the end client or agency (gross). It is then the umbrella company’s responsibility to make the appropriate deductions to the temporary workers pay before sending them their net salary. The deductions that are made include:
Once the umbrella company has made the necessary and legal deductions, they’ll send the worker their salary with a payslip. Nowadays, it’s common for umbrella companies to have an online portal and/or mobile app. These are modern, efficient ways for umbrella employees to access their payslips and to submit hours.
For more information regarding how umbrella companies work, check out the free resources on umbrellacompanies.org.uk.
When you register with an umbrella company, you are entitled to holiday pay, but it is often an area that causes a lot of confusion. Continue reading as we explain how holiday pay works through an umbrella company, including how it is calculated and paid to umbrella company employees.
From the 6th April 2022, National Insurance for employees and employers will increase by 1.25% to help fund health and social care. Continue reading as our article outlines the new Health and Social Care Levy and how it will impact contractors working via an umbrella company.
Key Information Documents (KID) were introduced on the 6th April 2020 to provide a breakdown of the deductions that temporary workers will see to their pay and provide essential information regarding their assignments. Continue reading as our article outlines what information should be included in a KID and who should give it to you.
It is a legal requirement for umbrella companies to provide and enrol their employees in a workplace pension scheme as an employer. Continue reading as we give an overview of how pensions work when contracting through an umbrella company and how to opt-out if you do not want to continue with the pension contributions.
Contractors receiving their first umbrella company payslip can sometimes find it challenging to understand how their pay has been calculated and what deductions have been made. This guide explains how an umbrella company payslip is generated and the tax deductions you can expect to see.
If you’re required to use an umbrella company for your payroll, it’s understandable that you may decide to shop around and choose the umbrella company that offers the highest take home pay retention. However, as we’ll explain in this article, all umbrella companies (the compliant ones) will process your payroll identically, and your retention between providers shouldn’t vary. However, there…
