[UK] Concerning levels of non-compliance in umbrella industry

New research has uncovered alarming levels of non-compliance and a lack of worker protections within the UK’s umbrella industry. The findings build a picture of systemic abuse, neglect and confusion around umbrella working, ContractorCalculator reports.

The survey, conducted by ContractorCalculator, found that the majority of contractors are forced into umbrellas against their will, with restricted choices and promotions of dubious schemes. 

Many are reportedly unaware of fundamental legal rights and compliance requirements regarding pay, pensions and regulations. And according to the survey’s findings there is widespread confusion and lack of transparency around pay rates, payslips, holiday pay accruals, and deductions.

Less than half of respondents felt able to determine if they were being paid correctly.

Responding to the results, Dave Chaplin - CEO and founder of ContractorCalculator - said, "The survey results paint a picture of an industry rife with unacceptable non-compliance and contractor exploitation. The umbrella mess has festered for years under a government that does not care about the flexible workforce. Now is the time for reform and accountability. Workers deserve better than more broken promises and inaction from the government. The umbrella industry needs intervention and regulation urgently, else a race to the bottom will ensue."

Key findings

The survey received 611 responses to over 40 questions. Key findings include:

• 80 per cent of contractors are told "umbrella only" when hired "Inside IR35", demonstrating that the IR35 Reforms are directly responsible for the considerable rise in umbrella use.
• Of those pushed towards an umbrella, 63 per cent are given a restricted list, 27 per cent are allowed to select their umbrella and 10 per cent are only given one choice.
• 85 per cent are told they must use an umbrella because the role is "Inside IR35", however, only 17 per cent are given a Status Determination Statement as legally required under the Off-payroll legislation.
• Regarding holiday pay, just 54 per cent understand accrued versus rollover structures. Nineteen per cent have reportedly had holiday pay problems and 11 per cent have been unlawfully withheld.
• Half the respondents are confused over pay, with only 49 per cent understanding the difference between an assignment and a PAYE rate. Just 40 per cent say they can determine if their payslip is accurate. Only 45 per cent receive the legally required Key Information Document.
• Alarmingly, 24 per cent have not been auto-enrolled into a pension while 14 per cent are unlawfully told they cannot even have one. And half don't know how to check their pension contributions are correct.
• 37 per cent don't understand the Conduct Regulations; provisions put in place to protect agency workers. And 87 per cent of respondents say agencies and umbrellas have never explained these to them. 49 per cent don't know if they have opted out of them, while 14 per cent have been (unlawfully) told they can only get the work if they opt out.

Mr Chaplin said, "Umbrellas operating compliantly, simply processing pay and retaining their published margin, should not have any concerns. There might be extra reporting requirements to satisfy independent due diligence, but the systems can easily be adapted."

Source: ContractorCalculator

(Quotes via original reporting)

New research has uncovered alarming levels of non-compliance and a lack of worker protections within the UK’s umbrella industry. The findings build a picture of systemic abuse, neglect and confusion around umbrella working, ContractorCalculator reports.

The survey, conducted by ContractorCalculator, found that the majority of contractors are forced into umbrellas against their will, with restricted choices and promotions of dubious schemes. 

Many are reportedly unaware of fundamental legal rights and compliance requirements regarding pay, pensions and regulations. And according to the survey’s findings there is widespread confusion and lack of transparency around pay rates, payslips, holiday pay accruals, and deductions.

Less than half of respondents felt able to determine if they were being paid correctly.

Responding to the results, Dave Chaplin - CEO and founder of ContractorCalculator - said, "The survey results paint a picture of an industry rife with unacceptable non-compliance and contractor exploitation. The umbrella mess has festered for years under a government that does not care about the flexible workforce. Now is the time for reform and accountability. Workers deserve better than more broken promises and inaction from the government. The umbrella industry needs intervention and regulation urgently, else a race to the bottom will ensue."

Key findings

The survey received 611 responses to over 40 questions. Key findings include:

• 80 per cent of contractors are told "umbrella only" when hired "Inside IR35", demonstrating that the IR35 Reforms are directly responsible for the considerable rise in umbrella use.
• Of those pushed towards an umbrella, 63 per cent are given a restricted list, 27 per cent are allowed to select their umbrella and 10 per cent are only given one choice.
• 85 per cent are told they must use an umbrella because the role is "Inside IR35", however, only 17 per cent are given a Status Determination Statement as legally required under the Off-payroll legislation.
• Regarding holiday pay, just 54 per cent understand accrued versus rollover structures. Nineteen per cent have reportedly had holiday pay problems and 11 per cent have been unlawfully withheld.
• Half the respondents are confused over pay, with only 49 per cent understanding the difference between an assignment and a PAYE rate. Just 40 per cent say they can determine if their payslip is accurate. Only 45 per cent receive the legally required Key Information Document.
• Alarmingly, 24 per cent have not been auto-enrolled into a pension while 14 per cent are unlawfully told they cannot even have one. And half don't know how to check their pension contributions are correct.
• 37 per cent don't understand the Conduct Regulations; provisions put in place to protect agency workers. And 87 per cent of respondents say agencies and umbrellas have never explained these to them. 49 per cent don't know if they have opted out of them, while 14 per cent have been (unlawfully) told they can only get the work if they opt out.

Mr Chaplin said, "Umbrellas operating compliantly, simply processing pay and retaining their published margin, should not have any concerns. There might be extra reporting requirements to satisfy independent due diligence, but the systems can easily be adapted."

Source: ContractorCalculator

(Quotes via original reporting)