If your temp agency wants to employ you using an umbrella company, say no. Or better still, go elsewhere if you can.
It’s a scam to make your life as a temp harder and avoid tax.
If you work for an umbrella company, it means you’re not actually working as a temp for your temp agency. You’re officially working for a different company which is set up just to employ you.
There are a few reasons why agencies do this.
First, it means they can take less responsibility.
If you have a problem at work and you complain to your agency, they can say ‘sorry, that’s not my problem. You’re a contractor for the umbrella company, so you need to contact the director of the company’.
Often, that’s someone who lives in a country far away who’s very hard to contact.
Secondly, it means the agency can pay less tax. Depending on which umbrella model is used, they can reduce the amount they have to pay in National Insurance contributions, claim back some of the VAT they pay, and charge fees to their temps.
Adrian Gregory, director of temp agency Extraman in London, has written on the ‘Ask’ section of Howbox about the scam:
“I’d never ask a temp to work for an umbrella company,” he wrote.
“If my company used umbrellas, we would save a lot of money but we would be letting down our workforce.”
You can read his full answer here.
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Has your temp agency asked you to use an umbrella company? If you have an umbrella company, how has it worked out? If you asked for a regular temp contract instead, what happened?
