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In these uncertain times, financial security is not something to be taken for granted. The past few years have seen many of us struggling to get work and, as a result, counting every penny. While we now seem to be crawling out of the economic pit we found ourselves in, we do not make our way towards the new horizon unarmed. We carry with us many lessons learned. Lesson one, it seems, is the importance of trust and caution when it comes to our financial affairs.

The various banking scandals of recent years have left many of us feeling cynical about the businesses we entrust with our money on a daily basis. Quite rightly, we have learned to regard such organisations with suspicion and we now exercise caution, and sometimes paralysis, when confronted with choices regarding our money. 

The employment industry has been awash with rumours of umbrella payroll companies on the verge of going under lately. It’s enough to send even the most seasoned umbrella worker out into the rain and have recruiters covering their barge-poles. But, as usual, facts are paramount. 

Bad practice, unfortunately, affects every industry, including the world of umbrella payroll. But before you dismiss the idea of working with an umbrella company or decide to cut your ties with the companies you already engage, consider these points:

Horror stories make the press. You’re unlikely to hear a peep from the happy worker getting paid week in week out through a compliant, efficient umbrella provider. But that doesn’t mean that such workers and such companies do not exist. If you don’t believe us, take a look at what these workers have to say. 

Word-of-mouth plays a big part in deciding whether or not you can invest trust in an organisation and listening to what workers have to say about their experiences can affect how likely you are to engage a particular umbrella provider.

The last thing an agency or worker wants to deal with are late or inaccurate payments so finding an umbrella company that has appropriate systems in place to ensure that everyone is paid the correct amount on time is paramount. Additionally, an umbrella that deals with issues immediately and efficiently will minimise the time and effort a agency or worker will have to spend correcting a problem. If an umbrella provider is ill-equipped to pay its employees properly, it is unlikely to keep workers happy for long.

Evidence that an umbrella company is operating a legitimate service can often be found in their connections. An umbrella company that is regulated, or supported and advised by a professional firm is unlikely to be involved in bad practice. For instance, you know you can trust Foremans (UK) Ltd because it is administered by the fully regulated chartered accountancy practice Foremans LLP. 

Do not make the mistake of falling into the arms of the first umbrella that offers you a commission for introductions for new contractor customers. Ask yourself why the company needs to make such an offer. To make a decision on whether or not to engage the services of an umbrella provider, further investigation is required. 

A good umbrella service shows a willingness to tailor its systems to support the way in which an agency prefers to communicate. This approach results in a more efficient service for all parties involved. A readiness to adapt prevents late and inaccurate payments and other avoidable problems.

An umbrella company that cannot keep its paperwork, contracts and financial systems in good order should set alarm bells ringing. If the umbrella company you use is continually losing records, getting contracts mixed up and missing payments, you may want to think about changing your arrangements. A good umbrella company will not put unnecessary administration pressure on agency staff.

An umbrella company that allows its employees to claim illegitimate expenses is another alarm-bell ringer. A reputable umbrella company allows its employees to claim legitimate business expenses only. While it’s difficult to know for sure whether or not an umbrella is complying with HMRC’s expenses regulations, the company’s contracts and other paperwork and the information on their website should give you some indication of how much of a priority this is for a company.

An umbrella company that bases its fee system on ‘a percentage of expenses paid’ may invite employees to overegg the expenses pudding. Good umbrella companies have transparent and easy-to-understand fee structures.

It is important to be sure that an umbrella company has developed the necessary systems and procedures to support all relevant legislation. A good umbrella will continue to adapt their systems and procedures as necessary to meet interpretations of legislation such as the AWR. The umbrella will remove as much of the ‘paper chase’ as necessary from an agency while ensuring that AWR requirements are met for the benefit of all parties to an assignment.

Exclusive arrangements are rarely healthy in business and a good umbrella company understand this. A reputable umbrella provider is confident that its services can compete fairly with those of other providers. Be wary of umbrellas that need to trap you into using its services.