Dispatches programme shines a spotlight on umbrella companies

The Construction union UCATT welcomed the Dispatches programme aired on Monday 19th January, titled “Low Pay Britain” which placed fresh scrutiny on the working of umbrella companies.

Dispatches estimated that 200,000 workers are currently being paid via umbrella companies. The programme included secret filming with an umbrella company, whose manager explained how his company could legally make deductions from a worker’s salary – when such deductions would normally be illegal.

The programme also interviewed a joiner who had been employed via an umbrella company working through an agency for the NHS.  The worker was hired for £12 an hour but was in reality receiving £3/£4 an hour less, after being paid by an umbrella company. The joiner believed he was roughly £60 a week worse off due to being paid by this method.

Steve Murphy, General Secretary of UCATT, said: “The Dispatches programme has played an important role in further highlighting the umbrella company con-trick. It is increasingly clear that paying workers by an umbrella company is unfair and unjust. Workers and the HMRC are being penalised so that employers, agencies and umbrella companies can boost their profits.” The Government is currently undertaking a consultation on umbrella companies.

So what should you do? 

Make sure you understand the fees completely, there are good umbrella companies to use and they can provide a useful service.  Alternatively you can compare the costs of using an umbrella company with operating through your own Limited Company –  you may be surprised how easy and efficient it is.

If you want more information on contracting through your own Limited company call Clearways Accountants on 01737 244298 or complete the contact form below.