In an industry which is unregulated, the membership of organisations such as the FCSA and Professional Passport are designed to highlight those umbrellas that can be trusted for their high standards, so this news has come as a complete shock to the entire umbrella industry.
A recent Contractor Voice article has exposed one of the UK’s largest and most trusted umbrella companies for withholding holiday pay from its contractors. One of the things that make this so shocking is that this particular company is FCSA and Professional Passport registered.
Non-compliant umbrella companies – nothing newBack in March 2021, BBC Radio 4’s Moneybox programme discussed the problem of non-compliant umbrella companies who fail to pay holiday pay to their contractors. In the programme, even FCSA member umbrella companies were mentioned. The programme also criticised the agencies who did not allow contractors to choose their umbrella providers.
Citing a certain UK umbrella company who allegedly forced a Christmas break on the contractors, who had to threaten court action to get their holiday pay entitlement, the programme caused widespread doubt in the industry.
Pimlico Plumbers – further confusionIn February this year the handling of contractor holiday pay was making the news again. A court of appeal awarded backdated holiday pay to a contractor who, as part of a wider trial about employment status and dismissal, was found to be an employee and therefore entitled to basic employment rights.
As part of the ruling, which involved IR35 status, the contractor was awarded backdated holiday pay, which had previously been denied by the company.
Within the trial, and subsequently reported across several professional publications, it was determined that a worker can only lose their holiday pay entitlement if an employer has made the terms of their holiday pay clear to the worker.
This led to many umbrellas making holiday pay entitlement a key factor in onboarding discussions.
What’s the latest?The latest article from Contractor Voice has accused one of the UK’s largest and leading umbrella companies of withholding contractor holiday pay in a bid to boost profits.
CV claims to have access to “knowledgeable insider whistle-blowers” who have evidence that the company (which will not be named in this article) “made the conscious and commercial decision to do everything it could to withhold holiday pay so it could be added to top line income.”
Practices that were designed to avoid discussion of holiday pay with contractors, and cause interference to prevent holiday pay being paid, were mentioned. This follows an earlier claim by Contractor Voice against another umbrella company for the same practices. The FCSA recently commented on that case and said that the company wasn’t in breach of the guidelines which were in place at that time, but that guidelines had been “strengthened” since then.
What is the law?All contractors working through umbrella companies are entitled to holiday benefits such as holiday pay.
The FCSA requires that all umbrellas should be “proactive in encouraging” workers to use their holiday pay. But FCSA membership or not, this is simply the right thing to do.
This unfolding story is further evidence that the umbrella industry desperately needs proper regulation to ensure that contractors and agencies are protected against the practices of dodgy umbrella companies who take advantage of contractors and agencies to boost their bottom line.
While the FCSA and Professional Passport, the current leading accreditation organisations, are doing their best there is only so much they can do without the full backing of the law. Because clearly, umbrella companies with dubious practices continue to be awarded accreditation.
But that doesn’t mean that all accredited umbrella companies should be tarred with the same brush.
Established in 2004, Ship Shape has 18 years of compliance in offering umbrella and payroll services behind us, and we welcome further legislations which will clean up the umbrella space and allow us to continue to put our contractors first.
We are a UK registered company (no off shore accounts here) and all our payments come from and go to UK accounts only. Experian categorises Ship Shape as a low-risk company, and we are fully insured.
Ship Shape works on a 100% compliance, no compromise basis. Our focus on compliance and transparency enables us to support thousands of contractors and agencies every year.
We offer all payroll and employment options to enable our partners to choose what works best for them and offer full advice on how to make the most of our services.
Talk to us today if you have any questions at all, we’re here to serve you.