Umbrella company employment is one of the three main operating models available to contractors, and it’s a popular choice. In this article we’ll look at why your contractors might choose umbrella employment, so you can advise them more easily.
Continuous employment:
The main advantage of umbrella company employment is that your contractors are fully employed across all their assignments. This gives them full employment rights while they’re engaged on an assignment, and between assignments too. It also simplifies their tax position and employment history, giving them one employer no matter how many end clients they work for.
Paid holiday:
Because they’re fully employed by the umbrella company, your contractors will be entitled to paid holiday. The statutory minimum is 5.6 weeks a year, though this will be pro-rated depending on how long and often they work. The cost of holiday pay is included in the assignment rate you pay the umbrella company.
Statutory payments:
Umbrella company employees get access to statutory payments like sick pay and maternity/paternity pay. The qualifying conditions are the same as they are for any other UK employee, and the cost is covered by the umbrella company.
Pension auto-enrolment:
All UK employers, including umbrella companies, are required to provide and contribute to a workplace pension and all qualifying employees must be automatically enrolled. The minimum contribution is 8%, at least 3% of which much be an employer contribution. As well as offering a workplace pension scheme, some umbrella companies may give their employees the option to contribute to their own choice of pension via salary sacrifice, which further reduces the cost of saving for retirement.
Access to Benefits and Services:
The umbrella company may also offer additional benefits and services, enhancing your contractors’ overall employment experience. These benefits may include employee assistance programs, insurance coverage, discounts and professional development resources. By partnering with an umbrella company, contractors can enjoy perks typically associated with traditional employment, contributing to their financial security and well-being and making it easier for you to attract and retain the best contractors.
If you have questions or if we can help in any way, please call our expert team on 01604 360222 or email [email protected].
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