LITRG launches practical help for umbrella company workers

The Low Incomes Tax Reform Group (LITRG) has issued guidance for temporary workers who are working through an umbrella company, acknowledging that their payment and holiday calculations can be complex, and providing practical tips on how to avoid any potential problems with their pay and deductions

The factsheet which has been created in partnership with PRISM, a not for profit umbrella company representative body, offers guidance around tax and employment status. While it has been written with the low-paid in mind - recognising the specific risks that they may face when working through an umbrella company – the LITGR says it may be useful more widely.

The factsheet covers a range of issues on which workers are likely to have questions including holiday entitlement and other employment right issues, the availability (or otherwise) of travel expense relief and why they may have been handed over to an umbrella company by an agency in the first place. It includes a helpful diagram explaining how umbrella companies work, a sample payslip to help demystify potentially confusing payslip entries and links to more help.

LITRG say a critical element is a ‘ready reckoner’ to help workers understand whether the rewards they are being offered through an umbrella company are roughly equivalent to what they might have otherwise received, once the various deductions the umbrella company has to make have been considered.

Anne Fairpo, chair of LITRG, said: ‘While we might prefer an employment landscape where low paid and sometimes vulnerable workers were not having to grapple with confusing employment arrangements involving intermediaries, we are where we are, and our concerns are - as ever - about the practicalities.

‘This factsheet has been created to help workers inform, navigate and protect themselves and we hope that in time it will lead to more transparency within the sector and fewer troublesome providers.  Our wish is that it is considered a useful and worthwhile resource and that it is not long before it is well in use among workers.’

The umbrella company fact sheet is here.

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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