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In a week when Unite once again called for an end to the use of payroll firms, Julia Kermode is calling for the union to educate itself about the benefits workers gain by choosing to work through compliant umbrella companies.
Julia Kermode said: “Like Unite, FCSA is committed to protecting the workforce from exploitation so I am disappointed to hear Unite’s London regional officer Harry Cowap attacking payroll firms so vehemently. Another option for workers is to ensure they choose a compliant umbrella firm which will employ the worker, thereby giving them all 84 statutory rights and benefits that come with employment. The umbrella sector does not exist to exploit workers but to provide a valued service enabling workers to be employed, whilst also having the flexibility of working on a number of short-term for various end-hirers. As well as providing stability, the continuity of employment enables workers to access financial products such as mortgages and loans which could otherwise be precluded from someone not in permanent work. Furthermore, if they work simultaneously for multiple hirers, the umbrella employee receives one consolidated pay packet with the appropriate tax and NICs paid to HMRC.
“To clear up the confusion of pay, the intermediary’s margin and employers NICs contributions are overheads, costs that should be factored into the overall assignment rate, i.e. in addition to the rate of pay that worker is told they will receive. This is correct whether the intermediary is a payroll company or a compliant umbrella firm that employs the worker. In either case, our position is very clear; people should not be charged for receiving their wages, nor should they be paying employers NICs. Confusion can sometimes occur when the intermediary provides their workers with a reconciliation statement showing the margin and employment costs deducted from the assignment rate, so it can seem as though they are being charged inappropriately, particularly if the pay rate was not communicated properly at the outset.
“We have long campaigned for recruitment agencies and intermediaries to work together on ensuring that the correct rate is given to workers, and we fully support the government’s intentions around improving transparency of pay for such workers, which Matthew Taylor referred to in his Review. I would welcome the chance to meet up with Mr Cowap as well as other trade unions like the TUC to dispel some of the myths around umbrella working. FCSA accredited members adhere to a strict code of compliance and we are committed to ridding the industry of its cowboys as well as promoting umbrella employment as a positive choice for the hirer and the worker.”