If you’re required to use an umbrella company for your payroll, it’s understandable that you may decide to shop around and choose the umbrella company that offers the highest take home pay retention. However, as we’ll explain in this article, all umbrella companies (the compliant ones) will process your payroll identically, and your retention between providers shouldn’t vary. However, there…
Joining an umbrella company isn’t complicated, but it does require you to provide a lot of personal information including date of birth, address, bank details and assignment information. We’ve put the following guide together to help you understand the processes involved when joining an umbrella company – so you have nothing to worry about.
Before joining an umbrella company
Before going ahead and registering with an umbrella company, there are some vital checks you should carry out. We’ve summarised these below.
Get an umbrella company calculation
It’s a great idea to request a take-home pay calculation from any umbrella company you’re interested in using. See how the calculation compares to our free umbrella company calculator. After all, ours has been designed to be transparent and as accurate as possible. Therefore, if you come across an umbrella offering significantly higher take-home pay than our calculation – they are probably trying to deceive you and trick you into registering with them.
Check the umbrella company is compliant
Compliance is everything. We cannot stress this enough. You must choose a compliant umbrella company for your payroll because this will ensure you pay the correct tax and National Insurance Contributions (NIC). There are over 500 umbrella companies in the UK. Therefore, picking a compliant one may sound challenging. However, it’s far easier than you may imagine.
While the government doesn’t currently regulate the umbrella company industry, two professional bodies do an excellent job of self-regulating it. These bodies are the Freelancer & Contractor Services Association (FCSA) and Professional Passport.
Both bodies are very well-respected within the supply chain of temporary workers, and they’re committed to ensuring temporary workers are well looked after. To obtain accreditation from the FCSA or Professional Passport, umbrella companies must undergo a series of rigorous assessments and audits – with no stone left unturned. Only umbrella companies that can prove they’re fully compliant with HMRC’s rules and regulations will gain accreditation from the FCSA or Professional Passport. Therefore, our advice is simple – choose an umbrella company that is accredited by either the FCSA or Professional Passport!
Conduct due diligence
Thorough research is key. It’s down to you to pick your umbrella company. There are plenty of helpful resources out there to help you. However, it’s if you’re working through an ethical recruitment agency, it’s worth asking them for recommendations, as they should have a Preferred Supplier List (PSL) in place.
You are responsible for sourcing a payroll provider, and you must conduct thorough research to ensure you choose a compliant umbrella company.
Assess the level of service on offer
All compliant umbrella companies process payroll in the same way (PAYE). However, the level of service between compliant umbrella companies will vary.
Firstly, you want to assess whether you can trust an umbrella company or not. Make sure they’re accredited by either the FCSA or Professional Passport and then research their service. Do they have good reviews on Google and Trustpilot? Are they established? Is their website up to date and full of helpful information?
Secondly, some umbrella companies offer a load of extras to entice temporary workers to pick their service over the competition. For example, some umbrella companies will offer hassle-free payroll, and that’s about it. Others may include loads of extras such as employee discount schemes, Same Day Faster Payments, special margins, referral promotions, and more.
Every compliant umbrella company will include employee rights (Statutory Benefits) and insurance cover – so don’t be tricked into believing these are extras.
When you’ve found an umbrella company with a package you’re happy with, it’s time to register with them.
Joining an umbrella company
Joining an umbrella company is pretty straightforward, but be prepared for some administration. Umbrella companies are legally required to gather a series of essential pieces of information about you – or else you can’t join them. Remember, umbrella companies legally become your employer, and you are an employee – so it makes sense that they require details from you about your circumstances.
The time it takes to register will vary between providers, but the best umbrella companies will complete the onboarding process within 10 to 15 minutes.
As part of the registration process with an umbrella company, you’ll be required to provide the following information:
- Full name
- Contact information, including phone and email
- Right to work in the UK
- Proof of identification
- National Insurance Number
- Date of birth
- Assignment information, including the rate of pay
- Banking information, including account number and sort code
Once the umbrella company has your basic information, they will register you to their service. You will then be sent an official contract of employment. Make sure you read this carefully and understand what’s included before you sign and return it.
Umbrella companies will also ask you for an up to date P45 document – to ensure they set you up with the correct tax code. If you don’t have a P45 – don’t panic. You can complete an official government document instead called the Starter Checklist for PAYE.
Once you’ve joined an umbrella company
When you’ve returned the signed contract of employment – you’re all set! Assuming you’ve chosen a compliant umbrella company, there will be no tie in period with their service, and you’ll be free to join and leave again (if you need to) as you please!
Umbrella companies will only deduct a margin when they pay you. Therefore, you can remain on the books of an umbrella company between contracts – even if you have 8 weeks without an assignment, for example.
Should you wish to leave your umbrella, simply contact them at your earliest convenience and let them know your desire to close your account. They will issue you with a P45, and then you’ll no longer be an employee of theirs.
- Don’t forget to ask as many questions as possible during the onboarding process.
- Take photographs/copies of your passport and right to work in the UK (if applicable) in advance so you’re ready to send it to the umbrella immediately. It’ll speed up the registration process.
- Never put up with a substandard service. If you’re unhappy with an umbrella company, switch away at your earliest convenience.
- You should be suspicious if an umbrella company doesn’t ask you for the information listed about. It’s a legal requirement for umbrella’s to gather your details, and if they cut corners, they could be breaking the law.