How An Umbrella Company Works

Why work through an umbrella company?

Umbrella company working is most suited to interims, consultants, contractors and other independent professionals working in the public sector. To find out more about why this is the case, please read our free guide ‘Contracting in the Public Sector: Limited or Umbrella?’

If you are in the private sector, it is recommended to work through a limited company. You can find out more about our limited company formation and accounting services on our accountancy pages.

It is possible, and recommended, to use a limited company for private sector contracts while also working through an umbrella company for public sector contracts. Competex can handle your tax & compliance across both trading formats.

What is an umbrella company?

An umbrella company is a company that employs freelance workers who may work on numerous different assignments, at various locations, either through agencies or directly for end-clients. The umbrella company enters into an employment contact with the worker and a service contract with the agency or end-client.

An umbrella company differs from a limited company in that the freelance worker does not own shares in the umbrella company and is one of many such workers employed by the company.

How does Competex Umbrella work?

When you work through Competex Umbrella (also known as ‘CUL’), you work as an employee of CUL . Your contract of employment is with Competex Umbrella and not with the end-client or agency. The terms of your contract of employment is largely in line with the terms of any other contract of employment (e.g. disciplinary, health and safety, etc), but with certain differences to take account of the unusual circumstances of an umbrella company.

You negotiate the terms of your contract with the end-client or agency on behalf of CUL, but the resulting contract is between CUL and the end-client or agency. Having negotiated your fee and any arrangement for expenses, you need to advise CUL so that this detail can be incorporated into the contract with the end-client or agency and into your salary payment structure.

Read more about terms and conditions of employment.

Read more about claiming expenses.

At the end of the month (or other agreed period) you need to complete a time sheet setting out the days (or hours) worked and any expenses due, and arrange for this to be signed off by the end- client. The end-client or agency pays CUL, and CUL pays you two working days after receipt of funds from the end-client or agency.

Read more about getting paid.


Amy FowlerCompetex Umbrella: How it works