Terms and Conditions of Employment

The terms and conditions of employment are more or less standard for all payroll umbrella companies.

You become an employee of the umbrella company and not a director or shareholder, unlike when working through your own limited company. You will receive your income as salary (plus expenses if applicable) and not as dividend.

Your contract of employment is with the umbrella company and not with the end-client or agency. The terms of your contract of employment are 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 employment by an umbrella company.

Contract of employment

When working through an umbrella company, you work under an ‘overarching’ contract of employment which is worded to provide continuous employment covering multiple assignments for different clients at different temporary locations so that you may claim certain travel and subsistence expenses. This is explained in greater detail below.

As a matter of good practice you are expected to work on the assignment until the assignment is ended and to complete it to the end-client’s satisfaction. To do otherwise would jeopardise your own reputation.

Provision of work

Umbrella companies do not provide work-finding services of any kind. Although you remain an employee of the company, you will be paid only when you are on assignment. You have no obligations to the company between assignments and you are not obliged to keep yourself available for work between assignments.

The onus, therefore, is on you to find your own work, and we will normally be very happy to provide the framework within which you can operate. However, CUL is under no obligation to accept work for you if the terms are not acceptable to us.

Identity

We are required to carry out identity checks for all employees. If you are not an EU national, you will be required to supply us with certified copies of your visa and work permit.

Professional capability

It is your sole responsibility, and not our responsibility, to verify whether the work proposed under an assignment is suitable for you, and your placement on an assignment will not be based upon any representation made by us in relation to the work involved.

You are not entitled to subcontract any part of the services being provided to the end client without the agreement of all parties concerned.

Employment agency regulations

If working on an assignment through an agency, we would expect you to give us authority to opt out of the Employment Agency Regulations.

Please see Legislation: Need to Know for more information.

Place of work

In legal terms, your ‘permanent place of work’ will be our company offices, although we would not expect you to attend at our offices at any time. Your ‘contract site’ will be the location where the end-client has asked for you to provide your services. This arrangement determines the end-client’s premises as a ‘temporary workplace’ and therefore enables travel and subsistence expenses, other than commuting between home and work, to be claimed (see Claiming expenses). There may, of course, also be occasions when it is appropriate for you to work from home.

Working hours and rest periods

Because you will always be working away from CUL’s offices, you will not have any basic hours of work set by CUL. You will be responsible for regulating your own working time, and for taking appropriate breaks, as arranged and agreed with the end-client.

Holidays and other absences from work

Because your employment is not one of full time work and involves working flexible hours, we are obliged to pay you holiday pay based on the number of days that you work. Your entitlement will be calculated every time you are paid and will be separately itemised on your payslip.

Because unexpected absence, or absence due to illness, could result in a breach of obligations owed to our end-client, it is important that as a matter of professional courtesy you notify both us and the end-client promptly on any day you are absent, and that you give your best indication as to how long you will be away.

Your client would normally require you to complete time sheets before arranging to pay you. CUL will pay you on a weekly basis no later than three working days after payment is received from the agency or end-client in respect of any time sheet.

Termination of assignments in the case of non-payment by the agency or end-client

CUL reserves the right to terminate an assignment with immediate effect if the agency or end client fails to pay an invoice within 14 days of submission.

In such a case you should not provide any further services until the agency or end-client satisfies us that they will in future meet their obligations for payment.

Overarching contracts of employment – an explanation

The key issue is that if your contract of employment with the umbrella company were to relate to only a single assignment, the client workplace would automatically become your permanent place of work, and the umbrella company would then not be permitted to claim travel expenses from the agency or end-client on your behalf. However, please note the final paragraph relating to working in the public sector.

In principle, HMRC permits travel expenses to be claimed only if you are travelling to and from a temporary place of work. However, as a contractor, you would normally work on different assignments in different locations for a limited duration in each case.

To overcome this issue, your contract of employment is worded to provide continuous employment covering multiple assignments, each carried out with different clients at temporary places of work. This form of contract has become known as an ‘overarching’ contract.

HMRC define a temporary place of work as follows:

  • “A workplace is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose. Therefore, even where an employee attends a workplace regularly, it will be a temporary workplace and so not a permanent workplace, if the employee attends for the purpose of performing a task of limited duration or other temporary purpose.”

Expense claims for travel are also subject to the ’24 month’ rule which stops a workplace from being a temporary workplace where an employee attends it in the course of a period of continuous work that lasts, or is likely to last, more than 24 months. For this reason you may not be paid travel expenses once it becomes evident that an assignment will continue beyond 24 months duration.

In April 2017, HMRC introduced new rules for individuals working in the public sector on IR35 assignments. The end-client location is now deemed to be the individual’s normal place of work, and travel expenses between home and the client location may no longer be paid to the individual free of tax and NI. This may negate the relevance of the ‘overarching’ contract, but umbrella companies do not propose to change the contract wording for these individuals until the implications have been fully considered.

Amy FowlerTerms and Conditions of Employment