A payroll umbrella company is a company that employs many freelance workers, all working on different assignments.
This way of working differs from limited company working in that the freelance worker does not own shares in the payroll umbrella company and is one of many such workers employed by the company.
Why work through a payroll umbrella company?
Although it is still possible to work through a limited company in the public sector, it is now complicated and onerous to do so as a result of the ‘Off Payroll Working’ (IR35) rules that came into force in April 2017. The recommended route is now to work via a payroll umbrella company such as Competex Pro.
The payroll umbrella company model has been in existence for some time, but is becoming a more favoured option by all concerned in light of the new changes, as it is now the most straightforward solution to the problems created by the new legislation.
A payroll umbrella company such as Competex Pro handles the commercial, employment, taxation, and statutory risks associated with the use of freelance workers. Indeed, workers will find that they enjoy more freedom and independence from their client working through Competex Pro than they would working through a limited company.
How does a payroll umbrella company work?
When you work through a payroll umbrella company, you work as an employee of the company.
Your contract of employment is with the payroll umbrella company and not with the 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 unique circumstances of a payroll umbrella company.
You negotiate the terms of your contract with the client or agency on behalf of the payroll umbrella company, but the resulting contract is between the payroll umbrella company and the client or agency. Having negotiated your fee and any arrangement for expenses, you need to advise us so that this detail can be incorporated into our contract with the client or agency and into your salary payment structure.
At the end of the month (or other agreed period) you submit a timesheet setting out the days (or hours) worked and any expenses due, and arrange for this to be signed off by the client. The client or agency pays the payroll umbrella company, and we pay you two working days after receipt of funds from the client or agency.