The Institute of Recruiters has teamed up with law firm Eversheds to launch a new audit scheme called Safe Umbrella to help recruiters choose a reputable umbrella company.
Umbrella companies act as an employer to agency contractors who work on fixed-term contract assignments. However, some umbrellas carry out unlawful practices to maximise profits and this means that agencies can be liable for unforeseen costs, or risk paying their contractors late.
HMRC has stipulated that it wants to ensure umbrellas operate within the law, paying the right amount of tax, dealing with holiday and sick pay correctly and managing travel and subsistence expense claims compliantly.
The Safe Umbrella scheme will assure recruiters that an umbrella carrying the Safe Umbrella badge has been vetted in all aspects of the umbrella PAYE model, claims IOR director general, Azmat Mohammed.
He said this is “crucial in the midst of so much risky and poor practice undertaken by a number of umbrella companies”.
He added: “This is a high-quality audit being introduced to the market that safeguards recruiters. Legislation is changing all the time and recruiters cannot be without risk if they use an umbrella that turns out to be adopting illegal or bad practices. You really don’t want to have to worry about liability from a third party’s actions so it’s better to be safe from the outset.”
One Click Umbrella is the first umbrella company to pass the audit and carry the new Safe Umbrella badge.