TUC presses for an end to reign of umbrella companies

The TUC is calling for a ban on umbrella companies on the grounds that they are used to exploit workers.

Research by the union body estimates half of agency workers already work for umbrella companies.

This could spiral further post-pandemic because of a combination of changes to tax rules, which have come in this financial year, and the increase in agency work.

An umbrella company is essentially a payroll company, used by recruitment agencies to operate a PAYE system for the agency workers they find work for. In many cases, the umbrella company will also employ the agency worker, with the agency workers becoming “employees” of the umbrella company.

The TUC says this creates a fragmented employment relationship and makes it difficult for workers to exercise their basic rights.

And it says workers face misleading and unfair deductions from pay, while breaches of holiday leave and pay entitlement are widespread. TUC general secretary Frances O’Grady said: “Everyone deserves decent work. But too many low-paid workers are denied the wages they were promised and basic legal rights like holiday pay because they work for umbrella companies.

“Lots of them are the key workers we all applauded — like social care workers, teachers and coronavirus testing staff.”

She said employers shouldn’t be able to wash their hands of any responsibility “by farming out their duties to a long line of intermediaries”.

https://www.tuc.org.uk/sites/default/files/2021-07/UmbrellaCompanies.pdf