Can my Recruitment Agency make me use a specific Umbrella Company?

(4 minutes to read)

When you first join the temporary work sector, it’s worth making yourself familiar with any rules that may apply to your way of working so that you’ll know where you stand in certain situations.

Can you choose your own umbrella company?

You are completely within your rights to choose your own umbrella company; however, you may find that many recruitment agencies will want you to use a specific supplier.

Generally, it is frowned upon for an agency to make someone use a certain umbrella, but there isn’t a rule against forcing contractors to use a single supplier or from a ‘preferred list’ of suppliers.

Should you use your recruitment agency’s chosen umbrella company?

If you find yourself in a position where your agency won’t let you choose your own umbrella, you need to think about your next move and whether you’re willing to use their suggestions.

Do your research and make sure you’re happy with their choice of supplier, if not then know that it is your right to refuse, but you may need to change your recruitment agency as a result.

It’s also worth noting that many agencies now use only FCSA accredited umbrellas, which might give you more peace of mind.

Why do recruitment agencies pick a specific umbrella company?

There are a couple of reasons as to why an agency might insist on a contractor using their preferred umbrella company.

They might want the contractor to use an umbrella that shares the same ethos as them. Many agencies will use PSLs (Preferred Supplier Agreement) in order to manage their risk and ensure all umbrella partners confirm to a set standard of compliance.

Another reason of course could be from a commercial point of view where the agency will benefit financially by recommending a particular umbrella to a contractor.

What should I look for in an umbrella company?

As mentioned previously, if you are willing to use an agency’s recommendation, then do your research to ensure you have confidence in the umbrella you’ll be contracting through.

Here’s what to look out for:

  • Good reviews
    Look at reviews to get an idea of what people really think of the umbrella company you’re thinking of working through.
  • Providing a personal service
    Having a go-to person who deals with all of your work is so important for a hassle-free umbrella experience.
  • Been in business for a long time
    Experience is key with any business, giving you peace of mind that they know what they’re doing.
  • Awards
    Recognition for the work they do is always a comforting factor when it comes to choosing the best umbrella company – make sure that their awards are fairly recent too.

Tax avoidance schemes

Although most umbrella companies will be legitimate and compliant with tax rules, it’s important to be aware that tax avoidance schemes do exist.

The signs to look out for are:

  • If there’s a third party in the chain making the payment.
  • If the umbrella company claims that you’ll be able to keep more of your earnings than others.
  • If you’re asked to sign an annuity, loan or other agreement which involves a non-taxable element of pay.

For more information on contracting through an umbrella company, you can read our Should I use an Umbrella Company? page.

We hope this page has answered some of your umbrella employment questions. Our team of experts are available to answer any queries you may have, so drop us a line on 01206 591 000 or email sophie.lewis@contractorumbrella.com.

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