top of page
  • Rob Wilks

Umbrella Companies – What are they?

Unless you have been referred to one through a recruitment agency or happen to have been contracted with us, you most likely have not heard of this term! Umbrella companies provide a vital role within the temporary working space to ensure that workers are not only paid compliantly but receive the rights they should be afforded. This blog will be a brief introduction into Clipper Contracting and how umbrella companies work, hopefully helping you to understand the benefits!


Umbrella companies defined and how they benefit you:

As defined by HMRC, “an umbrella company is a business often used by recruitment agencies to pay temporary workers”. An umbrella company will typically provide a number of solutions, from Umbrella PAYE solutions that provide employment, through to self-employed solutions such as CIS for those operating in construction. They not only ensure compliance in an ever-complicated payroll and legalistic recruitment space, but also a number of benefits to the worker. For example, when employed by an umbrella company, employees are entitled to Statutory Sick Pay, Maternity and Paternity Pay, Insurance against accidents at work as well as Holiday Pay (which you can claim weekly or have it accrued and request it on demand). Additionally, umbrella companies provide continuous employment even if you carry out multiple assignments for many agencies which is critical if applying for financial products such as loans or mortgages.


If you typically engage as a self-employed contractor within the temporary workforce, then umbrella companies will help administer the difficult compliance around this. From completing the SDC (Supervision, Direction and Control) assessment, to ensuring CIS is applied correctly, an umbrella company assists with all of this.


What is an umbrella rate?!

This is a common question we receive weekly. The Umbrella rate or Contract rate is the amount that the umbrella company receives from the recruitment agency. Where a worker is engaged Umbrella PAYE, this includes not only the money owed to the worker but the employment costs the umbrella company is required to make as the employer. These employment costs typically include the Employer’s National Insurance, employer pension, holiday pay and the Apprenticeship Levy. Therefore the contract or umbrella rate will be considerably higher than an equivalent worker who is paid directly.

Ultimately, Umbrella companies can be the perfect solution for temporary workers who are either self-employed, not under SDC or anyone that is looking for continued employment whilst operating on multiple assignments via multiple recruitment agencies.

If you would like a quote or calculations, please do get in touch on 01305233170 or alternatively email in to

Thanks to Guy Parfitt, Business Development Manager, for writing this article.

40 views0 comments


bottom of page