Why must a recruitment agency work with an Umbrella company in UK?

25 Aug, 2020

Recruitment agencies that work with good umbrella companies enjoy various benefits. Umbrella companies are an excellent choice when it comes to managing payments. When a recruitment agency signs up with an umbrella company, everything to do with payroll is taken care of effectively and efficiently and the agencies are assured of timely payments, adherence to compliances with the latest regulations, and more.

Umbrella companies offer many benefits including:

Ease of Payment:

Recruitment pay-outs are complex to handle due to involvement of number of fees such as temporary working fee, temporary to permanent working fee, or permanent placement fee. Due to a large number of variables involved, managing of payrolls by themselves can be cumbersome for a recruitment agency. All the things like PAYE and NIC’s will be managed by the Umbrella Company and leave the agency to simply concentrate on worker’s recruitment. When you choose to work with an umbrella company, you just have to submit the timesheets and expense claims to the umbrella company and you will get paid on time.

Why must a recruitment agency work with an Umbrella company in UK? 

Temporary staff/Contract Employees:

When temporary staff or contract employees join a good umbrella company, they are given same employment rights and importance as permanent employees and the only difference which can be seen is of tax rules and the period of employment. It even makes you free from the burden of managing the staff as it is managed by the umbrella company themselves.

Protection, Insurance and Safety :

As a recruitment agency, your work may be cyclic. Your team may need to travel, work, and stay in different situations but when you work with Umbrella companies, the temporary workers and contractors are given full coverage under the insurance cover. There is no need for recruitment agency to invest or manage the insurance plans for the team.

Taxes and duties:

When you choose to work with a good umbrella company, it lowers down your burden of calculating taxes. All taxes and NIC’s are taken care of by the Umbrella Company and the recruitment agencies are simply paid post deductions. Umbrella companies manage payments well through PAYE system– subtracting their agreed margin along with the necessary tax and National Insurance contributions.

Minimise administration work:

While working with an umbrella company, you can minimize administration costs relating to in-house payroll computations and processing of pensions, payment of worker’s insurance plans and other pay-outs.

Benefits and tax saving schemes:

Many allowances and schemes are offered by Umbrella companies to their contracted agencies including:

1. Employee benefits

2. Sick leaves

3. Holiday pay

Many good umbrella companies offer suggestions on tax-saving schemes, that significantly benefits the recruitment agencies

Reduced paperwork:

When you sign up with a new client, you need to do lot of paperwork which can be a time consuming process whereas working with an umbrella company, you don’t need to do much effort to complete your paper work as adequate help is provided. . Umbrella companies also provide you 24*7 support so that all your queries can be answered timely.

Compliances covered:

You need to be compliant with HMRC unless you may need to face the following –

1. Hefty fines

2. Loss of goodwill

3. It may jeopardize business operations

When you work with the right umbrella company, you are assured of the compliances being met at all times.

Grevience Addressal:

Working with a good umbrella company may benefit by going no grievances of you unaddressed. Many assign account managers that value your relationship with the company are also available to resolve any business issues you may have.

While working with an umbrella company, a recruitment agency can concentrate on their core business as umbrella company ensures payrolls work seamlessly. When you work with an umbrella company, you rule out the possibility of penalties that arises due to non-compliance. You enjoy seamless payroll processing and hassle-free working that increase your effectiveness and straightly reflects it on the growth of your business. Choosing a compliant umbrella company is one of the most complex decisions which are to be taken care of. Good umbrella companies offer suitable solutions, for both large and small recruitment agencies. Choosing a non-compliant umbrella company not only leave your business at a high risk of financial penalties from HMRC but also take you far away from the benefits offered by a compliant umbrella company. Hence, it is very important for you to sign up with an experienced umbrella company having good reputation along with a big history of client satisfaction.

Also See: Umbrella Vs Pay As You Earn (PAYE), What’s The Difference?