How To Spot & Avoid A Non-Compliant Umbrella Company

As January gets underway, it’s time to leave any bad habits behind you and start 2023 as you mean to carry on – with the right goals, the right work approach, and the right umbrella company that is efficient, effective and compliant. 

As a contractor, you don’t want to be left out of pocket or face legal and financial fines through no wrongdoing of your own. This is what you risk if you select a non-compliant umbrella company, and why it’s vital you choose carefully to ensure full compliance. 

What Is A Non-Compliant Umbrella Company?

It is a company that does not observe the relevant laws and regulations, engages in fraudulent activities, or takes measures to avoid paying taxes.

The company might fail to register with the necessary authorities, not abide by the employment laws for minimum wage, working hours and health and safety measures, or not pay the correct taxes and national insurance contributions – whichever form of non-compliance the umbrella company performs, it puts workers at risk of legal and financial penalties and impacts on their rights and benefits as employees.

How To Spot A Non-Compliant Umbrella Company

The old saying is correct – if something seems too good to be true, it most likely is. One of the biggest red flags for spotting a non-compliant umbrella company is being offered an unrealistically high take-home pay. If this happens, it’s probably because the company is non-compliant with HMRC. 

Other red flags include a failure to provide payslips, a lack of transparency around your pay and employment information, being paid from a company other than the umbrella company, or being paid via a loan, credit or investment payment.

What Should You Look For In An Umbrella Company?

Your chosen umbrella company is your employer, which means they should provide you with information on your employment including details such as the employer’s name, employment start date, rate of pay, and any holiday and sick pay entitlements you can access. The margin you pay should be transparent, too, and the company should be accredited by a reputable trade body such as Professional Passport. 

The company should provide you with a payslip, access to employee benefits such as holiday pay, sick leave, and maternity/paternity leave, and have customer service support available for any queries or concerns you might have. 

Make sure you choose a company that has a good reputation and plenty of reviews from other workers who’ve used them.

The Benefits Of Working With A Compliant Umbrella Company

Working with a compliant umbrella company like Cool Company enables you to enjoy minimal paperwork together with total peace of mind – you know that everything is taken care of from a payroll, tax, insurance and compliance viewpoint. 

Your contract work will comply with all the relevant laws and regulations, giving you the protection and reassurance that you’re compliant with the law. 

With Cool Company, you also benefit from fast sign-up, same-day pay and our unbeatable in-house customer service team.

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