As a contractor, safeguarding your employment rights is crucial. With recent changes in umbrella company legislation and growing concerns over non-compliant providers, choosing a reputable, FCSA-accredited umbrella company has never been more important.
What is an FCSA Accreditation?
The Freelancer & Contractor Services Association (FCSA) is the UK’s leading industry body for umbrella companies, limited company advisors, and contractor accountants.
The FCSA awards accreditation only to umbrella companies that pass a rigorous, independent audit covering tax compliance, employment law, transparency, and ethical business practices.
There are significantly more umbrella companies on HMRC’s list of tax avoidance schemes than on the FCSA’s list of accredited umbrella companies. This highlights the upmost importance of diligently choosing an accredited umbrella company.
What Employment Rights Should Contractors Expect?
As an Umbrella Company employee, you’re legally entitled to full employment rights. Including:
- Statutory Maternity & Paternity Pay & Leave
- Statutory Sick Pay
- Statutory redundancy pay
- Statutory adoption Pay and Leave
- Statutory Shared Parental Pay and Leave
- Statutory Parental Bereavement Pay and Leave
- Statutory Neonatal Care Pay and Leave
- Holiday Pay (minimum 5.6 weeks per year)
Curious about how your holiday pay is calculated? Read our full guide here.
Additionally, you have protection against unfair dismissal, the right to request flexible working and time off for unexpected emergencies.
How FCSA Umbrella Companies Ensure These Rights are Upheld
An FCSA umbrella company actively upholds your legal rights and ensures your pay complies with UK tax law.
Here’s why choosing an FCSA-accredited umbrella company, like Danbro Umbrella, is beneficial:
- Full Employee Status: Contractors receive full employee status through employment contracts.
- Transparent Payslips: Payslips clearly break down pay, margin deductions, and other required deductions. Danbro Umbrella’s SafeRec accreditation ensures all payslips are audited for full compliance.
- Automatic Statutory Payments: FCSA-accredited companies guarantee timely administration of statutory payments, including statutory sick pay and maternity pay.
- Pension Scheme Enrolment: Umbrella companies automatically enrol employees into a pension scheme in line with legal requirements.
- Comprehensive Insurance: Essential insurances, such as Employer’s Liability, Public Liability, and Professional Indemnity, are included as standard.
Want to learn more about SafeRec and how it protects you? Check out our blog.
Risks of Non-Accredited Umbrella Companies
If you are not with an FCSA-accredited umbrella company, you could face several potential issues:
- Loss of Holiday Pay: Legally, you are entitled to a minimum of 5.6 weeks of holiday pay each year.
- Incorrect Tax Deductions: Umbrella companies that operate tax avoidance schemes may make incorrect tax deductions, leading to significant repercussions for you, including steep fines and potential legal consequences.
- Lack of Statutory Payments: You may not have access to statutory payments you are entitled to, such as up to 39 weeks of maternity pay or up to 28 weeks of sick pay.
- Poor Employment Protections: Without full employment rights, you are vulnerable to unfair dismissal, discrimination, and health and safety issues.
New Umbrella Company Legislation
As part of the government’s efforts to clean up the umbrella company market, new legislation clarifies who holds legal responsibility for PAYE tax deductions in the supply chain.
Under the proposed changes, the end client or agency may become liable for unpaid PAYE tax if the umbrella company they’ve used fails to comply with HMRC’s rules. This is a major shift and a clear sign that HMRC is cracking down on tax avoidance in the temporary labour market.
We recently teamed up with the FCSA to host a live webinar discussing umbrella compliance, employment rights, and the latest legislation updates.
If you missed it, watch the full recording below:
How To Check?
The best way to check if your umbrella company is FCSA accredited is by visiting the website and checking their list of FCSA accredited umbrella companies.
You can ask your umbrella company for proof of the accreditation. However, it’s important to be wary of umbrella companies that “claim” compliance but aren’t officially listed on the FCSA website.
If your umbrella company is not listed on the FCSA website, it’s time to switch to an FCSA-accredited umbrella company. Check out our comprehensive guide on switching umbrella companies here. Our guide also provides recommendations on the best course of action if you suspect your current umbrella company is non-compliant.
Join an FCSA Accredited Umbrella Company Today!
It’s important to choose an FCSA Accredited Umbrella Company like Danbro Umbrella.
By choosing us, you’ll receive many benefits such as:
- Full Statutory Employment Rights – including maternity pay, paternity pay, shared parental leave and sick pay
- HR Guidance
- Support from our Customer Care Team
- Workplace Pension: Danbro Group SIPP
- Professional Indemnity Insurance
- Employer’s Liability Insurance
- Public Liability Insurance
- + Referral Rewards
- + Holiday Giveaway
- + Exclusive Contractor Umbrella Rewards – Discounts on over 120 retail & travel brands
To find out more about what Danbro Umbrella can offer you, feel free to get in touch with our team or explore our plans.
