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New IOR umbrella scheme keeps recruiters dry

Safe Umbrella is designed to help recruiters choose a safe umbrella partner (a company that acts as employer to agency contractors working on a fixed-term contract assignment).

If a recruitment company works with an unaudited umbrella partner, it could be liable for unforeseen costs due to poor practices by the umbrella. Additionally, recruiters could put their contractors at risk of not being paid properly or on time.

The government (HMRC) wants to ensure umbrellas operate within the law, paying the right amount of tax, dealing with holiday and sick pay correctly and managing travel and subsistence expense claims compliantly.

The Safe Umbrella audit will assure recruiters that an umbrella carrying the new Safe Umbrella badge has been vetted in all aspects of the Umbrella PAYE model. This, says IOR director general, Azmat Mohammed, is “crucial in the midst of so much risky and poor practice undertaken by a number of umbrella companies.”

Mohammed adds, “This is a high-quality audit being introduced to the market that safeguards recruiters. Legislation is changing all the time and recruiters cannot be without risk if they use an umbrella that turns out to be adopting illegal or bad practices. You really don’t want to have to worry about liability from a third party’s actions so it’s better to be safe from the outset.”

Not using an audited umbrella could also put recruiters at financial risk. Many recruiters rely on umbrella companies to manage their contractors’ pay, on the assumption that everything is being done legally. If your umbrella is carrying out unlawful practices to maximise profits, this is, naturally, quite alarming.

One of the key advantages of the scheme is that there are no employees of umbrella companies involved in this scheme, so it’s truly independent. It’s also transparent in showing to recruiters what has been audited in detail.

One Click Umbrella is the first umbrella company to pass the audit and carry the new Safe Umbrella badge. 

Mike Keeling of One Click Umbrella says, “We are often asked by recruitment agencies and clients if we have passed any form of third party audit so we researched the various schemes available in detail. We were attracted to the Safe Umbrella scheme as it is backed not only by the Institute of Recruiters but also by one of the largest and most respected firms of legal experts, Eversheds.”

Keeling adds, “We are proud to be the first umbrella company to pass the Safe Umbrella audit and would hope that many other compliant providers will follow our example.”  

Gemma Hardiman, senior associate at Eversheds, says, “We are delighted to be involved in Safe Umbrella. Our expert employment and tax lawyers are ideally positioned to audit this scheme so as to ensure Umbrella companies comply and are seen to comply with their employment and tax obligations as audited.”

To become a Safe Umbrella or find out more click


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