The TUS Umbrella System Explained

Let us tell you all about how and why you would use an umbrella company.

An umbrella company is a company that employs agency contractors who work on temporary contract assignments, usually through a recruitment agency in the United Kingdom. Recruitment agencies prefer to issue contracts to a limited company as the agency liability would be reduced. The agency performs the recruitment process on behalf of the client. Some agencies will provide a PAYE scheme as part of their offer. This alleviates the requirement for the umbrella company but requires additional capability within the agency. Most agencies elect to utilise an umbrella company.

Head to our TUS Umbrella Form to get registered.

Now the process

The umbrella company issues invoices to the recruitment agency and, when payment of the invoice is made, the umbrella company will pay the contractor through a PAYE payroll.

Working through an umbrella company differs from being a standard PAYE employee in two main ways.

You can see how much “profit” the umbrella company makes by employing you, this is the margin that is kept by the company from the money that the agency pays over for the work that you are doing. All companies make a profit from their employees, it’s just that usually it is not visible to you and it will not be a set figure.
The hourly or daily rate that the agency pays over to the umbrella company covers all the employer costs such as pensions, holiday pay, Employers NI etc. This is why the initial rate for an umbrella employee should be higher than that for a PAYE worker directly employed by the agency.

Further explanations of the company costs and other deductions can be found in our guide to your TUS Payslip.

What’s the difference then…

In other words, working for an umbrella company is exactly the same as being a normal company employee.

After an initial qualifying period and under the relevant conditions you are eligible for Statutory Sick Pay, Maternity/Paternity Pay etc.

You will receive holiday pay every time you are paid. This ensures that you are always up to date with any holiday entitlement you are owed. This ‘advanced payment’ method is the most common method that is used by most umbrella companies.

You will receive a payslip every time you are paid, a P60 at the end of the year or a P45 should you decide to leave us.

We hold Employers Liability Insurance as required by law.

We can supply employer references to confirm dates of employment which can be vital when applying for roles which need security clearance.

As simple as that

Head to our TUS Umbrella Form to get registered.

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