Teachers Are Coming For Umbrella Companies
And you can’t blame them. Rogue Umbrellas have long been seen to be taking advantage of the UK freelance market. Whether it be holding holiday pay that then disappears or not being clear about the elements and take home contractors can expect. It seems one group has had enough.
Supply teachers are considering collective action through a “Post Office-style” group litigation to challenge umbrella companies regarding illegal deductions from their earnings and unpaid holiday entitlements. The National Supply Teachers Network (NSTN) is collaborating with Contractors for Justice (C4J), a legal firm, to potentially pursue legal action against supply agencies in the High Court. Using umbrella firms to hire temporary workers allows agencies to avoid costs related to employment benefits like pensions and sick pay, leading to numerous concerns raised by unions.
Trade Union Congress reports reveal widespread issues with deductions from workers’ pay, breaches of holiday pay entitlements, and potential involvement in tax evasion schemes via umbrella companies. The demand for supply teachers has surged due to increased illness levels during the Covid pandemic, resulting in local authorities spending approximately £698 million on supply expenses last year, marking a 12% increase. NSTN chair Niall Bradley highlighted the inadequate pay for supply teachers, with many earning significantly less than full-time educators, further exacerbated by umbrella companies siphoning off additional earnings.
In an effort to address these issues, the GLO initiative proposes that supply teachers unite to collectively challenge the improper deductions from their salaries and reclaim any withheld holiday pay. Similar to the successful action taken by postmasters against the Post Office regarding the Horizon IT scandal, this collective litigation approach aims to pool the claims of affected supply teachers. C4J’s CEO, Susan Pash, indicated that for the case to proceed, around 500 supply teachers are required, expecting over a thousand sign-ups despite potential delays of up to a year in building the case.
Recent HM Revenue & Customs consultations on plans to curtail umbrella company activities shed light on the pervasive nature of this issue, with an estimated half a million individuals across various sectors now working under such arrangements. While the prevalence of teachers being paid through umbrella or offshore payroll companies has decreased from previous years, there remains a pressing need to address the exploitation and unfair practices faced by supply teachers in the education sector.
All this begs the question, hot can you tell if you Umbrella is one of the good guys? The market is a minefield with even supposed FCSA umbrella’s pulled in the past for shocking holiday pay treatment.