What Is Umbrella Company Skimming – Orange Genie

Lets keep this short and sweet. Umbrella company skimming is something that should never ever happen, ever. It’s basically where an Umbrella Company hides an amount in the employer deductions to keep for themselves, this may only be a couple of pounds but over hundreds if not thousands of payments it adds up.

To go in to a little more detail, when an Umbrella Company pays an employee (contractor) there will be a section of the payslip that relates to the employers expenses. This covers things like Employer NI, Holiday Pay, Employer Pension Contribution, AL etc These “should” be calculated in a way so that everything balances out against the contractors “Gross Pay”. In other words if you calculate the Employers NI due on the employee’s gross salary it should work out just as if you were another employee anywhere. The only difference is that the assignment rate for the contractor and the hence the income generated from that assignment is used to pay the employer expenses as well. The ONLY income an Umbrella should make is the margin it charges (usually £15-£30 a week).

However what some naughty Umbrella(s) has/have been accused off is skimming on the employer expenses, i.e. add a pound here, a pound there, thus increasing the amount they “keep” at the expense of the contractor (employee). When added up over time, large numbers of payments and large numbers of contractors this can come to millions extra that the Umbrella is keeping for itself. Even a 10% uplift on their margin is huge over time. As stated above, this is something that should never happen, but like with anything, and especially self governing “proxy regulators” like the FCSA a badge of compliance means nothing. The only way to be sure is to manually check your payslips and make sure that the employer expenses you see actually relate to the payments amounts your see.