Umbrella workers take law into own hands to claim lost benefits
Umbrella workers urged to claim withheld holiday pay and lost benefits in what is seen as two calls to justice putting compliance outfit in the spotlight
Two developments have come to light about umbrella workers reportedly being denied benefits that they have paid for through Pay-As-You-Earn (PAYE). The amount rightfully owed to the contractors could span years.
The first development became known to The Freelance Informer through Jacob Bellas, a consultant surgical theatre medic who is running Contractor Voice, a pro-contractor lobbying organisation. Bellas says he is working to ensure contractors, often working through umbrella companies, are not victims of unethical hidden practices carried out by certain umbrella companies, such as salary skimming, withheld holiday pay and hybrid or “elective deduction model” practices. The latter is when a contractor is classified as self-employed for worker status yet pays PAYE for tax purposes without receiving benefits.
Bellas, through Contractor Voice and his partner company Maven, a business services company, reported that Freelancer and Contractor Services Association accredited umbrella company, NumberMill, was found to be practising the elective deduction model (EDM) following a contractor’s payslip audit.
At the time of writing, the contractor was working through a specific yet unidentified Number Mill entity, according to one source who wished to be anonymous. There have, however, been other NumberMill contractors who have since come forward to request payslip audits, the source told The Freelance Informer. However, the contractors are working through another entity and a different contract. Whether the contractors have been working through an EDM was not reported.
The Freelance Informer did not receive a response from NumberMill nor its founder Louise Rayner at the time of writing, despite a combination of attempts.
However, Chief Executive of FCSA Chris Bryce, confirmed to The Freelance Informer that the Elective Deduction Model is not permitted for use by FCSA members, saying, ”FCSA believes that all umbrella workers, no matter if engaged as employees or under a contract for service, should receive holiday pay as required under the Working Time Regulations and, of course, their pay should meet at least the National Minimum Wage requirements.
“Our Codes are quite clear on this. FCSA’s position is that contractors engaged by our members must be treated fairly and transparently and their statutory and regulatory rights must be upheld. FCSA is undoubtedly at the forefront of setting compliance standards which protect contractors we very much hope that umbrellas that are not accredited by FCSA follow our lead. A rising tide lifts all boats.”
The founder of Numbermill, Louise Rayner, was recently appointed as a director to the FCSA according to Companies House.
When The Freelance Informer requested follow-up information from Mr Bryce and Ms. Rayner (an FCSA director) via the FCSA to have on the record FCSA’s confirmation that Numbermill has no umbrella workers who work through the Elective Deduction Model; nor contracts that include EDM. Mr. Bryce responded:
“At this time, FCSA have no further comment.”
Prior to our correspondence with the FCSA, Mr Bryce, responded to Contractor Voice’s report of NumberMill’s use of the EDM on LinkedIn.
FCSA is aware of an article on a contractor site, Contractor Voice, containing baseless allegations regarding one of our Members, NumberMill, and further unfounded and untrue allegations regarding FCSA’s payslip checking service and FCSA’s response to a worker.
In our view these allegations are based on poor knowledge of the facts, a lack of research and a failure to fact check or clarify. We are disappointed that at no point did Contractor Voice make any attempt to contact FCSA or NumberMill for comment, clarification or to check facts.
Furthermore, the allegations appear to be based largely on a fundamental misinterpretation of a single SafeRec payslip audit – the fact that the resulting allegations are so inaccurate is a clear demonstration of the serious limitations of an uninformed observer relying on a single payslip audit without examining or understanding the whole picture. Our full response to the allegations is included in the document attached to this post.
FCSA calls for Contractor Voice to retract the article and issue an unreserved apology to both us and NumberMill.
FCSA is committed to ensuring that our Members achieve and maintain the highest standards of compliance and observation of our Charter and Codes, and we continue to rigorously apply and examine these standards. Whilst we accept that occasional errors may occur within any organisation’s processes, and we support Members who recognise and rectify these issues in a timely and effective manner, where we find non-compliance we can, do, and will take appropriate action.FCSA
More injustices come to light: unpaid holiday pay
The second development is centred around unpaid holiday pay. Contractors who have worked through an umbrella company in the past 20 years and may have had holiday pay wrongly withheld from them are being urged to reclaim what is rightfully theirs through a new no-win, no-fee group legal action.
Launched by Contractors4Justice (C4J Ltd) and supported by ContractorCalculator, the initiative enables contractors who have missed out on holiday pay to make claims, without any personal financial risk or upfront cost, it was told to The Freelance Informer.
“With legislation on the horizon that could close this window of opportunity, it’s important that workers act quickly if they think they have a valid claim,” said ContractorCalculator.
Contractors will only be charged if the litigation is successful, which will be a percentage of their successful claim amount.
The entry cost of making a High Court run into tens of thousands – said ContractorCalculator – and in the High Court, the loser pays the winner’s costs. Hence, contractors are only able to access justice realistically via group action.
C4J will fund all the costs of group action, and contractors pay nothing if the case is unsuccessful. Due to ATE insurance.
How will the process work?
To proceed with a claim, umbrella workers will need copies of their contracts and payslips from the periods when they were denied full holiday pay. Claims can stretch back 20 years, with the average payout expected to be around £5,000 per worker per year affected.
Commenting on the initiative, Dave Chaplin, CEO of contracting authority ContractorCalculator said: “I welcome this initiative. There has been an awful lot of hearsay over the years about holiday pay being withheld, with suggestions that the problem is endemic. I have only seen hard evidence for a few cases, so maybe we will finally learn the truth.”
Chaplin clarifies that the issue does not affect all umbrella companies.
“Most [umbrella companies] operate compliantly in this area. However, where holiday pay has been wrongly withheld, contractors have legal grounds to retrieve it.”
To get started with the Contractors4Justice , simply fill in a form, and an advisor will be in touch to assess a claim. If the case holds up, it can then proceed on a no-win, no-fee basis. Contractors can make a claim here: Make holiday pay claim
According to Contractor Voice, any contractors who suspect wrongful, unauthorised, or unexplained deductions in their wages by any umbrella employer are invited to register their interest in joining a group claim with the following law firm: Penningtons Manches Cooper LLP here.