The Freelance Informer is concerned about the risks contractors face from tax avoidance schemes within some umbrella companies and the complications caused by non-transparent assignment rates. We spoke to Ray Walker, Worksome‘s VP of Contingent Workforce and regulatory expert, to get his insights.
Q: Contractors are worried about being forced into umbrella companies with shady practices. What are hiring companies doing to protect them?
Ray Walker: Unfortunately, most companies aren’t doing enough. They might be unaware of the issue, hoping to avoid responsibility, or simply not taking it seriously. This growing problem highlights why I advocate for government regulation in the umbrella company industry. It wouldn’t be easy, but it’s essential to clear out bad actors and ensure contractor safety.
Q: How can the use of misleading assignment rates be addressed?
Ray Walker: Ideally, the government would remove employer costs from advertised rates, as other countries do. This would make contracting more transparent for everyone. But for now, the best tool available is the Key Information Document (KID). This document, provided before signing any agreement, should clearly show the gross salary rate. However, many contractors overlook it. Highlighting the KID’s importance to clients and supply chain partners could significantly help.
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Disclaimer: This article is for informational purposes only and should not be construed as professional advice. Always consult with qualified professionals for specific guidance.
Do you have further questions or concerns about umbrella companies or assignment rates? We encourage open and informative discussion on these important topics. Share them in the comments below.