A MoneyBox programme on BBC Radio 4 last Saturday https://www.bbc.co.uk/programmes/m000tcl7 included mention of an umbrella company, said to be accredited by The Freelancer & Contractor Services Association (FCSA), which was withholding pay from contractors. The programme included commentary from Dave Chaplin, CEO of ContractorCalculator and has resulted in further comment from Chaplin as well as the FCSA itself.
“Withholding thousands of pounds from what is rightly due to contractors, who had to threaten court action before the umbrella company in question paid out, is an utter disgrace,” said Chaplin of the case presented by the programme. “The FCSA must take the matter seriously, conduct an investigation and expel the umbrella that has perpetrated this wrongdoing from their group. The FCSA standard on holiday pay clearly falls short, and its codes are meaningless if not properly policed.
He went on: “When the Off-Payroll legislation is rolled out into the private sector in April, tens of thousands of contractors are likely to be required to work through an umbrella model so I would urge firms who use umbrella companies to conduct their own due diligence and ask for cast iron proof, not promises, that all payments are being made correctly.”
Crawford Temple, CEO of Professional Passport, also commented on the issue saying: “It was disappointing to hear this story. It is one that will serve to cast suspicion on the entire sector and the umbrella in question should be scrutinised and penalised. With more contractors likely to be working through umbrella companies under the new Off-Payroll tax rules, transparency is the key to protecting workers, as many will not be familiar with the workings of an umbrella.
“Transparency with workers is a critical component of a good working relationship between umbrellas, agencies and workers. Specifically on holiday pay, workers should receive pay reports with every payslip that allows them to see, at a glance, what their entitlement and position is, so that they receive what is due to them.”
The FCSA has responded saying it had been made aware by the BBC Money Box radio programme that one FCSA member firm had failed to pay holiday pay to its contractor(s), but the name of that member had not been disclosed.
“Withholding holiday pay is in contravention of the FCSA Codes of Compliance and a matter we take very seriously,” the FCSA said in a statement. “If the FCSA receives a complaint against a member firm with clear evidence provided of any wrongdoing to demonstrate that the accused company is in breach of the FCSA’s Codes of Compliance or Charter, in accordance with our complaints policy, we will fully investigate. In the event that we find evidence to support any such breach, the FCSA will terminate their membership with immediate effect.
The organisation went on to say: “It is rare, but when the FCSA has come across unlawful practices, it has taken swift and decisive action to thoroughly investigate and expel members.