Page 4 - Not Always Umbrella

Umbrella The now traditional route for flexible workers who are unable to utilise their PSC within IR35. The umbrella company employs the contractor and the contractor pays a margin for the service. After the margin and all other employment costs, this is purely a PAYE solution. Pro’s: The contractor is employed and gets all other statutory benefits and maybe some enhanced benefits as well. The agency or hirer outsources the entire employment process and most of the risk, no additional processing work and one weekly amount payable to the umbrella. Con’s: The contractor pays a margin & receives a lower PAYE net wage to their PSC, the umbrella discharges all of the additional employment costs, leaving minimal risk for the hirer/agency, although all parties usually get named in legal claims. The Professional Employment Organisation (PEO) A relatively new payroll solution that jointly-employs the contractor with either the hirer or agency. The contractor is paid full PAYE and employment responsibilities are shared. PEO accepts liability for payroll, Tax, NICs, pension, app levy, legal and tribunal, insurances and all statutory pay. The agency or hirer pays a single amount to the PEO. Pro’s: The contractor is employed, doesn’t pay a fee and gets all other statutory benefits and maybe many enhanced benefits as well. The agency or hirer outsources the entire employment process and most of the risk, no additional processing work and one weekly amount payable to the PEO. The cost is considerably cheaper than a traditional umbrella and there are huge cashflow benefits over the umbrella. The payslip is clear, simple and easy to understand. Con’s: The contractor receives a lower PAYE net wage to their PSC. The options The options 03 Version 1.0 2020