Umbrella Payroll Services

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At Bishop Oak, we provide a range of outsourced payroll services including Umbrella Payroll. Let us take the stress of payroll away so you can focus on what you do best.

Umbrella payroll refers to a system in which individuals working as contractors or freelancers are employed by an intermediary company, commonly known as an umbrella company. Under this arrangement, the umbrella company becomes the employer of the contractors, handling various administrative tasks such as payroll processing, tax deductions, and National Insurance contributions.

Umbrella payroll models are typically used by agencies, especially those in the recruitment sector. However, lots of sectors and businesses can utilise Umbrella to save money and time.

The process of using the Umbrella payroll model is quite straightforward. An agency sets up a contract with the umbrella company that outlines the areas the umbrella company is responsible for. These responsibilities will include employing workers and paying their wages in line with all relevant information and legislation as well as then invoicing the agency for the time each worker has worked.

There are several benefits to choosing Umbrella as the payroll model for your business, they include:

• Reducing employment costs – NI not charged to the business
• Outsourcing admin saving your business time and money
• Contractual and legal obligations passed on to the Umbrella company ensuring your compliance with regulation
• Insurance cover as many Umbrella companies will also include some level of insurance in their packages
• Flexibility for you and your workers as Umbrella companies will be used to working with workers on both long and short term contacts

It is important to note that a worker has the same rights as an employee when being paid through an Umbrella company. These rights include:

• An employment contract
• Be paid national minimum wage or national living wage on time and in full, terms should be agreed by all parties in the key information document
• A holiday entitlement and paid holiday

You pay the umbrella company the assignment rate and then the umbrella company will make several deductions to work out the worker’s gross pay. The breakdown of the deductions can be found on the reconciliation statement and will usually include:

• Umbrella company operating costs, also known as margin
• Employer National Insurance contribution
• Employee workplace pension contribution
• Holiday pay
• Apprenticeship levy where applicable

It is the responsibility of the Umbrella company to ensure workers are paid correctly and on time.

If you’d like to learn more about Umbrella, please contact our friendly team who will be happy to help.