The Freelance Informer asks Contractor Voice’s Jacon Bellas about the latest report of suspected umbrella company payslip skimming. What has his audit and investigation revealed?
Contractor Voice, an advocacy news and campaign site for contractors, has announced on its website and social media channels that umbrella company Orange Genie, an FCSA member for over 10 years, has “been unlawfully and systematically taking money from contractors, week in, week out for many years.”
Contractor Voice said that it has collected evidence through umbrella worker payslips voluntarily submitted to check for suspected skimming.
The report said, “Unbeknown to contractors, £2 per week has been incorrectly deducted and disguised on the payslip in the deduction called “Employment cost, including Employer National Insurance.”
This deduction is consistently equal to the employer’s national insurance and a £2 additional masked deduction, which is invisible to contractors
“The FCSA code of compliance clearly requires that ‘the pay reconciliation you [the umbrella company} provide to the employee transparently show an itemised breakdown of all employer costs, including but not limited to the Apprenticeship Levy.” (FCSA Umbrella Employment code of compliance, A17, page 9),’” said the report.
“No doubt the aim is to give comfort to contractors that the individual elements and calculations are correct. However, none of the Orange Genie payslips that we have seen and audited include an itemised breakdown of the hidden £2 and only becomes visible following a payslip audit,” the report stated.
Umbrella company victims fight back
The advocacy, founded by Jacob Bellas, an NHS contractor, understands what it feels like to fall victim to reportedly unethical umbrella company practices. He founded Contractor Voice in response to his personal story of losing thousands of pounds worth of his holiday pay when his umbrella company took part in ‘phoenixing’ – folding one company and reopening a new company to continue their practice.
In Contractor Voice’s report on Organe Genie, Bellas has urged the umbrella company accreditation organisation, FCSA, to remove Orange Genie from its list of members “without delay” and that “all contractors employed by them should find a new umbrella, and all agencies to stop working with them for the benefit of contractors.”
Key findings of the Contractor Voice report and suspected practices:
- Contractors provided payslips to Contractor Voice for auditing
- All payslips have been forensically audited by saferec.co.uk
- £2 per week has been “secretly deducted” from every audited payslip
- The deduction is not itemised on the payslip
- This has been Orange Genie practice for at least 5-years
- The total extra revenue generated by OG come to at least £4million
The Freelance Informer reached out to Bellas to learn more about the payslip audit that Contractor Voice carried out with the help of auditing software SafeRec.
Q: Based on your audits, how many umbrella workers have likely had this reported £2 deducted from their payslips? Over what time period?
A: Considering that the £2 deductions are on all Umbrella PAYE payslips we audited with SafeRec it is likely to be on all of them.
At this stage, it is not possible to work out exactly what has been skimmed, but Orange Genie has been a main player in the umbrella sector well over the 5 year period that we have looked at, so [suspectedly] it will have made £2 million or possibly more from payments during that period.
Also, we strongly suspect that the skimming goes back further than 2017, which we anticipate proving soon once we have access to older payslips.
Unfortunately, if an umbrella is minded to make deductions and hide them, it is relatively easy to mask them in difficult-to-understand payslips. To do it on the scale that [we suspect] Orange Genie has, I believe that its payroll software must have been purposely designed to do it.
As payroll auditing is only a relatively new tool in the sector, rogue umbrellas have been safe to make unlawful deductions, but the auditing technology is here and available, so I believe there will now be many very worried umbrella owners that have managed to get away with it unchecked for many years.
Q: What sparked this audit in the first place?
A number of contractors asked to have their payslips audited, and, as a result, several agency whistleblowers contacted us directly after they audited their workers’ payslips.
Q: Is there anything in the Orange Genie umbrella worker contract for miscellaneous charges?
None of the contracts provided to us by contractors makes any reference to the extra deduction or the justification for it.
Q: Do the FCA and HMRC have the authority to investigate or do an Orange Genie audit on this “skimming” practice?
The FCA does not regulate the umbrella industry so will not get involved. HMRC does not regulate umbrella companies either but may be interested in the fact that part of the salary has been excluded from the calculation of tax and NICs, so the RTIs will have been understated. HMRC could investigate initially via formal enquiries for each concluded tax year, but they generally take several years to deal with so there will be no quick resolution or finding that salaries have been skimmed.
Q: Did you get a response from Orange Genie?
We are yet to have a response from Orange Genie or the FCSA.
Below is a recent Twitter post by Orange Genie.
A request for comment from a senior member of the Orange Genie team was not provided at the time of writing.