On the back of fresh allegations that another of the UK’s leading umbrella companies has been ‘skimming’ millions from contractors’ payslips – reportedly amounting to a 1.5% deduction from contractors’ pay – umbrella payroll auditor, PayePass, has urged contractors to “run a mile” from umbrellas that refuse to a transparent payroll audit.
Yet, the umbrella company accused has come back with a statement refuting the allegations of skimming.
Independent worker advocacy site, Contractor Voice, has stated that “Liquid Friday is making millions of pounds by hiding in plain sight an additional fee that has been costing contractors dearly every single week for years.”
Colin Gunnell, Chief Executive Officer of Liquid Friday, has made a statement, published on its website, in response to Contractor Voice’s accusations.
In the statement, Gunnell, said:
“All elements from PAYE Tax and National Insurance to our company margins and employment deductions are shown and explained to contractors via the Onboarding Consultation, Key Information Document, Key Facts Document, Personal Illustration, Payslip and Remittance Advice.
“In addition, Liquid Friday contacts all contractors further to their initial new assignment payment to ensure they are fully aware of all deductions and answer any questions they have. This is above and beyond what a business is required to do in line with the FCSA code of conduct in our ongoing pursuit to be the best contractor service delivered within the industry.”
In relation to statements made by commenters of the industry, Gunnell said, “we simply do not understand the negativity towards our business. Liquid Friday clearly details and discusses all elements of the financial relationship of working with us so contractors and recruitment agencies alike have all the information available to make an informed decision about whether they choose to work with us.”
Liquid Friday is not engaged on any sole supply service agency arrangements meaning all contractors that opt for Liquid Friday have a wide range of umbrellas to choose from, with all the information needed to make a decision for themselves.
Colin Gunnell, Chief Executive Officer of Liquid Friday
Gunnell said that some assignments “do have larger operational costs associated with facilitating them,” such as redressing and correcting contractor work, bespoke processing requirements outside our standard operations and the financing requirements of a particular supply chain in order to deliver weekly payments to contractors.
He said, “This is an economic fact of delivering certain assignment types, where these costs are relevant they are detailed as a business overhead and included in the charge out rate paid by the agency or end client and clearly stated to contractors in 6 different forms of communication.”
Gunnel claimed that assumptions and calculations used within the recent Contractor Voice article are “incorrect and applied inappropriately, such as the statement of Liquid Friday charging for insurance, which it does not, and the outputs of the comparison matrix published.”
According to the umbrella company CEO, Liquid Friday was not asked to comment on the Contractor Voice article prior to its publication.
“If done so we would have been happy to clarify and provide information that shows their calculations are incorrect, however, we are still more than happy to engage in conversation with them to discuss in an open manner for the benefit of its readers,” said Gunnell.
Gunnel’s line of thinking is that “thousands of contractors” choose to work with Liquid Friday “from a large and competitive range of options” available to them and so so because of the service it delivers and how contractors have been looked after.
“We truly appreciate the support of our business by contractors and agencies and thank them all for believing in us as much as we believe in them and the awesome things the flexible recruitment sector can deliver for the UK,” said Gunnell in the statement.
Are some umbrellas trying to do the right thing?
However, Fred Dures, founder of PayePass, said despite hearing of the latest alleged skimming practices, he believes more umbrella companies are trying to become more transparent.
“Another week and another umbrella company has been accused of skimming money from unsuspecting contractors,” said Dures. “This time, the umbrella in the spotlight is said to have been deducting 1.5% from every payslip. This apparent sleight of hand and other mischievous ways to syphon money from contractors doesn’t help the reputation of the umbrella industry.”
PayePass, has developed software that analyses vast amounts of historical payroll data. And while Dures is not surprised to hear of reports of unscrupulous practices in the payroll industry, he said:
“We should be careful not to tar all umbrellas with the same brush, though. True, there are a few cowboys, but this industry isn’t the wild west.”
Dures said that more umbrellas are trying to do the right thing. “Believe it or not,” he said, “more umbrella companies are taking it upon themselves to raise standards and demonstrate their compliance, which can be achieved by auditing payroll processes. Many operators are watching situations like this unfold and are proactively looking to show to contractors, recruiters and end clients that they can be trusted.”
He urged that employment agencies must quickly realise and accept that they, their clients and candidates need to be protected against unscrupulous umbrellas. “The payroll auditing technology exists right now to stop and stamp out all financial wrongdoing within weeks across the entire sector.”
Signs an umbrella may have “something to hide”
Dures said if an umbrella refuses to agree to a full and transparent payroll audit to remain on or join an agency’s preferred supplier list, it “should be assumed that they have something to hide.”
My advice is to run a mile from these umbrellas. However, there are far more umbrellas out there that will gladly agree to a full payroll audit, as they have nothing to hide.
Fred Dures, founder of PayePass
“Even if the recent allegations against two of the UK’s largest umbrellas are not proven to be illegal, lack of transparency is a real issue. This should be enough for agencies to act, as contractors will rapidly lose trust unless they can show that their preferred supplier list is only made up of payroll-audited umbrellas,” said Dures.
With the payroll auditing technology that exists today, the days of an umbrella company displaying FCSA accreditation – historically one of the sector’s compliance standards – and agencies putting complete reliance in this, doesn’t cut it any longer. This is because it doesn’t audit the payroll financials.
Despite signs of greater transparency emerging in the umbrella company sector, Dures still expresses a lack of trust. “Let’s be frank; there are billions of pounds of funds flowing through the temporary workforce sector every single month. As a result, there is a temptation to unlawfully take a slice of it. Even so, agencies and their clients are slow to realise and accept that fact and embrace the technology that can stop it.”
“Agencies are now also acutely aware of the fact that things aren’t right in the umbrella sector. Consequently, if an umbrella is proven to have been illegally skimming, agencies will struggle to plead ignorance and be certain that they don’t have any involvement. Lawyers are already circling the sector, looking for the next big feed and agencies will be on the menu.”