The IT Pro Podcast: How umbrella companies exploit IT contractors
Is tighter regulation needed to stop workers from being cheated out of earnings?
For many IT professionals, the decision to move from a permanent position to a contractor or consultant role has given them more flexibility, better earning potential and a healthier work-life balance. There are those, however, who use legal loopholes to prey on IT contractors, lining their own pockets by cheating both them and HMRC out of rightful earnings.
In this episode of the IT Pro Podcast, we’re joined by James Poyser, InniAccounts CEO and founder of OffPayroll.org, to discuss the role that umbrella companies play in the IT industry, and why regulation is needed to stop unscrupulous umbrellas from dipping their hands into the cookie jar.
“One of the challenges is the umbrella market is unregulated. And even the head of a professional body who represents umbrella companies has described it as the Wild West; it's full of opportunists. And contractors for many umbrellas are seen as a commodity that needs to be exploited.”
“When we talk about these umbrella rates, it's that daily rates are advertised before any tax, and it wouldn't happen anywhere else. If your teenage kids are going to get a temporary job flipping burgers at McDonald's, it would be a gross rate of pay, after all the employment taxes have been paid. But for some reason, it's kind of okay in IT to advertise these rates before things like employers National Insurance and the apprenticeship levy are taken off. So those are the kind of things we want to see stopped, and for a fair rate of pay to be advertised.”
“The IT contractor community is very tightly knit; contractors know one another, they ask each other for recommendations. And if one of them has a bad experience with an umbrella company, it's going to be on that WhatsApp group, it's going to be shared. And those kind of things will start to ripple through the IT contractor community. And hopefully, conversely, the recommendations for the good umbrellas will also go out through the community as well.”
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