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Umbrella contracting 'becoming increasingly popular'

Tuesday 25th July, 2017
The number of people choosing to work as umbrella company contractors is on the rise in the UK, as more workers recognise the benefits of being able to work independently, but with the same rights as employees.

According to new research from the Freelancer and Contractor Services Association (FCSA), there has been a significant increase in high-earning umbrella contractors over the last two years. In 2015, just over half (53 per cent) of those working through an umbrella company earned more than £15 an hour, but this has since risen to almost three-quarters (73 per cent), Recruitment International reports.

This indicates that a growing number of organisations are recognising the value that umbrella workers can add to their operations and are offering higher pay rates to them as a result. However, hiring struggles relating to the ongoing skills shortage may also be playing a role in this.

What's more, this data could also suggest that more contractors with expert or consultancy skills for which the pay rates are typically higher are choosing to work through umbrella companies.

There has been a particularly notable increase in the number of health and social care workers choosing to work through an umbrella agency. The sector accounted for just six per cent of all umbrella contractors two years ago, but is now responsible for 17 per cent of all those in the UK.

In addition, the length of contracts on offer to umbrella company contractors has increased since 2015, when the average assignment period came in at 14 weeks. Now, this stands at 29 weeks, indicating greater stability for temporary workers who choose to work in this way.

Moreover, the length of time that contractors are staying with their chosen umbrella companies has increased. Two years ago, this stood at 30 weeks on average, but it has since risen by more than 50 per cent to reach an average of 46 weeks.

Statistics show that umbrella company contractors now contribute in the region of £3 billion to the UK economy each year, demonstrating their value.

Umbrella contractors essentially work for themselves, but their umbrella company acts as a third party between them and the client, receiving their wages and collecting income tax and National Insurance contributions before awarding the contractor their take-home pay.

Julia Kermode, Chief Executive of the FCSA, commented: "The facts speak for themselves; with higher rates of pay, longer assignments and longer employment tenures, umbrella is a lot more secure than the numerous other precarious ways of working that we see in the UK today. By working through an umbrella company, contractors enjoy all the benefits and rights that come with being an employee."

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