Freelance Supermarket Logo

Umbrella Companies - Promoting a Level Playing Field

With the Managed Service Company (MSC) legislation well into its second year of existence, recruitment agencies must remain vigilant and continue to ensure they are not caught up by the MSC debt transfer provisions.

The risks are of course still high to contractors. If they are not operating in a compliant manner, the contractor may receive an unexpected tax bill, with any surplus tax liabilities being transferred to the referring recruitment agency.

Being outside the scope of the MSC legislation, the vast majority of umbrella companies, who pay their agency workers only by way of employment income, offer no risk to recruiters who refer their workers to them. The question that remains therefore, is to how best to identify those umbrella companies that offer no risk?  

There are a number of organisations operating in the industry that will perform a comprehensive and on-going audit of umbrella and accountancy providers, with a specific emphasis on MSC compliance.

Applicants to the Association of Employment Management Companies (AEMC) must pass a three part test that includes a legal and compliance audit as well as financial certification to achieve membership.

Having undergone thorough examination, recruitment agencies and contractors can operate with piece of mind, knowing that their umbrella company is not one of the many incompliant providers still prowling the market today.

As Colin Howell, Director of the AEMC and co-owner of Crystal Umbrella explains, "the beauty of the AEMC is that we are offering agencies and contract workers across the industry an easy source of identifying suitable providers using the employment model which in this industry, with constant changes in legislation is vital."

In an industry that is full of compliance and legislative uncertainty, we need professional bodies that are transparent, offer a level playing field and provide connections to safe and secure partners. For this reason, recruitment agencies and contractors alike would do well to use The AEMC as the badge of approval to their umbrella.

For more information on the AEMC or Crystal Umbrella then please contact us on 0800 848 8888 or

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: mieces to pieces by the sea the sea