Freelancers affected by umbrella company administration

Their creditors, which include freelancers and contractors, will now be hoping that they will eventually receive some of the funds owing to them. Albany's foreign subsidiaries are not affected and are classed as profitable and sound.

The Administrators, Carter Backer Winter, claim that Albany's problems started when their clients could not settle their bills.

John Alexander, CBW partner and joint administrator commented in a press release: "We have only just been appointed so it is too early to be definitive. However, we are hopeful that there will be at least some dividend to creditors, including former employees who may also be entitled to additional amounts from the government's redundancy fund where they have unpaid salaries."

The Administrators plan to contact each individual creditor to ascertain the precise situation. This should happen within the next couple of days.

These problems at Albany have caused the REC to issue a warning to recruiters to conduct due diligence before contracting with intermediaries. The REC is not able to recommend intermediary companies to its members, but Chief Executive, Kevin Green said that they "have been encouraged by the work the Service Providers Association has been doing to establish a code of conduct for umbrellas, with external assessment and information sharing with HMRC. We encourage this movement towards greater transparency in the umbrella sector."

Albany isn't the only umbrella company in difficulties. Another large umbrella company only recently entered into a voluntary arrangement having debts of £10.6 million to HMRC.

One of the major problems with umbrella companies is the lack of regulation according to Adrian Marlowe of the Association of Recruitment Consultancies. Although umbrella companies claim to comply, HMRC is currently concerned about the issue of incorrect payment of expenses.

These current problems highlight the need for agencies to ensure that they have a back-up plan if the umbrella company they are dealing with fails to pay workers.

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