FCSA umbrella accused of withholding thousands of pounds from contractors

According to BBC's Moneybox, an umbrella company with membership in the Freelancer and Contractor Services Association has been charged with depriving contractors of thousands of pounds in holiday pay.

An anonymous contractor who claimed they had to threaten employment tribunal (ET) action before their umbrella company paid out holiday pay owed to them and several colleagues totalling approximately £6,000 each was interviewed by the BBC Radio 4 program last Saturday afternoon.

The umbrella in question is accredited by the FCSA, a prominent UK membership organization dedicated to promoting supply chain compliance, despite the fact that questionable practices used by some umbrella companies are a well-known issue.

The CEO of ContractorCalculator, Dave Chaplin, stated on BBC's Moneybox program that stricter enforcement by the FCSA is required to stop further non-compliance: “There are numerous codes that the FCSA has. You can have as many as you like, but they won't mean very much if they aren't actually enforced”

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The contractor recalls the inside story concerning umbrella holiday pay

Sadly, many contingent workers will be all too familiar with parts of the story that the contractor, who gave Moneybox the pseudonym "Steve" to protect their identity, shared.

Prior to the expansion of the Off-Payroll legislation to the private sector, Steve was compelled by his client to resume his engagement as a software developer through an umbrella company. Moreover, he had previously provided services via a limited company. Besides, it’s the client who selected the umbrella company.

During the 2020 Christmas season, Steve and his contracting coworkers were subject to a period of enforced mandatory leave from their client; they subsequently took their leave before the year ended. Besides, the contractors requested their holiday pay for the time of leave upon returning to work on January 4 but were denied. On the other hand, the umbrella company contended that the claims were invalid because they weren't filed in the year that the leave was taken.

Only after consulting their employee handbook and threatening ET action did the contractors agree that everyone was owed roughly £6,000. Steve noted that neither he nor his coworkers received any reminders from the umbrella company urging them to submit their holiday pay claims on time.

Read the inside story of BBC: Check here

FCSA must act swiftly!

The situation is especially critical because the April 2021 expansion of the Off-Payroll legislation to the private sector is likely to result in tens of thousands more contractors being forced to use an umbrella model.

Chaplin reiterated the points raised on the program and urged the FCSA to act quickly and firmly against the offending umbrella.

"It is an absolute disgrace to withhold thousands of pounds from contractors who are rightfully owed money and who had to threaten legal action before the umbrella company in question paid out. The FCSA must treat the situation seriously, launch an investigation without consulting any of the businesses, and expel the umbrella responsible from their organization.

What steps can be taken to stop further abusive interactions?

Government efforts to address the need to stop similarly exploitative behaviour in the future have clearly failed. When questioned by Moneybox about the effects of the new legal requirement for agencies to give employees Key Information Documents (KIDs), intended to combat non-compliance by promoting greater transparency:

The agency is required to provide the worker with this since it became law in April 2020. However, in a recent survey, we conducted of 3,000 contractors, 86% of those who responded said they had never even heard of a Key Information Document. So once more, no matter how extensive the rule book and codes are, they are useless without enforcement.

It is obvious that there is room for improvement in the FCSA's code of compliance for its members, so the government is not the only entity that needs to enforce the law more strictly.

'In conducting the review, FCSA's assessors will rely on the information supplied by the business in question and will not conduct any independent verification as regards the accuracy or completeness of this,' the FCSA document states in reference to the organization's 'code of compliance review', which is meant to evaluate and verify the practices employed by prospective or accredited members.

For the avoidance of doubt, the FCSA (and its assessors) review does not constitute any type of independent audit of the business in question and should not be held out as, or be taken, as such, the code of compliance states shortly after.

There is undoubtedly room to raise this standard, says Chaplin. "The FCSA standard on holiday pay manifestly falls short, and its codes are useless if not properly enforced. Businesses using umbrella companies should perform their own due diligence, and we suggest requesting concrete evidence, not just assurances, that all payments have been made.

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