Was Employment Tribunal result on umbrella company as it was portrayed?

Last week (w/c 16/11/2015) Lawspeed received a flurry of calls following the publication of a press story by the union UCATT concerning an employment tribunal ‘win’ against an umbrella company by one of its members. Coming so close to the anticipated announcement in the Chancellor’s Autumn Statement as to the future of tax reliefs on travel and subsistence expenses one could easily draw the conclusion that the umbrella model is under attack from more than one direction with the employment tribunal the latest to undermine umbrella arrangements.

 

Having obtained a copy of the judgment the position is not so clear cut. Put simply, the UCATT case was not a case of the umbrella model being legally challenged but simply one where it was found that there was no contract in place meaning that the contractor claimant had not given his consent to deductions for margin, employer’s NICs or to being paid holiday pay on a rolled up basis. Despite the fact that the umbrella respondent had made the employment contract available to the claimant online, a point which all umbrella companies should note, they had not ensured that the claimant had signed (i.e. agreed) it.. In the absence of the agreement any deductions from the payment to the worker were unlawful.

 

So in this case the claim did not amount to the detrimental action implied by the UCATT press story of the umbrella in question and which served only to damage the perception of the recruitment sector. Clearly there needs to be transparency (as the judgment attests) and it remains the case that providing a clear explanation of the contractual chains in recruitment arrangements to workers will obviate misinformed claims. However, at the same time it is important that the whole industry is not tarred by what supposedly amounts to an oversight by a single umbrella operator which simply could not evidence that it had the contract in place with the claimant.

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