The news is of a major scandal of agency bungs to umbrella companies.
Under the 2010 Bribery Act, Umbrella Companies are not allowed to make payments to Agencies for sending contractors to them. However, we have had it confirmed that this does happen – and it is completely against the law.
Many agencies force contractors to go with a particular umbrella company or to one of several Umbrella Companies that are on their PSL. Often contractors will tell agencies that they want to use their own Umbrella Company and are told point-blank that this is not possible. They say that the contractor must use the one they recommend or one on their PSL.
The agencies are very forceful about this and will seldom back down when the contractor tries to put his or her foot down.
Of course, it may be that they just want to ensure that contractors are working through reputable Umbrella Companies. It could also be because they are getting a bung for each contractor the preferred Umbrella Company gets from them.
Major Scandal of Umbrella Companies
This is a major scandal of umbrella companies and many people know that it is happening. It is an open secret. At some stage the police may decide to raid an agency. One would presume that agencies hide these payments as much as possible. They are not likely to be on the accounts as ‘Agency Bribes’. They will hide them under some other name.
It is completely illegal to induce contractors to choose one Umbrella Company over another in order to get a payment. That payment is not legally a payment but a bribe.
If a contractor is told that they have to use an umbrella company ‘recommended’ by the agency or they cannot start the new contract, the contractor should ask the agency to email them something to say that they are not receiving any money from the particular umbrella company.
Alarm Bells Ringing
If this is not forthcoming then the contractor should have alarm bells going off all over the place. It would be up to the contractor to meekly accept what they are told or insist on having their own umbrella company. They could even threaten to call the police, or financial authorities, if the email saying that they do not receive money from the Umbrella Company is not forthcoming.
That should get their attention if the umbrella companies are taking agency bungs.
Of course, they may find some other candidate is suddenly better to take up the contract. However, they would know that you would call the police. You would have them over a barrel.
For a list of legal Offshore Umbrella Companies you should click on Offshore Umbrella Company List