Umbrella Companies Referral Fees
One thing of which contractors are often not aware, are umbrella companies referral fees to agencies to get them to put contractors their way.
Sometimes agencies tell contractors, especially new contractors, that they must join a particular umbrella company.
More often, they are told that they must join an umbrella company on the agency’s preferred supplier list (PSL).
Often, contractors just comply with that without question.
2010 Bribery Act and Umbrella Companies Referral Fees
Other times, agencies tell contractors that the umbrella company they want to use is not on the agency’s Preferred Supplier List. Therefore, agencies tell them, they cannot use them.
This may be contrary to the 2010 Bribery Act.
Umbrella Companies Referral Fees given to agencies for contractors
The agency cannot put undue pressure on a contractor to join a particular umbrella company, or set of umbrella companies.
Umbrella Company Contractors Options
So, what can a contractor do when the agency tells them that they must join a particular umbrella company or one on their Preferred Supplier List?
The first thing that they can do is that they can refuse to do so. They should tell their agency that they are going to use a different umbrella company.
They should do this in writing, e.g. via email.
Undue Pressure to Join Umbrella Company
This ramps up the pressure on the agency. Previously, they could have said that they were not using undue pressure to get a contractor to use a particular umbrella company. They were only recommending one.
However, if they refuse this reasonable, documented request from the contractor then they have upped the stakes.
It would be hard for them to argue, here, that they were only just recommending a particular umbrella company, or set of them.
Ask Agency About Umbrella Company Referral Fee
The second thing that a contractor should do, in response to a demand from the agency to join a particular umbrella company, is to ask the agency if they get an umbrella companies referral fee if a contractor joins up with an umbrella company recommended by them.
The contractor should, once again, put that information request in writing.
Umbrella Company News for UK contractors
The agency, may, or may not, respond in writing but the very request shows that the contractor has concerns.
Agencies are all very aware of the 2010 Bribery Act.
Refuse to join Their Recommended Umbrella Company
While they put the pressure on contractors to join particular umbrella companies, they also know where the line is. That is even if they sometimes cross it.
By asking these questions the contractor is weakening the agency’s resolve to insist that the contractor joins a particular umbrella company.
Once that resolve has been weakened, the contractor is then in a stronger position. He, or she, should write to the agency saying that he, or she, will not be joining the umbrella company recommended (or forced on them, to be frank), by the agency.
Using Undue Pressure to Join Umbrella Company
They should say that they feel that the agency had put undue pressure (using that very phrase) on them to join a particular umbrella company, or group of them.
The agency will understand the significance of that.
They can then inform them which umbrella company that they will be joining.
In the correspondence to the agency, the contractor should include at least one senior person on the CC list.
Include Finance Director
There’s always the possibility that the actual agent you are dealing with is chancing his, or her, arm in order to get extra commission.
They may not be as fully aware, as senior people in the company would be, of the consequences of breaking the 2010 Bribery Act.
The Finance Director would be a good one to CC in on your emails.
Recruitment Agencies Inducing Contractors to Join Umbrella Companies
They are ultra cautious, unlike salespeople. They understand better than anyone else at the company the full ramifications of breaking the 2010 Bribery Act.
They are also very powerful at a company, ranking only behind the Chief Executive and the Chairman. They rank ahead of an individual salesperson’s boss.
Contractor Should Stand Firm on Refusing Umbrella Company
The agency may bluster (as they do) but the contractor must stand firm when he, or she, wants to use an umbrella company not on the agency’s Umbrella Company Preferred Supplier List.
Although they would like to get the umbrella companies referral fees they don’t want to put their company in danger of breaking the 2010 Bribery Act. This would have very serious consequences for them.