Why Umbrella Company employees should care about continuity of employment
As an Umbrella Company employee, having the continuity of employment is a major advantage. If you’re new to using an Umbrella Company, you may be wondering what that means.
In this blog we’ll take a closer look at how the process of maintaining continuity of employment can have a hugely positive affect on both your professional and personal life as an Umbrella Company employee.
First things first, what is continuity of employment?
In a nutshell continuity of employment is where there is an uninterrupted period of time whereby an individual is employed by the exact same employer. When you become the ‘employee’ of an Umbrella Company, it’s the Umbrella that effectively provides continuity through its overarching contract of employment. The contract provides the guarantee that the employer / employee relationship remains intact, regardless of whether you’re currently working on a contract or not. The following points explain why:
- Stability and security – financially
Regardless of whether you have a contract or not, when contracting under an umbrella you maintain a continuous employment status. This is different compared to contracting using say your own Limited Company, where gaps can occur when completing one contract and beginning another. Traditionally financial institutions and lenders tend to favour applicants with continuous employment, as it lowers risk, and can therefore make it easier for Umbrella employees’ financial planning when considering and applying for mortgages and loans.
- Less of an administrative burden
When running your own Limited Company, it’s your responsibility and legal duty to ensure you complete of all your Director’s responsibilities, including paperwork and meeting deadlines set by Companies House and HMRC. This also includes the payment of any taxes and National Insurance due, usually with the assistance of a qualified accountant. But when you’re an employee of an Umbrella Company, it’s their responsibility to ensure your tax and National Insurance (PAYE) is paid on your behalf from your contractor income, before you receive it. Payroll remains consistent and correct, regardless of how many contracts you complete, which can reduce room for error.
- Tax code consistency
When self-employed, having an ever-changing tax code can leave room for confusion and unpredictability, which could also end in an expectedly higher tax bill come yearend. But by having only one employer, your tax code remains consistent, and therefore removes this uncertainty. HMRC takes your earning information from either your employer or through your tax returns, and generates your tax code. By having just the one employer reporting your income information, you avoid any unexpected income tax and National Insurance increases, that can happen with multiple employers.
- Rights for Employees – Agency Worker Regulations Rights (AWR)
When in permanent employment you benefit from statutory rights, such as sickness and holiday pay, pensions auto enrolment, minimum wage, and maternity / paternity pay. When you become an employee of an Umbrella Company, you’re legally entitled to the same employment rights as permanent employees after completing 12 weeks of continuous employment in the same role with the same client.
How SG Umbrella can help you
As an Umbrella Company employee of SG your ability to relax knowing we’ve got your continuity of employment and everything that comes with it in hand, is very important to us. From the minute you join us, our team run by expert contractor accountants are here to guide you on all things relating to your employment, and how we as your employer, can make your life as a contractor more rewarding. By providing you with continuity of employment you can feel secure, knowing we have your best interests at heart. If there’s anything in this blog you wish to discuss further with the team, get in touch with us today.
Note: All the information and advice in this blog post was correct at the time of writing.
