Umbrella Companies PSLs. Can agencies Insist You Use Theirs?

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Umbrella Companies PSLs
Umbrella Companies PSLs

Umbrella Companies PSLs

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What’s the story with recruitment agencies’ umbrella companies PSLs?

When contractors tell agencies that they are either using one of the onshore umbrella companies or indeed any umbrella company, often the agencies will tell them that they have to use one of the ones on their Preferred Supplier List.

Umbrella Companies PSLs are a part of our marketplace now.

Usually contractors just comply and accept one of the umbrella companies on their umbrella companies PSLs.

Agencies and Umbrella Companies

However, there has to be a suspicion that these umbrella companies PSLs hide illegal activity.

It is illegal for agencies to influence contractors to choose one umbrella company or another.

There is always the suspicion that agencies who force contractors to choose one of their approved umbrella companies are getting a ‘bung’ or some kind of payment in kind for doing so.

2010 Bribery Act

That is highly illegal under the 2010 Bribery Act. Agencies could be in big trouble if they are accepting fianncial inducements to push contractors to one umbrella company or another.

They could be in big trouble if caught.

Yet, it almost certainly happens on a daily basis in our industry.

Contractors and Their Agencies

So, what can contractors do when agencies tell them that they must choose one of the brollies on their umbrella companies PSLs?

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They could tell them that they are keeping their own umbrella company or that they would choose their own.

They could then tell the agency that it is illegal to induce contractors to choose one umbrella company or another – or they could point them towards this article.

Choice of Umbrella Companies

I suppose they could argue that as they are giving contractors a choice from their umbrella companies PSLs they are not inducing them to choose a particular umbrella company.

However, I don’t think they would be keen to have that tested in court.

The court might decide that they are forcing the contractor, against his, or her, will, to choose an umbrella company that they didn’t want to use – even if they are given a choice by the agency.

The agency could be asked, on oath, if they have taken any money from umbrella companies for the contractors that they put their way.

They would have to produce financial documents too.

They could not expect their staff to lie under oath for them.

I think that the agency would quickly back down if threatened with this.

They would also not want to lose a contractor because of an argument over which umbrella company they should use.

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Agencies Prefer Clients

They will make much more from the client for the contractor than they would make from the umbrella company on their umbrella companies PSLs.

The money from the umbrella company is just the icing on the cake, or dessert, for them.

The money they get from the client is, by far, the main course.

Of course, they would want the main course AND the dessert if they can.

However, they won’t lose the main course for the sake of the dessert.

Agencies Bluffing Contractors

As is their wont, they’ll tell contractors that they MUST use one of their umbrella comanies PSLs companies.

They are used to contractors acceding to their bullying and backing down.

However, if contractors stand up to them and insist, the agency will almost certainly back down.

Agencies are not known for tossing away good money.

Greedy Agencies

They are, of course, very greedy and will want more – as contractors know so well.

How many times do agencies try it on with contractors over contract rates?

Contractors should use a bit of brinkmanship to get the agency to back down.

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Legal Advice for Contractors

If they insist on you using their Umbrella Companies PSLs, tell them that you are taking legal advice over this demand.

This, in itself, may make them back down.

Tell them, after that, that the legal advice you have received says it is illegal for them to do that.

In the great majority of cases this will work.

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1 COMMENT

  1. I’ve used Tortious interference along with the Bribary Act 2010 with great success in the past when agencies have tried to force me to use their preferred umbrella companies. They have always backed down.

    Tortious interference with business relationships occurs where the tortfeasor acts to prevent the plaintiff from successfully establishing or maintaining business relationships. This tort may occur when a first party’s conduct intentionally causes a second party not to enter into a business relationship with a third party that otherwise would probably have occurred. Such conduct is termed tortious interference with prospective business relations, expectations, or advantage or with prospective economic advantage.

    You are employing the umbrella company to do you tax and invoicing, paye etc. and therefor you can look at this as a business relationship.

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