Over the last few months, a small number of umbrella companies have been accused of salary skimming and essentially boosting their profits at the expense of employees. Most recently, Contractor Voice accused Liquid Friday, an FCSA-accredited umbrella company, of malpractice. The FCSA has now released a statement about an investigation into Liquid Friday’s conduct. Please keep reading for more information.
Liquid Friday was accused of salary skimming and profiting at the expense of contractors
In November 2022, Contactor Voice, an independent body that sets out to protect temporary workers, called for the FCSA to investigate accredited member Liquid Friday. After earlier accusations of salary skimming against Orange Genie, Contractor Voice suspected that Liquid Friday might have been doing something similar.
In an article on Contractor Voice, they stated:
“Our investigations and number crunching shockingly reveals that Liquid Friday is making millions of pounds by hiding in plain sight an additional fee that has been costing contractors dearly every single week for years.”
The article continued by asking the FCSA to conduct an investigation:
“Contractor Voice urges the FCSA to publicly confirm it will immediately commence an investigation into the conduct of Liquid Friday, including a review of all documentation is has submitted to FCSA assessors over the years and what those assessors said about the extra charging.”
You can read the full article on the Contractor Voice website at the following link: FCSA’s Liquid Friday’s Huge Hidden Profits – Are They Legal?
Liquid Friday has responded to the allegations
Colin Gunnell, CEO at Liquid Friday, responded to the accusations in a statement on Liquid Friday’s website. The statement said:
“For over 15 years Liquid Friday has strived to be the best business possible, both as a service to industry and to its employees and colleagues.
We have worked continuously to evolve our proposition in line with sector demands and have always focused on delivering a valuable service to those who choose to work with us, from investing heavily in our beliefs around service, to more recently supporting contractors financially through the pandemic crisis.
A key element of this is our ethos around communication, transparency and openness. Everything we do is explained and disclosed clearly and concisely to contractors, especially with regards to their assignment income.
All elements from PAYE Tax and National Insurance to our company margins and employment deductions are shown and explained to contractors via the Onboarding Consultation, Key Information Document, Key Facts Document, Personal Illustration, Payslip and Remittance Advice.
In addition, Liquid Friday contacts all contractors further to their initial new assignment payment to ensure they are fully aware of all deductions and answer any questions they have. This is above and beyond what a business is required to do in line with the FCSA code of conduct in our ongoing pursuit to be the best contractor service delivered within the industry.
In relation to statements made by commenters of the industry we simply do not understand the negativity towards our business. Liquid Friday clearly details and discusses all elements of the financial relationship of working with us so contractors and recruitment agencies alike have all the information available to make an informed decision about whether they choose to work with us.
Liquid Friday is not engaged on any sole supply service agency arrangements meaning all contractors that opt for Liquid Friday have a wide range of umbrellas to choose from, with all the information needed to make a decision for themselves.
Some assignments do have larger operational costs associated with facilitating them, such as redressing and correcting contractor work, bespoke processing requirements outside our standard operations and the financing requirements of a particular supply chain in order to deliver weekly payments to contractors.
This is an economic fact of delivering certain assignment types, where these costs are relevant they are detailed as a business overhead and included in the charge out rate paid by the agency or end client and clearly stated to contractors in 6 different forms of communication.
We note that assumptions and calculations used within the recent Contractor Voice article are incorrect and applied inappropriately, such as the statement of Liquid Friday charging for insurance, which it does not, and the outputs of the comparison matrix published.
Liquid Friday was not asked to comment on the article prior to its publication, if done so we would have been happy to clarify and provide information that shows their calculations are incorrect, however we are still more than happy to engage in conversation with them to discuss in an open manner for the benefit of its readers.
Thousands of contractors choose to work with Liquid Friday from a large and competitive range of options available to them. We believe this is down to the service we deliver and how we look after them. We truly appreciate the support of our business by contractors and agencies and thank them all for believing in us as much as we believe in them and the awesome things the flexible recruitment sector can deliver for the UK.”
The FCSA’s official response
In a LinkedIn post on Thursday, 8th December, the FCSA explained that they had concluded their investigation into Liquid Friday and are now satisfied that the umbrella company is “now fully compliant” with the FCSA’s strict Codes of Compliance. The FCSA’s official statement is below.
“Freelancer and Contractor Services Association (FCSA) has now finalised its investigation into allegations that Liquid Friday had made deductions for “business overheads” from its workers assignment rate without their knowledge or consent. FCSA can confirm that these allegations are incorrect.
Our Codes have, since October 2021, required that all deductions are transparently shown in KIDs, illustrations, contracts of employment and on the payslips/reconciliation statements provided to workers.
FCSA is satisfied, based on the evidence we have gathered with the full cooperation of Liquid Friday and as a result of our own investigations, that in cases where Liquid Friday did make deductions the worker was informed via the Key Information Document (KID), the pay breakdown illustration and their contract of employment.
These deductions were therefore known in advance and agreed to by the workers affected and there is no evidence to suggest that any workers have been misled by Liquid Friday in any way, however should any new evidence to the contrary come to light FCSA will, as always, take steps to investigate.
It is worth noting that in some supply chains these “business overheads” were not applied as a result of commercial arrangements between Liquid Friday and the employment businesses they were dealing with. It is not within FCSA’s remit to comment on the make-up or application of Liquid Friday’s “business overheads”.
Whilst workers were fully informed of the “business overheads” deductions via the KIDs, illustrations and contracts of employment, FCSA have found that due to delayed software development timelines Liquid Friday did breach our Code in respect of detailing these deductions on payslips/reconciliation statements and thus Liquid Friday have been subject to FCSA’s standard disciplinary procedures and required by FCSA to rectify this breach. Liquid Friday has done so and therefore meets our requirement for full transparency with regard to any deductions made.
FCSA is satisfied that Liquid Friday are now fully compliant with our Codes and would like to reassure all stakeholders that Liquid Friday remain full members of FCSA and retain full FCSA Accreditation.”
Advice for contractors
In light of the recent allegations aimed at FCSA-accredited umbrella companies, we have some advice for contractors either using an umbrella company presently or those who want to use an umbrella in the future.
- Always ask for a detailed take-home pay calculation – and review the details carefully.
- If you’re working via an agency, request an up to date Key Information Document (KID) – a document that will show you an overview of the deductions that will be made to your pay.
- Review every payslip and make sure you’re 100% satisfied with its content and all deductions.
- Check the umbrella company’s online reputation.
- Understand exactly how compliant and ethical umbrella companies process payroll. For more information, please read our guide: Umbrellas Explained.
- If you suspect anything unethical is going on, report an umbrella company to the FCSA. You can also share your experience by commenting on our Umbrella Company Forum.
Top 10 umbrella companies
If you’re looking for a new umbrella company, we have just the resource for you! Please visit our top 10 umbrella companies. They are all accredited by either Professional Passport of the Freelancer and Contractor Services Association (FCSA), and some have special offers at the moment.
