Umbrella Company Glossary
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There is a misconception that umbrella companies are highly complicated. While there is plenty of information to get your head around, they’re far more straightforward than you might have imagined.
To help you understand umbrella companies better, we’ve created an umbrella company glossary that provides simplified definitions for many of the key terms and topics surrounding umbrella companies. Our site is full of resources to assist contractors and freelancers, and many of the definitions below link to further information that we hope you find helpful.
There are currently 8 Umbrella Company Terms in this directory beginning with the letter E.
E
Employee Benefits
When you join an umbrella, you become an employee. As a result, you will have access to statutory employee benefits including sick pay and maternity/paternity pay.
Employee Reward Scheme
The umbrella company sector is pretty saturated. Therefore, to try and win new business, umbrella companies often offer little extras as part of their service. Recently, one extra that we’ve seen grow in popularity is granting employees access to an employee reward scheme such as Perkbox. Such schemes will allow you to save money when shopping online, visiting the high street, eating out and going to popular attractions or the cinema. If you like this idea, find an umbrella with an employee reward scheme.
Employees National Insurance Contributions
Employees are required to pay Employees National Insurance Contributions through Pay As You Earn (HMRC’s tax system). When you use an umbrella company, you will see the Employees NI deductions on your payslip. For the latest rates of NI, visit the government's website.
Employer's Liability Insurance
Employer's Liability Insurance is the cover that compensates employer's should a worker (or ex-worker) suffer from illness or injury on the job – and subsequently make a claim.
Employer's National Insurance Contributions
When using an umbrella company, the umbrella cannot cover Employer's National Insurance Contributions because they do not benefit directly from any of the work employees undertake (because they're working for their end client, not the umbrella). Therefore, the Employer's National Insurance Contributions are passed onto the worker and will be deducted from the assignment rate (the negotiated rate before an assignment is accepted). If you're new to contracting or haven't used an umbrella before, it's essential to consider the Employer's National Insurance Contributions.
Employment Costs
The employment costs consist of the Employer's National Insurance Contributions and the apprenticeship levy. Both of these are passed to the worker and are deducted from the assignment rate.
End Hirer / End Client
The end hirer / end client is the body in the supply chain that the temporary worker works for. It is the end hirer / end clients responsibility to determine the IR35 status of its temporary workers.
Expenses
In the world of umbrella companies, expenses refer to costs that a worker can claim back in full or costs that are tax-exempt and can be reclaimed. It’s doubtful that umbrella company employees can benefit from being able to claim expenses because of legislation introduced in 2016 called Supervision, Direction and Control. To put it simply, the government decided too many umbrella employees were benefiting from claiming expenses when permanent employees working in the same circumstances couldn’t.
