According to new research, 61 per cent of people who work for umbrella companies have said that there is no advantage to working this way. The study from IPSE (the Association of Independent Professionals and the Self-Employed), also showed that 70 per cent of participants feel that since they joined an umbrella company they have lost their “independence and ability to work however they wish.”
Andy Chamberlain, Director of Policy at IPSE, said: “Today’s report was shared with the government following their recent call for evidence and we hope that they listen to us and the many umbrella company workers that have failed to see the benefits of working via an umbrella company. In particular, we hope that they put forward recommendations that stop freelancers from being forced into working for umbrella companies that limit their independence and give them no real benefits.”
The number of workers using umbrella companies has grown substantially since April last year when the new IR35 rules were brought in for the private sector. 69 per cent of participants reported since these changes were made, their clients have insisted that they work through an umbrella company.
“The fundamental problem here is that people are being forced into pseudo- employment relationships they do not want. Since the IR35 changes came in a year ago, thousands who proudly consider themselves self-employed are being pushed into umbrella companies under disadvantageous conditions, often without even a choice over which umbrella company they use,” Chamberlain added.
8 out of 10 umbrella company workers said that being responsible for covering the liability for Employer’s National Insurance and the Apprenticeship Levy (where applicable), through a reduction in their day rate was the main reason for being dissatisfied working for an umbrella company.
