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FCSA and UCATT in a debate over umbrella companies

Last updated on Tuesday, September 6, 2016

Written by Alex Cadman

The FCSA trade body for umbrella companies and accountancy providers has criticised UCATT, the construction union, for allegedly encouraging workers to protest against umbrella companies.

An article by the Recruiter revealed that the FCSA, the Freelancer and Contractor Services Association, is not impressed with UCATT’s efforts to steer contractors in construction away from umbrella companies.

Citing ‘false propaganda’, the FCSA claims that discouraging construction workers from choosing umbrella companies as their payroll solution is potentially damaging for the construction industry.

While umbrella companies are a good payroll option for many contractors who have a short contract or a lower hourly rate, UCATT appears to have a fair reason for campaigning against umbrella companies.

UCATT believes it is unfair that thousands of construction contractors are forced by their contract providers to work through umbrella companies as a result of past legislation changes, as this lessens the opportunity for the contractor to maximise their take home pay.

Contractors who are employed by umbrella companies are subject to full employee PAYE tax and National Insurance contributions, in addition to having their holiday pay rolled up into their rate and paying the umbrella company a weekly margin. It's because of this lack of choice for many construction contractors that UCATT has started campaigning for change.

FCSA has called for talks with UCATT to discuss how compliant umbrellas work in an effort to persuade the union to stop encouraging its contractors to take industrial action against umbrella companies.

Regardless of who is correct in the debate, contractors should be able to choose the payroll service that is best for them and their situation. Umbrella companies may be the right option for many contractors, but for those who are genuinely self-employed, having a limited company can give the contractor more control over their finances and higher tax efficiency through claiming expenses. 

To learn more about the differences between limited companies and umbrella companies, read further our article limited or umbrella. If you would like to discuss your options as a construction contractor, request a callback or contact us on 01707 871622, and we will be happy to discuss your options and which payroll service may be best for you.

Are you a construction worker? If so, what do you think about the FCSA’s criticism of UCATT? Leave us a comment below.

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