Umbrella company workers: rights and pay

You cover the warehouse night shift or a care-home rota. The agency offers an hourly rate, but an umbrella company you barely know sends a smaller payslip. Ask what you will earn, with holiday pay shown separately. The headline rate may be paying the umbrella’s bills as well as yours.

Who is your employer?

The client runs the care home, warehouse or kitchen. The agency finds your placement. In the usual arrangement, the umbrella employs you, runs payroll and owes your wages, holiday pay and payslips.

Following the client’s instructions does not, by itself, make it your employer. If the contract and reality differ, get advice on your employment status.

For payments to workers on or after 6 April 2026, HMRC can recover the umbrella’s unpaid PAYE tax and National Insurance from the agency holding the client contract, or the client if there is no agency. That is tax liability, not a general guarantee of your missing wages.

Umbrella employees have rights to written terms, payslips, minimum wage and paid holiday. Pension, sick pay and family pay have eligibility rules. In Great Britain, ordinary unfair dismissal usually needs two years’ continuous employment as at 1 October 2026. Certain automatically unfair dismissals and discrimination claims do not. Statutory redundancy pay normally needs two years.

Your employment contract and your assignment are different

Your umbrella contract should explain pay dates, hours, notice and what happens between placements. Do not assume it promises between-assignment wages or that employment ends with the placement.

The agency should give you each assignment’s client, job, location, notice and health and safety risks. HMRC’s umbrella guide explains the documents. Before moving, ask whether you are ending an assignment, your employment, or both.

Why the advertised rate is not your wage

The assignment rate is what the agency pays the umbrella, not necessarily your gross wage. Ask which rate the advert quotes.

The assignment pot funds the umbrella margin, employer National Insurance, employer pension and Apprenticeship Levy where applicable. Employer National Insurance is 15% above £96 weekly in 2026/27. Holiday pay also needs funding, either reserved for leave or lawfully rolled up into gross pay. Income tax, employee National Insurance, employee pension and applicable student loan payments then come off gross.

The illustration assumes an eligible irregular-hours worker receiving rolled-up holiday pay, standard personal allowance and basic-rate tax in England, Wales or Northern Ireland. The employee has opted out of pension saving; there is no student loan or Apprenticeship Levy. Annual tax allowance is divided by 52, so actual PAYE rounding can differ. Your tax code, other earnings and Scottish income tax can change the result.

Employer National Insurance must not come off your gross wages. Ask for a payslip and reconciliation statement showing assignment rate to gross pay, then gross to net.

Minimum wage is a separate check. From 1 April 2026 the hourly rates are £12.71 for age 21+, £10.85 for ages 18 to 20 and £8.00 for under-18s above school-leaving age. The apprentice rate is also £8.00, for apprentices under 19 or in their first apprenticeship year. A rate increase applies from the first pay reference period starting on or after the change. Check pay for working time, not the assignment rate or your after-tax bank payment.

For hourly paid carers, travel between care visits and required training count for minimum wage; ordinary commuting generally does not. Check which hours count and how deductions affect the calculation.

What the agency must show you before you start

In Great Britain, agencies must provide a Key Information Document before you agree terms, a requirement since 6 April 2020. The KID should identify the umbrella, minimum assignment rate, deductions and minimum gross pay.

An agency may require a preferred umbrella for an offer. HMRC says you may be able to choose your own, not that you have an unrestricted right to do so. Ask whether agency PAYE is available. Agencies generally cannot charge for finding ordinary temporary work; the umbrella margin is a separate charge funded from the assignment pot.

1. Read the KID. Find the assignment rate, minimum gross pay, margin and every other charge. Convert percentage fees into pounds for your expected week.
2. Ask how holiday is paid. If rolled up, check you qualify for that method and the payslip shows a separate amount. Otherwise ask how to request leave and receive the accrued pay.
3. Read both sets of terms. Check your umbrella employment contract and the agency’s assignment details. Look for notice, guaranteed hours, pay dates and the position between placements.
4. Compare the first payslip. Check approved hours against the rate you agreed. Ask for a reconciliation showing assignment pay to gross wages, then gross to net.

Holiday pay: rolled-up or taken as leave

You have 5.6 weeks’ statutory paid holiday a year. In Great Britain, qualifying irregular-hours and part-year workers accrue leave at 12.07% of hours worked for leave years starting on or after 1 April 2024. Employers can pay these workers rolled-up holiday pay at 12.07% of pay for work done, separately itemised on the payslip. You must still be allowed leave. Umbrella employment alone does not qualify you for this method.

Otherwise, holiday pay is paid when you take leave. Variable pay may need a 52-week reference period of paid weeks; fixed-hours calculations differ. See GOV.UK’s guidance and our holiday pay guide.

Ask for the leave and pay record. If employment ends, accrued untaken statutory leave must be paid. Before switching umbrellas, ask how holiday and continuity will be handled. Do not assume a new company inherits the balance.

Sick pay, pension and family pay

From 6 April 2026, Statutory Sick Pay has no waiting days or minimum earnings threshold. In 2026/27, the weekly rate is the lower of £123.25 or 80% of average weekly earnings. Other eligibility rules still apply. Report sickness promptly to the umbrella. Northern Ireland’s guidance also confirms first-day payment.

The umbrella must auto-enrol you in a workplace pension if eligible and pay employer contributions. Those employer contributions must not come off gross wages. Opting out loses you the employer contribution too. Check your pension account.

Statutory family pay has earnings and service rules. In Great Britain, paternity leave and unpaid parental leave became day-one rights on 6 April 2026, but paternity pay did not. Before switching umbrellas while pregnant or planning leave, get advice about continuity and pay. Notify your employer as well as the agency.

The 12-week equal treatment rule

In Great Britain, agency-worker rights can cover umbrella employees supplied temporarily to work under a client’s supervision. Day-one rights include shared facilities and vacancy information. Facilities access can be refused on objective grounds; vacancy information does not guarantee a job.

After 12 qualifying weeks in the same role with the same hirer, you get the basic conditions you would have had if recruited directly. These include relevant pay, overtime, performance-related bonuses, working time, night work, rest breaks and annual leave, not every staff benefit or permanent employment.

The weeks need not be uninterrupted. GOV.UK explains the breaks. A substantively different role may restart the clock; renaming a warehouse shift or changing agency or umbrella does not itself do so. Keep assignment dates and job descriptions.

If directly recruited healthcare assistants get a night premium you do not, ask the agency and umbrella to check equal treatment. The pay-between-assignments exemption was abolished in Great Britain on 6 April 2020 by the 2019 amendment regulations. A contract cannot revive it.

Spotting a bad umbrella

Ask for the margin in writing. There is no official fee that proves an umbrella is safe, and a low charge is no substitute for lawful payroll.

Unexplained changes to the employer name or PAYE reference can indicate mini-umbrella fraud. HMRC warns that frequent employer changes can affect employment history and mortgage applications. Ask why it changed; compare deductions with your personal tax and pension accounts.

If the umbrella becomes insolvent, eligible employees can claim through the government scheme. Payments can include statutory redundancy, up to eight weeks’ wage arrears and six weeks’ holiday pay, subject to eligibility and caps. Not every contractual payment is covered. Contact the insolvency practitioner and keep the claim reference.

IR35 concerns work through an intermediary, commonly your own limited company. For genuine umbrella employment under PAYE, it is not a second tax deduction. An “inside IR35” advert may lead to an umbrella offer. Compare the actual wage before accepting.

Who to complain to, and how long you have

Write to the umbrella and copy the agency about missing wages. Give the dates, hours, agreed gross rate and amount missing.

The Fair Work Agency handles agency conduct and minimum-wage enforcement. Tax avoidance goes to HMRC. A missing KID is an agency-conduct complaint; an ordinary wages dispute may need Acas and a tribunal. The FWA does not replace them.

Get advice from Acas, Citizens Advice, a law centre or your union. UNISON organises care and NHS support staff; GMB covers warehouses, retail and food production; Unite covers hospitality and logistics, among other sectors. Check rules on union legal help for disputes that began before you joined.

1. Keep the evidence and make the demand. Attach the relevant timesheet and payslip. Ask for the unpaid amount and a corrected breakdown. You can propose a reply within seven days, but that is your requested response time, not a statutory deadline.
2. Check the claim deadline now. In Great Britain, most tribunal claims about events before 1 October 2026 still have a limit of three months less a day. For most events on or after that date, it is six months less a day. Do not give an older pay dispute the new limit.
3. Notify Acas in time. Notification is required before most tribunal claims. Timely early conciliation pauses the clock; a grievance or agency complaint does not. Ask an adviser to calculate the deadline, especially for repeated underpayments or overlapping claims.

In Scotland, tribunal breach-of-contract claims retain three months less a day for breaches before 9 November 2026, then move to six months less a day. Ask an adviser which claim fits your dispute.

What changes next

The government’s timetable updated on 22 October 2026 plans umbrella company regulation for December 2027. It is not in force today. That gap does not exempt umbrellas from existing wage, holiday or tax law.

1. 6 April 2026In force: tax and SSP reforms

   Supply-chain PAYE liability begins. SSP waiting days and the earnings floor go.

2. 7 April 2026In force: Fair Work Agency established

   Existing enforcement functions come together.

3. 1 October 2026In force: longer tribunal limits

   Most new events get six months less a day; earlier events generally keep the old limit.

4. 1 January 2027Scheduled: unfair-dismissal changes in Great Britain

   Ordinary protection after six months rather than two years; compensatory award cap removed.

5. December 2027Scheduled: umbrella company regulation

   The timetable plans regulation of umbrella companies for December 2027.

Questions people ask

Can the agency require its preferred umbrella?

It may make that a condition of the offer. Ask whether it will accept another umbrella or agency PAYE. There is no blanket right to choose your provider.

What should never come out of gross wages?

Employer National Insurance and employer pension contributions. The margin and Apprenticeship Levy belong in the assignment-to-gross calculation, not the employee deductions.

Where has my holiday pay gone?

Ask for the leave and pay record. Lawful rolled-up pay must be separately itemised; otherwise holiday pay is due when you take leave.

Does equal treatment make me permanent?

No. After 12 qualifying weeks, the Great Britain agency-worker rules give equal basic conditions, not permanent employment or every staff benefit.

Does switching umbrellas reset my service?

It can affect continuity, but not every transfer breaks it. Get advice before a switch that could affect family pay, dismissal protection or redundancy.

What if the umbrella uses a tax-avoidance scheme?

Keep contracts, payslips and bank statements. Do not sign further side agreements. Contact HMRC for help leaving the scheme and get independent advice about unpaid tax.

Sources

1. Working through an umbrella company, HMRC. Employer identity, assignment documents, deductions, choice of umbrella and fraud warnings.
2. PAYE rules for labour supply chains that include umbrella companies from 6 April 2026, HMRC.
3. Key Information Document guidance for agency workers paid through umbrella companies, GOV.UK.
4. Check your payslip if you work through an umbrella company, HMRC.
5. Rates and thresholds for employers 2026 to 2027, HMRC. Tax and National Insurance assumptions used in the worked example.
6. National Minimum Wage and National Living Wage rates, GOV.UK.
7. Calculating the minimum wage, GOV.UK. Pay reference periods, rate changes and treatment of deductions.
8. Working hours for which the minimum wage must be paid, GOV.UK. Travel between care visits and required training.
9. Holiday entitlement, GOV.UK.
10. Statutory Sick Pay changes 2026, Acas.
11. Sick pay rights, nidirect. First-day payment in Northern Ireland.
12. Agency Workers Regulations 2010, legislation.gov.uk.
13. Your rights as an agency worker: equal treatment, GOV.UK. Qualifying weeks and breaks.
14. Agency Workers (Amendment) Regulations 2019, legislation.gov.uk. Repeal of the pay-between-assignments exemption from 6 April 2020 in Great Britain.
15. Employment tribunal time limits, Acas, updated 1 October 2026. Transitional limits and the two payday examples.
16. Employment Rights Act 2025, Acas. Current and scheduled reforms.
17. About the Fair Work Agency, GOV.UK. Enforcement remit and limits.
18. Factsheet: umbrella companies, Department for Business and Trade. Regulation planned for December 2027.
19. Umbrella companies: why agencies and employers should be banned from using them, TUC, 2021. Historical survey evidence cited in the first reality check.
20. Hundreds of employers handed penalties for illegally underpaying workers, GOV.UK, 19 March 2026. Naming-round figures in the second reality check.
21. Warning for agency workers and contractors employed by umbrella companies, Spotlight 60, HMRC.
22. Claim for redundancy and other money you are owed by an employer, GOV.UK. Employer-insolvency payments.
23. Employment agency rules, nidirect. Northern Ireland’s separate enforcement arrangements.