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The use of umbrella companies within the healthcare sector

Umbrella companies employ individuals on behalf of employment businesses, often referred to as recruitment agencies, who are then supplied to end clients. They have a significant impact on those they employ but, are largely unregulated. An experienced hospital and locum pharmacist has shared their concerns about the impact of NHS trusts choosing to use umbrella companies to engage locums.

Mon 30th October 2023 The PDA

The government has recently consulted on proposals to tackle non-compliance with both tax and employment rights by umbrella companies, that may improve things in the future. However, today I have deep concerns about the current involvement of umbrella companies, particularly within NHS trusts.

As a dedicated healthcare professional, I believe it is essential to address the issues surrounding the lack of regulation and proper due diligence in this area to protect staff in advance of new laws or regulations from the government. NHS trusts and other employers need to accept their responsibility for how they are involving these companies in the engagement of pharmacists and others. Unless they do, they will not resolve concerns about transparency, compliance, and proper oversight.

One crucial aspect in this matter is the obligation of recruitment agencies to exercise due diligence when placing umbrella companies on Preferred Supplier Lists (PSLs). The introduction of the Criminal Finance Act on August 30, 2017, has mandated that recruitment agencies ensure compliance throughout their supply chain. This involves establishing robust processes to prevent tax avoidance through thorough due diligence.

Regrettably, my recent experience has highlighted the shortcomings of this system. Last week, I discovered that the umbrella company recommended by my agency was non-compliant with the standards set by the Freelancer and Contractor Services Association (FCSA), the accrediting body for umbrella companies. This oversight led to a temporary unexpected financial burden of money owed to HMRC for a short contract with an NHS trust. This was later corrected after several lengthy phone calls with HMRC. In order to get the contract, I had to place my trust in the agency’s PSL and select an umbrella company from the provided list.

To make matters worse, this umbrella company issued a P45 during the middle of my contract and subsequently re-employed me without my knowledge or consent. These confusing operating models are causing unnecessary distress and financial strain on professionals who are already dedicated to their crucial roles within healthcare.   

The prevalence of umbrella company usage extends into various NHS trusts across the country. My agency failed to disclose in a timely fashion that the NHS trust I was going into contract with operates via an umbrella company. The emergence of new recruitment agencies that operate outside NHS Frameworks further complicates matters as their use of umbrella companies for pay processing remains uncertain.

I believe as the pharmacist profession we must advocate for measures that prioritise the well-being of healthcare professionals and uphold the standards of transparency and compliance that are imperative in our sector. Together, we can work towards fostering an environment that ensures the financial security and peace of mind of professionals like myself.

By an anonymous hospital and locum pharmacist and PDA member

Get involved

  • Those having difficulties with their contract, pay, or rights at work due to an umbrella company are encouraged to contact the PDA Member Support Centre.

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