Contract of Employment

You will sign a Contract with your Umbrella Company

As the umbrella company is your employer, you will need to sign a Contract of Employment with them. This contract guarantees your entitlement to state benefits including, statutory sick pay and state pension.

Employment contracts with umbrella companies are also known as "overarching employment contracts".

What is an overarching contract?

An overarching contract is defined as follows:

  • The contract guarantees a minimum number of work hours per year, usually 336, whether you are working under contract or not
  • The contract must allocate holiday pay as stipulated by the Working Time Regulations
  • There must be mutuality of obligation for the duration of the contract
Why is an overarching contract important?

Having an overarching contract with an umbrella company entitles you to tax relief on your work expenses. Travel expenses are only payable if you are travelling to a temporary workplace. This is somewhere you work for a fixed term and for less than two years.

Your contracts must be linked under a single employer i.e. the umbrella company in order to comply with HMRC regarding claiming travel expenses.

Also see the two year rule for more about travel expenses.

Why do I have to sign a Contract of Employment?

All Umbrella companies require their contractors to sign a Contract of Employment. This means that you agree to abide by the terms and conditions of the umbrella company but also means that you are officially an employee of the umbrella company. This is essential for you to access employee benefits like Statutory Sick Pay and Statutory Maternity Pay.

Am I tied into the contract?

Some umbrella companies will ask for you to give them notice if you wish to leave but there is not usually a set contract term.

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Contract of Employment

You will sign a Contract with your Umbrella Company

As the umbrella company is your employer, you will need to sign a Contract of Employment with them. This contract guarantees your entitlement to state benefits including, statutory sick pay and state pension.

Employment contracts with umbrella companies are also known as "overarching employment contracts".

What is an overarching contract?

An overarching contract is defined as follows:

  • The contract guarantees a minimum number of work hours per year, usually 336, whether you are working under contract or not
  • The contract must allocate holiday pay as stipulated by the Working Time Regulations
  • There must be mutuality of obligation for the duration of the contract
Why is an overarching contract important?

Having an overarching contract with an umbrella company entitles you to tax relief on your work expenses. Travel expenses are only payable if you are travelling to a temporary workplace. This is somewhere you work for a fixed term and for less than two years.

Your contracts must be linked under a single employer i.e. the umbrella company in order to comply with HMRC regarding claiming travel expenses.

Also see the two year rule for more about travel expenses.

Why do I have to sign a Contract of Employment?

All Umbrella companies require their contractors to sign a Contract of Employment. This means that you agree to abide by the terms and conditions of the umbrella company but also means that you are officially an employee of the umbrella company. This is essential for you to access employee benefits like Statutory Sick Pay and Statutory Maternity Pay.

Am I tied into the contract?

Some umbrella companies will ask for you to give them notice if you wish to leave but there is not usually a set contract term.

Read More

The quickest way to get
the best take home pay

Stop losing your hard earned cash!

Fill in your details below and start saving now!

Your information is safe: Privacy Policy