Loan charge group raises concerns over holiday pay and cyber attacks
MPs have written an open letter to a leading trade body highlighting significant issues affecting umbrella companies and those who use them.
The All-Party Parliamentary Loan Charge and Taxpayer Fairness Group (APPG) has written to Chris Bryce, CEO of the Freelancer and Contractor Services Association (FCSA), about holiday pay and cyber-attacks on umbrella companies.
The FCSA is a membership organisation for umbrella companies, contractor accountants and CIS payroll services and offers accreditation for compliance.
The APPG is urging the body to address key issues affecting the industry. The first is the impact of the Smith versus Pimlico Plumbers case.
The Civil Division of the Court of Appeal ruled that Gary Smith is entitled to have holiday backdated after it was found that he was an employee and therefore the right to paid leave could be carried over.
Some umbrellas reliant on not paying holiday pay
The loan charge group highlighted that it has raised the issues of “holiday pay being withheld by some umbrella companies” before in its How Contracting should work report published last year.
It wrote: “We would be interested to know how this affects FCSA accredited companies, and if under the terms of this ruling, any of them are liable for backdated holiday pay.
“It has been suggested in the media that some umbrella companies may be reliant on not paying holiday pay, as part of their business model.”
The group added that while it hopes this has not been the case with FCSA accrediting umbrellas, it would still like the trade body to “provide clarity on the implications […] for both umbrella firms and workers who use them.”
In response to the issue around holiday pay, a spokesperson for the FCSA told Contractor Weekly: “The FCSA’s updated code mandates that any holiday pay due must be paid to the worker if it is unused.
“FCSA members are required, throughout the year, to remind contractors to take their holiday, and to also give contractors at least one month’s notice of their holiday year end, providing them with the option to use their holiday entitlement or be paid in full for any unused holiday days.”
‘Data leaks causing serious worry’ say Loan Charge group
The other issue MPs in the action group want the FCSA to address is in relation to the cyber-attacks on accredited firms.
The APPG said: “Our understanding is that these have not only caused delays to payments, but have also led to leaks of confidential data that is inevitably causing serious worry.”
Trade body appoints cyber-security expert
The group welcomed FCSA’s response to its previous letter stating it would investigate the incidents and urged the body to keep them updated and provide a solution to prevent further attacks.
Regarding cyber-security, the FCSA spokesperson said: “The FCSA’s codes of compliance demand adherence to employment and tax best practice, but we recognise that the prevalence of cyber-crime is increasing worldwide and across all industries.
“We will continue to liaise with stakeholders and our members to ensure the industry can best protect itself from future cyber-attacks, including supporting members and referring them to third-party expert advice.
“In addition, we have appointed independent cyber security experts to strengthen our own approach and the recommendations we can offer to our members, for example, in relation to business continuity and disaster recovery in the wake of a potential cyber incident.”
You can read the full letter on the Loan Charge APPG website here.