The Autumn budget.
In a potentially seismic shift following the Autumn 2024 Budget, hundreds of thousands of Britain’s contingent workers may soon find their take-home pay drastically reduced. Why? Controversial ‘umbrella companies’ that handle payroll and administrative services for contingent workers across various industries are preparing to pass on the rising employer costs.
This change impacts significant employees, many of whom work in critical sectors such as NHS staffing, IT, and construction, many of whom are already contending with an unrelenting cost-of-living crisis.
Though these umbrella companies provide certain benefits, they have also been criticised for transferring employer-related costs to the workers themselves. This practice is set to escalate as the budget introduces higher National Insurance Contributions (NICs) and other employer obligations, which umbrella companies will most certainly pass on directly to these contingent workers. This could effectively create a ‘stealth tax’ on some of Britain’s most vital workers, who play a crucial role in the economy yet often lack the protections afforded to traditional employees.
Rockford Resourcing is dedicated to providing quality, volume contingent workers whilst ensuring the service is fully transparent, compliant and most importantly fair to workers.
Stephen Nicholas, CEO of Rockford, explains “These tax rises are a double whammy for the 700,000 contingent workers that are paid via umbrella companies. Not only are they coping with inflation and the rising costs of everyday living, but they’re now expected to shoulder their employer’s increased costs. It’s simply not fair. In traditional employment, businesses are responsible for paying NICs and other employer costs. However, under these umbrella arrangements, it’s often the worker who ends up covering both employee and employer expenses.”
A ‘Stealth Tax’ on Flexible Workers
As Rockford and other experts point out, this financial burden on contingent workers is unfair and fundamentally flawed. Unlike traditional employees, workers under umbrella companies lack the negotiating power to resist these costs, which can include not only National Insurance Contributions but also other employer expenses like administrative fees and pension contributions. For workers who rely on this type of employment for flexibility, this practice can seem like an invisible tax, taking a large portion of their income with little benefit in return.
Beyond the individual financial burden, these practices pose a broader economic risk, as high-calibre professionals may be deterred from contingent work, potentially leaving a gap in crucial sectors. Many sectors, particularly healthcare and technology, have increasingly relied on contingent workers for specialised expertise and flexible labour. However, as costs rise, so does the risk that talented professionals may seek more stable arrangements, depriving industries of vital skills.
Our commitment to fair employment practices
We are a pioneering Professional Employment and Payroll Services Organisation (PEPSO), and are taking a bold stand against this trend of passing the buck on increased costs.
“We believe in fair pay for fair work, why should hard working professionals have to pay both employee and employer costs? It’s time to disrupt this outdated model and create something fairer for Britain’s contingent workers that are paid by Umbrella Companies.” continues Stephen Nicholas, CEO.
Rockford aims to ensure that contingent workers keep more of their earnings, providing a much-needed safety net in an increasingly volatile economic landscape.
Our model is designed with a worker-centric approach, emphasising transparency and fair compensation. Rather than surprising workers with hidden deductions, Rockford’s structure ensures transparent, stable pay, making it a more sustainable option for those who depend on contingent work for its flexibility. The model underscores Rockford’s mission to empower Britain’s flexible workforce, even as traditional umbrellas make contingent work seem riskier.
What Next?
As the Autumn Budget unfolds and the new costs come into effect, workers in contingent roles are encouraged to take proactive steps:
Check employment arrangements: Now is the time to review your employment setup. Verify whether you’re engaged with a traditional umbrella company, and if so, assess whether additional costs might affect your take-home pay.
Calculate potential impacts on Income: Taking the time to understand the potential deductions for NICs, administrative fees and apprenticeship levy can help you prepare for changes in your financial situation.
Consider alternative employment models from PEPSOs such as Rockford: Exploring alternative models, can offer a more predictable and fair income structure, especially as employer costs rise.
Seek professional advice: Consulting with an employment or financial advisor can help you weigh your options and choose the best model for your financial future.
Rockford’s commitment to not passing on employer costs is setting a new standard in an industry that often overlooks worker interests. By pioneering a fairer model, Rockford is working to create an environment where contingent workers feel supported and valued.
“This is about more than just paying the bills; this is about respect and the right to keep what you earn. Flexible work shouldn’t come at the cost of financial stability.”
Better employees
Rockford’s approach is designed to benefit employers too. Employees who feel well treated and reassured are generally more motivated and likely to perform to the best of their ability which supports Rockford’s mission to create a happier and more committed workforce.
If you’re interested creating a fairer, more sustainable and compliant workforce for your business contact us at [email protected]
