Signing with an umbrella company is straightforward for most contractors. But the contract you sign matters. It sets out your rights, your pay structure, and the umbrella's legal obligations to HMRC. Knowing what to look for protects you before you start work.
DASA Umbrella holds dual accreditation from FCSA and Professional Passport. That means every contract we issue meets the strict standards both bodies require.
What should you check before signing with an umbrella company?
Before you sign, check that the contract clearly states your pay rate, the umbrella's margin, and how PAYE is handled. It must confirm the umbrella runs RTI-compliant payroll and remits PAYE to HMRC on time. A compliant contract protects you and, since April 2026, also protects the agency that placed you.
Take your time with the contract. Don't sign the same day you receive it. Read every section and ask questions about anything that's unclear. A reputable umbrella will answer without hesitation.
Check that the contract is an employment contract, not a service agreement. You're an employee of the umbrella. The contract should say so explicitly.
What should the contract say about your pay?
The contract must state the assignment rate. That's the amount your agency pays the umbrella for your work. It must also show the umbrella's margin separately. You should see exactly what is deducted before your gross pay is calculated.
The umbrella deducts its margin, employer's NI, and the Apprenticeship Levy from the assignment rate. What remains is your gross pay. PAYE tax and employee's NI come out of that. You take home the net figure.
Make sure the contract names a specific margin amount, not a range. Vague margin terms are a warning sign. Use the umbrella pay calculator to check whether your quoted take-home matches the actual maths.
The contract should also state how often you're paid: weekly or monthly. Confirm the payment method too. Direct bank transfer is standard.
See our umbrella contractor pay and tax guide for a full breakdown.
What should the contract say about holiday pay?
The contract must confirm your statutory holiday entitlement of 28 days per year for a full-time worker. It must also explain how holiday pay is calculated and whether it's paid with each payslip or held and paid when you take leave.
Holiday pay is one of the most misunderstood parts of umbrella payroll. Some umbrellas roll holiday pay into your regular pay. Others hold it back and release it when you book leave. Both are legal. The contract must be clear about which one applies to you.
Check whether your payslip shows holiday pay as a separate line. If it's rolled into your basic pay without clear labelling, that's a problem. The amount must be visible.
The Fair Work Agency launched in April 2026. It now enforces holiday pay compliance for agency workers. This makes proper holiday pay terms in your contract more important than ever. Read more in our full guide to umbrella company holiday pay.
What should the contract say about PAYE and HMRC compliance?
The contract must confirm the umbrella operates PAYE payroll and submits Real Time Information returns to HMRC on time. It should state that the umbrella remits all PAYE and NI to HMRC by the monthly payment deadline. This protects you from liability if the umbrella fails to pay.
RTI compliance means the umbrella tells HMRC about your pay every time they pay you. If an umbrella can't confirm this in writing, walk away.
Since April 2026, JSL rules apply. Agencies are jointly liable for unpaid PAYE if their umbrella defaults. A contract confirming timely PAYE payments isn't just good for you. It's also what your agency needs to show due diligence.
Ask whether the umbrella holds client money in a separate account. Some compliant umbrellas segregate funds. Your pay stays protected even if the company hits financial difficulty. Check what the contract says about this.
Also check whether the contract names the umbrella's accreditation bodies. FCSA and Professional Passport both require members to follow a published code of conduct. A contract from an accredited umbrella should reference that. It's a sign the umbrella operates to an audited standard, not just their own.
What are the red flags in an umbrella contract?
Walk away if the contract promises take-home pay above 85% of your assignment rate without a clear explanation. Walk away if there's no named margin. Walk away if the contract refers to loans, annuities, or credit arrangements. These are signs of a non-compliant scheme.
Other red flags to watch for:
- No mention of PAYE or HMRC compliance
- No separate holiday pay line on payslips
- Pressure to sign quickly without time to read
- Margin described as "variable" or "competitive" with no fixed figure
- No written confirmation of RTI submissions
Compliant umbrellas make their terms clear. Anything that feels evasive is worth questioning. See our full guide to what makes an umbrella company compliant for more detail.
What does a compliant umbrella contract look like post-April 2026?
Since April 2026, a compliant contract must confirm timely PAYE payments, RTI compliance, and a clear margin. It should also reflect the umbrella's accreditation body code of conduct. Agencies now need these terms as part of their JSL due diligence paper trail.
The Joint and Several Liability rules changed the stakes for agencies. Agencies share liability for unpaid PAYE when their umbrella defaults. A well-drafted contract from a dual-accredited umbrella is central to that paper trail.
DASA holds accreditation from both FCSA and Professional Passport. Both bodies audit their members' contracts, payroll processes, and compliance procedures. Our FCSA and Professional Passport accreditation means every contract we issue has passed independent checks.
If you're about to sign, ask your umbrella for their accreditation certificates. Ask which code of conduct their contract is written to. A dual-accredited umbrella will answer both questions without hesitation.
Contractors sometimes focus only on take-home pay when comparing umbrellas. That's understandable. But the contract is what protects you if anything goes wrong. A higher quoted take-home with vague contract terms is a worse deal. A slightly lower figure from a compliant, accredited provider is safer.
FAQ
What should I check before signing with an umbrella company?
Check that the contract states your assignment rate, the umbrella's margin, how holiday pay works, and how PAYE is handled. Confirm the umbrella runs RTI-compliant payroll and remits PAYE to HMRC on time.
What should an umbrella contract say about pay?
It must state the assignment rate, show the umbrella's margin as a fixed amount, and explain how your gross pay is calculated after deductions.
What are the red flags in an umbrella contract?
Promised take-home above 85%, no named margin, references to loans or credit arrangements, pressure to sign quickly, and no mention of PAYE compliance.
How does April 2026 JSL affect umbrella contracts?
Joint and Several Liability rules mean agencies share liability for unpaid PAYE. Compliant contracts now confirm timely PAYE payments and RTI submissions to help agencies demonstrate due diligence.
What accreditation should I look for in an umbrella company?
Look for FCSA and Professional Passport accreditation. Both bodies audit contracts and payroll processes independently. DASA Umbrella holds both.
