Contracting in the energy industry can provide truly lucrative opportunities for professionals. The high demand for niche skills across the sector – whether that’s in renewables, oil & gas, nuclear or any other remit – means that experts can often make good money by working across projects under a limited company or PSC (personal services company). But doing so does come with its challenges. After all, you will lose some of the security of a permanent role. That’s why a number of professionals seeking contract work do so through an umbrella company. But what are the benefits of an umbrella and how do you know which one is right for you?

The benefits of using an umbrella service

Risk management is perhaps the most valuable benefit of using an umbrella service. Operating as a contractor in the energy industry can present a number of compliance challenges, from tax calculations to insurance requirements. And with the private sector roll out of IR35 fast approaching (April 2021) individuals are facing an increasingly complex determination process where end-hirers and recruiters alike will be seeking to reduce the risks of a mis-classified worker by scrutinising contracts.

However, by signing up to an umbrella company, you become their employee. This grants you access to the compliance and tax support that you need, while still being able to operate as a freelance expert in energy. Essentially, you can still reap the benefits of being a contractor with less of the associated risks.

This includes having access to HR support and other benefits you would normally expect from a permanent position. For those looking to start out in contracting in energy, an umbrella can really help guide you through this transition and shoulder much of the administrative burden, keeping your time free to do the job at hand.

Contracting in the energy industry: choosing an umbrella service

While there are clearly many benefits to using their services, there are a significant number of umbrella companies that you can choose from. So how can you pick the best one? Here are a few pointers to consider when selecting an umbrella service:

  • Do your research: Just as you would research any new employer before applying for or accepting a job, looking into an umbrella company’s background is a key step that shouldn’t be skipped. Use your network and any sources of job information for recommendations. Find reviews online and dig deeper into the firm’s operations – how long has it been trading? What other services does it offer that indicate it is a legitimate business and not a tax mitigation service? Look at the team and check their credentials on LinkedIn – do they have a history that’s relevant to the contracting world?
  • Check the employment contract: A real umbrella company will be offering you an employment contract as you will become a permanent employee of that business. Read the small print of any documents you are signing to confirm that this is the case.
  • Confirm the fees: Given that one of the benefits of an umbrella company is that individuals can access administrative, legal and compliance support, it perhaps goes without saying that there will be some fees involved. Usually a company will charge on a weekly or monthly basis. Check the details with the firm before signing anything and find out exactly what you get for the cost. And beware promises that sound too good to be true – if an umbrella is offering free services then it is unlikely to be a legitimate business. 
  • Ask about expenses processes: While operating through an umbrella, a contractor can claim expenses as agreed under the contract with the end-hirer or recruitment agency. As per any permanent employment, you will be required to store and submit receipts for expenses. If at any point the umbrella company suggests that this is now the case, you should be wary of the firm’s commitment to compliance. 
  • Be aware of notice periods: As an employee of the umbrella company the contract you sign up to will include a notice period. Unlike services such as an accountant you can’t simply sever ties and move on, you will need to serve a notice period. Before signing a contract check the length and finer details including any potential penalties that might be incurred.

Contracting in the energy industry

No matter what area of the energy industry you’re working in, contracting can give you access to multiple projects with beneficial financial gains. But ensuring you remain compliant really is a must. Whether you’re a seasoned contractor or starting out on your own for the first time, an umbrella service can offer real benefits for you, but make sure you invest time into finding the right one that suits your needs. And if you’re looking for an umbrella company but not sure where to start, we are partnering with iConsult, a leading UK Umbrella payroll service provider renowned for their expertise in compliance and reliability, they provide first-class Umbrella services for contractors in the energy industry – why not contact them today?

Looking for your next contract role in energy? Check out our latest vacancies today.


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