If you’re a contractor and a new role comes up through a recruitment agency you will probably want to use an umbrella company to manage your PAYE needs. You may have used an umbrella company previously or you might have just checked an income calculator to find an umbrella company with the best deal. Either way you have an umbrella company in mind that you want to use. You might find that your agency doesn’t want you to use them for their role and want you to use one of their preferred companies. Unfortunately, this type of situation can be quite thorny and what’s worse is it’s becoming more common.


They may tell you that your chosen company is not on their PSL (preferred supplier list). They may also tell you that it will take up too much time to verify a new company is HMRC compliant and to get them registered on their books.


So, can they tell you not to use a particular company?


Technically no, but… If you don’t go with the company the agency wants, they might not put the work your way or withdraw the offer altogether.


If you find yourself in a situation like this you can register a complaint with The Recruitment and Employment Confederation (REC). All REC members must abide by a Code of Professional Practice. Above all, the REC is committed to raising standards and highlighting excellence throughout the recruitment industry.


There are a few factors that you need to think about when an agency is pushing you to a particular company. 


What are the reasons behind them forcing a particular umbrella company on you? The main reason might be that they will be getting some sort of kick back from the company. So it benefits them financially to push you in a particular direction. Or, it could be down to past experience, level of service and cost.


If it’s the latter they would probably not be as forceful and wouldn’t mind too much if you went with another agency. As for the former, this is unethical and illegal.  If you suspect it’s down to money you can always speak to the Umbrella Company that you want to use and let them know. Give them the contact details of the agency and see if they can match what the other companies are offering.


The other thing you need to think about is the state of the market. If there are lots of jobs out there and not many applicants then you will have the upper hand, after all their main income will come from placing you in a role and any kick backs would only be a small amount in comparison. But, if there are not many roles then the recruiter holds all the cards and you may be forced to compromise.