We’ve written before about Preferred Supplier Lists (PSLs) and how they can be incredibly effective for agencies looking to reduce their risk when engaging with other suppliers, including umbrella companies.
In short, a PSL is a list that the agency creates of trusted companies that they are willing to work with as part of their supply chain.
You can read more about PSLs and what they are here.
Agencies can create PSLs themselves, and the more time they spend auditing potential partners and assessing how compliant they are, the less chance is that they’ll encounter problems in the future.
For an agency’s workers and contractors, though, a PSL could pose problems, especially if the umbrella you have chosen is not on the agency’s PSL.
Agency workers and the PSL problem
A question that regularly crops up from agency workers is ‘can my agency force me to work through their PSLs?’
The short answer is yes, they can.
However, you always have the choice to walk away but if you want to work with that agency then you will be required to work with one of the suppliers from its PSL. Usually, you cannot work with that agency unless you do so.
As an example, if you’re currently employed by an umbrella company, and then sign up with an agency that works with different umbrellas on their PSL, the agency can require you to change umbrellas to one that they trust and have done their due diligence on. This minimises the financial risks to that agency.
On the outside, it may seem like the agency may just lack flexibility.
However, the issue runs deeper than that, though, and relates to the Criminal Finances Act 2017, and other financial risks faced by the agency in relation to intermediaries that they work with.
Consider this as an example. If an agency has partnered with an umbrella company, but the umbrella is evading paying taxes, the agency could be found guilty of failing to prevent that tax evasion – even if they had no idea what was going on.
Read more about the Criminal Finances Act 2017 here.
It’s a risk that simply isn’t worth taking for most agencies, and that goes for other companies through their supply chain, too.
It’s still your choice
Given the financial risks, an agency is within their rights to ask you to move to an umbrella in their PSL. It is up to you whether you choose to do so.
What you consider when making the decision will depend on your personal circumstances. Some points that may be considered by workers are listed below.
- What is the issue for the agency with the umbrella company that you have chosen?
- Can the issue be overcome and your chosen umbrella added to the agency’s PSL?
- What financial impact will using an umbrella from the agencies PSL have on you and is this acceptable to you?
- Is there a connection between the agency and its preferred supplier other than the working relationship (e.g. does the agency own or have a financial interest in the preferred supplier)?
- Is there another agency that you can deal with in relation to the assignment?
- Is there another assignment you can undertake with an agency that accepts your choice of umbrella?
- How will your decision impact your future pipeline of work?
Look at the broader picture – is it worth missing out on the new contract just because you aren’t willing to move to a new umbrella company? What could you stand to lose work-wise in the long-run?
Ultimately, your agency is within their rights to insist that you work with a firm on their PSL, and this is usually in your best interests too as the agency should have done their due diligence on their chosen PSL.
Of course you could refuse, but the agency may then decide that they cannot offer you work.