LinkedIn has been ablaze with allegations of umbrellas “skimming” money away from contractors, yet the company at the centre of it, Orange Genie, has so far been quiet on the subject. Julia Kermode spoke to their Chief Executive, Paul Bresnihan, to find out what exactly has been going on. Here’s what he had to say:
Why have you chosen to comment now?
We have around 60 internal staff and thousands of contractors who are our employees. They are doing an amazing job in difficult circumstances. They have enough to worry about, with an ongoing cost of living crisis and other everyday challenges, without seeing inflammatory posts about their employer on social media which has caused some of them to worry to a level that isn’t healthy. Therefore my priority was to make sure everyone within the business was okay.
As a business we were not going to be pressured into an online exchange with people who don’t have the full facts in front of them and frankly are not interested in the truth. Whereas what they are interested in is self promotion and slandering other businesses and associations.
Orange Genie has been accused of “skimming” £2 from every umbrella employee payslip, is this true?
No, absolutely not. We have made a lawful deduction of £2 from the assignment rate to cover the part of our employment costs that enable us to provide our employees with access to an online portal that contains their payslip and pensions information as well as access to other benefits such as an online doctor, counselling services and high street shopping discounts. The £2 is shown within “employment costs” on our reconciliation statement of assignment rate to gross pay and is clearly shown above the line before our employees gross pay is calculated.
Isn’t that an unlawful deduction from umbrella employees income?
No, it is not unlawful because this is not deducted from employees’ income. This amount is an overhead cost that we retain from the assignment rate as I’ve just mentioned.
The assignment rate is made up of our employee’s gross pay plus our costs of employment such as holiday provision, employers NICs, apprenticeship levy, pension contributions, our payroll staff, office costs, insurances etc.
All of these are the same overhead costs that any employer incurs, the only difference here is that we have apportioned our costs into an amount per employee. We do that because our income is based on receiving an assignment rate for the work the employee is carrying out (paid to us by their recruitment agency), and the amount we pay our employee is directly related to the amount we receive, so it makes sense to ensure that the amount we retain is sufficient to for us to cover all expenditure incurred per employee.
But surely your umbrella employees received less pay than they expected as a direct result of the £2 deduction?
No. Although the £2 was wrapped up in the employment costs element of the reconciliation statement, it was always declared within that figure throughout all the onboarding processes. This means that all of our umbrella employees received pay illustrations which had the £2 taken into account within the employment costs.
As well as those pay illustrations, new joiners signed up via our online registration portal where further guide documents were presented to demonstrate how their pay would be calculated. All of these include the same breakdown as the pay illustration and in a format reflective of what the subsequent reconciliation and payslip documents would look like. Our registrations team are always on hand throughout the process to answer any further questions. Once they had joined, employees had access to the document library within our portal where they could view and download these documents as often as possible.
At no point would any umbrella employee have received a pay projection without the £2 factored in, so they did not receive less pay than they expected.
Why didn’t you give umbrella employees the opportunity to opt out?
Opt out? That would suggest that this is a fee that we’re charging the employee, and as we’ve already explained, it isn’t. We use it to fund our employee benefits platform that includes many invaluable services, such as an online Doctor, 24/7 emotional support helpline, discounts across 1,000s of high street retailers along with secure access to their payslip which is why we see such high engagement levels, but it should not be confused with a fee for those services. The cost is simply our business overheads which are incurred per employee, so it isn’t an optional service that could be added or removed. We incur this cost whether our employees use the services or not.
If it isn’t “skimming” why wasn’t the £2 transparently declared within the reconciliation statement?
It was included in all our reconciliation statements as an element of “employment costs”. That’s the most logical place to include it as the £2 figure is simply an apportionment of business overheads. We did not seek to hide the £2 cost, however we also didn’t provide a breakdown of “employment costs” and perhaps we should have.
Because the umbrella industry is not regulated there is no standard or requirement for what constitutes “employment costs”, and each umbrella business must decide for themselves what to include within that line. Even FCSA, the best-known umbrella compliance standard, does not dictate how employment costs should be calculated.
There has been an allegation that you developed your payroll software so that the £2 was deducted each time. Is this true?
Our payroll software does automatically include the £2 employment cost when calculating pay because it is incurred per umbrella employee. As already explained, it is just an apportionment of business overheads incurred. All payroll software is developed to the needs of the business, so this isn’t a shocking revelation!
How long has this been going on for, and do you genuinely believe that Orange Genie has done nothing wrong?
When I bought the business in May ‘21 a significant amount of very detailed due diligence underpinned the purchase, and I was aware of the £2 overhead cost apportioned per umbrella employee. In line with Orange Genie’s general approach to transparency they were open with me about what it was, how it was calculated and why it was included. This seemed perfectly logical to me given my background in general insurance and employee wellbeing. Yes, I genuinely believe that Orange Genie has done nothing wrong.
Did the deductions result in Orange Genie making any additional taxable revenue?
No, because we are invoiced by our supplier at the rate of £2 per employee per week. Due to its size the business has an annual financial audit and no irregularities have come to light, whereas if there were any tax discrepancies I would expect these to be identified by the auditor.
Although the way we used to display the line didn’t meet the new FCSA code that came into force in October 2022, previously to that it passed through FCSA reviews carried out by EY for many years.
How many umbrella employees have contacted you seeking reimbursement of this £2 deduction? Will you be offering any refunds?
To date, no umbrella employees have been in touch requesting a refund, and as the £2 has been included in all pay calculations from the outset it seems unlikely there will be any justifiable requests to come. We have had a handful of people call to query it however once it’s explained people have understood. Unfortunately, social media for all its good falls down as people can make statements that are factually incorrect with no recourse. It also important to clarify that a “refund” suggests that the employee has previously paid for something, which isn’t the case.
Were the recruitment agencies that you work with aware of the £2 deduction?
Yes, they were aware. We have never hidden the cost from anyone that we work with. The £2 is simply part of our employment costs.
Did any recruitment agencies receive part of the £2?
No they did not, as there was no money made from it to share with anyone.
Were you made aware of the allegations before they were published?
Contractor Voice did not contact us for comment prior to publishing their allegations, which we believe was poor journalism on their part. If we had been given the opportunity to engage, we would have done so, however instead they published an unbalanced article which was both inflammatory and inaccurate. Due to the reputational damage being caused to our business we have pointed out our concerns to Contractor Voice and received their response.
Do you think you have been victim of a broader anti-umbrella and/or anti-FCSA witch-hunt?
I wouldn’t go as far as saying that, but if you read the criticism online a large portion is directed towards the FCSA and their assessment processes. As well as critics who don’t like FCSA, there are also a good number who do not like the umbrella profession either. It is not surprising that both of these groups have been aggressive in their views, particularly given the emotive language used in some comments and reporting of the issue.
Much has been said on social media about your membership of FCSA, their disciplinary process, and your current suspension. Did FCSA treat you fairly?
The FCSA have published what happened during the process and what people read into that is up to them.
Was it proportionate to what else has happened recently across the industry with data leaks or holiday pay claims?
I couldn’t really comment, however none seem to have grabbed the attention as much as this which is strange as nothing illegal has been done here, which would suggest there’s somewhat of a discrepancy in focus, in certain areas.
I was disappointed with the way industry peers, both members and non-members, jumped on the band wagon to attack us, some who have not been without their own challenges.
Did the payslip and reconciliation statements you gave to your FCSA assessors for your annual membership renewals include the £2 deduction?
Yes. We have never sought to hide this deduction from FCSA assessors, and all pay documentation submitted in relation to our membership renewals included the £2. The issue was how clear the information was on our pay documents, and of course being tardy with our responses to the FCSA we left ourselves open to further scrutiny.
The fact that the £2 payments seemed to be hidden has created some mistrust, what are you doing to rectify that?
We‘ve made changes to our IT systems to ensure that the “employment costs” are broken down to show the £2 overhead cost. We have also engaged with a well-known top tier accountancy company to undertake a full independent audit of the business processes now and previously to satisfy that we are and have been compliant with the law. After all the industry isn’t officially regulated and individual opinion seems to drive a lot of what people think is right or wrong. We also welcome any agencies to come in and review/audit us to satisfy their needs.
Should the accountancy company findings bring to light any new concerns, be assured that these will be addressed. We would be disappointed if this was the case given that: we pay a lot of money for FCSA’s independent reviews; that we’ve always followed their advice; and that everything was considered okay until the FCSA guidance was changed.
We are also working with FCSA to ensure that we meet their requirements for our membership to be reinstated. I am doing everything in my power to restore trust, and the business has a strong future ahead of us. We have always done things properly at Orange Genie and will continue to do so. Finally, I would like to thank the whole Orange Genie team for their tireless hard work during this stressful time.
