An umbrella company is a third-party organisation that acts as an employer for contractors, freelancers, or temporary workers.
Instead of working directly as self-employed, individuals sign a contract with the umbrella company, which then manages payroll, taxes, and compliance on their behalf.
Umbrella companies are especially common in industries where short-term or project-based work is prevalent, and they provide workers with a way to access employee benefits while maintaining flexibility.
The umbrella company serves as the legal employer of the contractor and typically manages:
Employment contract: contractors work under an agreement with the umbrella company.
Payroll & deductions: the umbrella company processes wages, deducting tax, social security, and other statutory contributions.
Client billing: the umbrella company invoices the client and manages payments to the worker.
Compliance: ensures legal obligations are met across jurisdictions.
Benefits: in some cases, contractors may access benefits like sick pay, insurance, or pensions.
Simplicity: removes the need for contractors to manage their own payroll and taxes.
Compliance: reduces risks of misclassification and ensures workers are legally employed.
Flexibility: allows contractors to work for multiple clients while receiving centralised payroll.
Access to benefits: provides statutory employee rights not available to self-employed individuals.
International reach: can support workers engaged in cross-border or global projects.
Umbrella company: focuses primarily on contractors and temporary workers, handling payroll and compliance.
Employer of record (EOR): a broader solution for companies hiring full-time staff globally, providing legal employment and compliance in foreign jurisdictions.
Both models reduce compliance risks, but EOR services are typically more comprehensive for global workforce expansion.
At Mauve Group, we recognise the importance of flexible employment models such as umbrella companies.
While Mauve Group primarily provides Employer of Record (EOR) and global payroll solutions, we also advise clients on when umbrella companies may be suitable, helping them remain compliant and efficient in international contracting arrangements.
Employer of record (EOR): a third-party service that employs workers on behalf of a company.
Contractor management: the process of overseeing and paying independent workers.
Freelancer: a self-employed individual offering services on a project basis.
Global payroll: payroll services that span multiple countries and legal systems.
Managed payroll: outsourced payroll solutions for organisations.
Independent contractor: a worker engaged under contract rather than as a direct employee.