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  • Crawford Temple

The Attack of the Umbrella Clones – The Sequel – Part 2

Last time we discussed the growing threat of companies who clone umbrella companies to defraud recruiters by underhand means. We now look at what those recruiters can do to keep themselves and their reputations safe.

Check, check and check again

When engaging with a new provider it is essential that recruitment agencies carry out detailed checks to ensure that the potential provider is legitimate, credible and genuine.

The starting point must be to check that the company name matches exactly with those details on the Companies House register.

You can find Companies House registration numbers for all the accredited firms listed with Professional Passport on the providers page which can be accessed from our listing page If there is one letter or number different then that company has not been accredited and you should be on high alert.

Recruiters must also check that the bank details for these companies match the name of the registered company when they are inputting their details onto their systems. Again, discrepancies should be investigated immediately.

Cold calling and dubious payments

We have noticed a common theme with clone companies – they invariably cold call contractors. This scenario begs the question of how they obtained the details of the contractors they are trying to attract? It may be linked to promotional emails from clone companies we have seen that offer incentive payments directly to recruitment consultants to encourage them to share contractor information. In some instances these sums of money can be as much as £750 for each successful introduction. Given that the typically-compliant umbrella company operates within a margin of around £20 per week, the huge sums of money that clone companies are offering demonstrates just how much they are making, and how they cannot be operating in a compliant manner.

Behaviour such as this can have disastrous consequences for recruitment agencies. If individual recruiters engage in such activities they can bring their employers into breach of a number of laws such as bribery, tax evasion and data protection. The implications of such breaches are extremely serious and costly, particularly if the agencies’ procedures around the non-facilitation of tax evasion are inadequate.

Identifying potential problems

One very visible indication that a recruitment agency may have a problem with cloned providers is that they suddenly experience a large take-up by contractors of one particular provider for no obvious reason. This is usually a red flag that their ‘offer’ is outside what is usually considered to be compliant and that contractors are being enticed by such things as higher take-home pay.

Sensible management of individual recruitment agents is vital and frequent reviews of their working practices will highlight any unusual behaviour. If you’re a recruitment manager and you have concerns you can contact Professional Passport to understand what might be happening and why.

Similarly, if you have any concerns about a new provider on the scene during the registration process, whether they are accredited by us or otherwise, contact us and we will try to help you confirm the provider’s status.

Finally, we know that cloning is a real risk in the sector, and it is likely that problems with cloned providers will not only continue but increase in the future. Non-compliant providers are becoming increasingly sophisticated in their attempts to defraud both contractors and recruitment agencies and it is essential that end users remain highly vigilant. If you have concerns regarding any issues with a suspected cloned umbrella company contact us for advice and assistance.

If you are an agency or organisation in need of advice around cloning companies or engaging with an umbrella company, contact

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