Award winning service! Sign Up What is an overarching contract of employment and why do I need one? (2 minutes to read) HomeWhat is an overarching contract of employment and why do I need one?What is an overarching contract of employment and why do I need one? Any contractor employed through an umbrella company will sign an overarching contract of employment. In essence, this means that the contractor becomes a permanent employee of the umbrella company – it provides continuity of employment during and between different contracts. This overarching contract of employment allows an umbrella company to pay you as a permanent employee, which is one of the chief benefits of an umbrella company – you’re paid through the PAYE system, with tax and National Insurance taken care of by the umbrella, greatly simplifying the administration surrounding contract work and avoiding the need to submit a tax return if your income is solely through the umbrella company. It also guarantees the contractor the same rights as any other permanent employee – namely sick pay, statutory parental pay, pension and holiday pay. An overarching contract of employment requires several components to be considered a true contract of employment. It will guarantee a minimum number of hours – usually 336 a year, equivalent to one day a week – and require any shortfall in a year to be paid to the contractor. The contract must also make a provision for holiday pay, in compliance with the Working Time Regulations. Finally, there must be mutuality of obligation, which is a key component of any employee-employer relationship – in plain English, this means that both the umbrella company and the contractor have obligations to each other. You may also like to read What is the Apprenticeship Levy and why does it appear in my pay calculation? The Levy is a small tax charge, payable by all companies with an annual wage bill in excess of £3m. ... Read More Umbrella vs. Limited – which is the best option for me? The three main options are to set up your own Limited company, go self-employed or work through an Umbrella company. Self-employed ... Read More Your Payslip Explained Payment will be made by Same Day Fast Pay Transfer, providing cleared funds are received into our bank account by ... Read More Most Popular Guides How is my pay calculated? What is Employers National Insurance? What is IR35? How does an Umbrella company work? Umbrella vs. Limited Ask us a question Resource Categories Starting up Umbrella Company Advice Contractor Tax Industries Calculate Your Take Home Pay Comprehensive Contractors Guides Sign up to Contractor Umbrella The complete umbrella package... With the flexibility to work either limited or umbrella. SIGN UP TODAY Want to learn more about contracting? We understand you might have lots of questions, so why not give one of our friendly experts a call on 01206 591 000. Alternatively, sign up using this form and we will send you an email, guiding you through the steps you will need to take. SUBSCRIBE ME COOKIES GDPR POLICY GENDER PAY GAP COMPLAINTS CONTACT US ANTI-MODERN SLAVERY The website and its content is copyright of Contractor Umbrella 2018. All Rights Reserved. Contractor Umbrella Ltd is a company registered in England and Wales with Company Number 4324081. VAT Number 780351338. Our registered address is Unit 36 Silk Mill Industrial Estate, Brook Street, Tring, HP23 5EF.