We are often asked about our umbrella offering. But which umbrella are we talking about? Payroll Management Services or Third Parties Umbrella Services?
Two completely different topics, and we will try to clarify the differences here.
A simple distinction
Payroll Management Services is the best way to deliver work for a client where you are not on the approved supplier list, by leveraging the supplier status of a third-party company.
Third Parties Umbrella Services is a service that handles all administrative activities tied to the assignments of an independent consultant who chooses not to set up their own company to deliver their services. Only an umbrella company can offer these services.
Who, when and why use these services?
The consultants' perspective
For a consultant, Third Parties Umbrella Services is first and foremost the choice not to set up and run their own company to deliver services. It means delegating every administrative aspect of the business to an umbrella company. It is also the choice to benefit from employee social protection and all the related advantages — unemployment insurance, social security and pension — while keeping full independence in selecting assignments. Payroll Management Services, for consultants, is more of a constraint than a choice. That constraint is that many large clients have set up panels of approved service suppliers, including for professional services. Since freelancers are not on these panels, working with large groups often requires contracting through an approved company.
The perspective of IT Services Companies and consulting firms
For them, just as for freelancers, Payroll Management Services is a way to easily offer their services and expertise to large groups where they are not on the approved supplier list. This service can be used over the long term, especially for recently founded or small firms, or over the shorter term for larger consulting firms and IT Services Companies, while a full supplier qualification is run by the procurement teams of the end clients.
As for Third Parties Umbrella Services, consulting firms and IT Services Companies sometimes confuse the term with offering a project-based permanent contract to a new hire. A project-based permanent contract has nothing to do with Third Parties Umbrella Services, which can only be carried out by an umbrella company and is their exclusive activity. Third Parties Umbrella Services is nevertheless increasingly familiar to IT Services Companies and consulting firms, who rely more and more on external resources. In that case, it is the freelancer who asks them to contract with the umbrella company they have chosen. Some firms also use this status to continue working with internal employees who express the wish to go freelance.
The perspective of buyers and operational managers
For clients, and more specifically their procurement teams, Payroll Management Services is a tool for operational efficiency. Approved firms do not always have on hand the skills being sought. Payroll Management Services lets buyers quickly access skills and expertise from non-approved companies while keeping a limited supplier base. As for Third Parties Umbrella Services, for clients who engage freelancers, it is sometimes seen as a way to mitigate the risk of an assignment being reclassified as an employment contract, since consultants already hold employee status through the umbrella company.
How does it all work in practice?
Third Parties Umbrella Services is a tripartite relationship in which the umbrella company sets up an employment contract for the consultant who delivers services to a company. The umbrella company then signs an umbrella services agreement with the client company to invoice the consultant's work. Learn more about Third Parties Umbrella Services.
Payroll Management Services consists of setting up a commercial contract with the client to invoice the services delivered by the consultant or company using the offering. In most cases this commercial contract is a simple subcontracting agreement, but some clients may prefer to set up co-contracting agreements. Learn more about Payroll Management Services.
In conclusion
Payroll Management Services meets efficiency and administrative simplification goals, both for end clients and for non-approved service providers.
Third Parties Umbrella Services is a sales-administration and payroll activity that serves freelancers who want to keep employee status.
Payroll Management Services and Third Parties Umbrella Services are therefore two completely distinct activities, aimed at different audiences, that can nevertheless be combined. This is the case, for example, when a freelancer cannot offer their services directly to an end client and must use the Payroll Management Services of an approved company, while also choosing to operate under Third Parties Umbrella Services rather than setting up a company.
So they are different — but they can also go hand in hand!
We remain at your disposal for more details on our dedicated offerings.
