How to understand Contractor Relationships

Critical Mass

Contractor relationships are vital to understand and it is important to handle them well for a rewarding career as a contractor. Learn more in our guide New to Contracting.

Here are the basics of what a contractor should know:

1. Recruitment Agency

Your recruitment agent is vital to a successful contracting career, and will be largely responsible for finding you contract work. The recruitment agency has a relationship with the client to find suitable contractors to complete various tasks, and agrees an hourly/daily rate with the client for each job.

Your recruitment agent will have a contractual relationship with your umbrella company in which you are the person named to fulfil the role. See Introduction to an Umbrella Company for further information.

2. The Client

You do not have a direct contractual relationship with your client. Your client has a contractual relationship with your umbrella company, via your agency, in which you are the named person to fulfil the role.

3. The Umbrella Company

You become an employee of the umbrella company as soon as you register and open an account. Find the best umbrella company with our useful guides.

The umbrella company will have a contractual relationship with your recruitment agency and your client - in which you are the named person to fulfil the role.

Once you have done the work how do you get paid?

• Send your time sheet to the umbrella company
• The umbrella company invoices your recruitment agency for your hours worked
• The recruitment agency will invoice the client for the hours you worked
• The client will pay your recruitment agency
• The recruitment agency will pay your umbrella company
• Your umbrella company will pay you.