A British concept, the umbrella company is often referred to as “portage salarial”. In fact, the two modes of operation are very comparable. They offer freelancers added security without sacrificing their independence. Here’s how it works.
What is an umbrella company?
When a worker wants to become self-employed, he has 2 alternatives: he can set up a micro-business, or choose to work as a permanent employee. The umbrella companies employ self-employed workers who wish to be attached to a larger organization.
An umbrella is a type of “Managed Service Company” (MSC), i.e. its main activity is to mediate between a co-contractor and a client. Each month, it collects the fees due for the assignment from the co-contractor, and passes them on to its principal (the freelancer) in the form of a salary or dividend. In this configuration, the independent contractor becomes an employee of the umbrella company.
What is “portage salarial”?
In France, the umbrella company concept has taken the form of “portage salarial”. Born in the 90s, this fledgling sector is enjoying increasing success, with 2-digit growth since the beginning of the year 2000.
How does freelance administration work? In fact, it’s a three-way relationship that links a ported employee, a portage company and a client company. The latter two are committed to a commercial contract, while the portage employee is committed to an employment contract with the portage company. This does not mean, of course, that the “porté” employee loses any of his independence: he is free to choose his work assignments and clients.
Portage salarial and umbrella company, what are the benefits?
By becoming an employee of an umbrella company or a “portage salarial” business, the self-employed person gains access to the same benefits as a regular employee. For instance, they gain access to better social security cover, unemployment benefits in the event of termination of their contract, and pension coverage.
What’s more, in return for a fixed fee, the PAYE employee no longer has to worry about administrative matters. The “portage salarial” or umbrella company takes care of these matters, as well as the invoicing of their services to the customer company. For the freelancer, this frees up time to concentrate on assignments, training or looking for new projects.
For client companies, freelance administration offers greater flexibility in the search for new talent. They don’t need to set up complicated HR procedures to recruit, and they don’t have to add to their payroll costs by signing up a new fixed-term or indefinite-term contract.
Specific features of umbrella companies.
When it comes to taxation, umbrella companies are very closely watched. In fact, it’s the responsibility of the employee to declare his or her income accurately. In the event of an audit, it is the employee who must be able to justify the expenses declared, not the umbrella companies. This is definitely an advantageous system for the umbrella company.
As far as costs are involved, the umbrella company generally deducts a percentage from the employee’s wages. In some countries, Umbrella companies prefer to charge a fixed amount. This may be weekly or on a monthly basis. If a percentage is chosen, the umbrella company will negotiate the amount with the client beforehand.
Choosing ERAI TURKEY the umbrella company to work in Turkey
In addition to offering stability and protection to freelancers wishing to work in Turkey, the umbrella company ERAI TURKEY assists the employee with legal and immigration formalities. The freelancer is also freed from administrative tasks, in return for a fixed fee (generally 10%). There are two types of status, depending on the duration of the assignment: seconded employee (project lasting less than 24 months) or expatriate employee (project lasting more than 24 months).