Umbrella (or "payrolling") company

A company that acts as an employer to workers who work under a fixed-term contractual assignment with an external client. The worker is not employed by the external client, but by the umbrella company. The umbrella company allows workers to work as an ‘employee’ rather than having to register as a business/self-employed. The umbrella company provides payroll for work carried out by the worker. The umbrella company also can take on the burden of legal and administrative tasks such as employment declarations, insurance, invoicing of clients, deduction of expenses, calculation and payment of monthly social charges and payment of wage/ remuneration after deductions. An umbrella company can take different legal forms, including cooperatives or any other commercial entity. In some countries umbrella companies are not allowed to operate in certain sectors. The use of umbrella companies enables some businesses to avoid employment law and tax obligations of directly employing their workforce.