Following FCSA’s recent expulsion of umbrella company Orange Genie in connection with “skimming” allegations, an independent arbitration panel (IAP) has concluded the FCSA must consider and improve its processes.

The FCSA was entitled to expel Orange Genie from membership in October, the IAP said. However, the panel warned that “a number of improvements need to be made to FCSA processes around the consideration of sanctions and the implementation of the FCSA’s rights under its codes”. 

The recommendations come in the wake of allegations of malfeasance against Orange Genie, which resulted in the termination of the company’s FCSA membership. Publication Contractor Voice recently published an article alleging that Orange Genie was “skimming” the pay of contractors by including a £2 charge in the amount it withheld from each contractor that was not transparently accounted for in pay statements. 

In its deliberations, the IAP – appointed by the FCSA – concluded that Orange Genie had breached two items in the Umbrella Code: the financial illustration provided to the employee did not clearly state the deduction of £2 that was being made, and the pay reconciliation provided to the employee did not transparently show an itemised breakdown of all employer costs.

According to a document outlining the IAP’s recommendations, Orange Genie failed to act on a financial penalty issued by the FCSA to remedy the situation. “Finally, the FCSA implemented [the expulsion] on 28 October having made repeated requests to Orange Genie to remedy the breach and pay a financial penalty. Orange Genie ignored all requests. The termination of the membership was a sanction that was open to the FCSA under its code,” the IAP document said.

However, the IAP said: “The Panel does not accept that this case has been handled well. We are concerned by:

• The pace at which the case accelerated from finding a breach and issuing a small fine to expulsion
• The lack of clear guidance for members on timelines and procedures for sanctions
• The apparent cursory discussion of suspension as an option – and the lack of focus on repairing the issue at the heart of the complaint
• The relatively small scale of the fine, given the scale of the apparent issue.”

Recommendations set out by the four-person panel, appointed by the FCSA, are non-binding but it is allowed to make suggestions to resolve the situation. “Our first principle should be improving compliance for the benefit of the industry as a whole and remedying the breach, as well as setting an example to all members of the FCSA,” the IAP urged.

The panel made the following recommendations:

• Orange Genie should pay the fine immediately and be suspended from membership for six months so that the FCSA can work with the firm towards compliance with the FCSA codes in place at the end of that period.
• FCSA should issue updated industry guidance on so-called ‘salary skimming’ and consider whether additional charges are appropriate and whether there should be a “viable opt-out” for the worker… “This case must be used to improve practice in all firms, not just Orange Genie.”
• Amendments to the Umbrella Code to clarify points around sanctions, to include “more detailed steps” and designated timelines for response prior to membership termination.
• After six months, the IAP will reconvene “to hear whether Orange Genie has reached compliance and the progress made by FCSA on its codes”.

The panel was chaired by Rebecca Seeley Harris. Other members were Neil Carberry, CEO of the Recruitment & Employment Confederation; employment law partner James Collings; and entrepreneur Carl Reader.

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