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Giant Umbrella contractors suffer salary payment delays following suspected ‘data breach’

Following the discovery of “suspicious network activity” in its systems, payroll processing firm Giant Umbrella has taken itself offline, leaving contractors to fume over missing salary payments

Payroll service provider Giant Umbrella has moved to assure its contractors they will be paid in due course, after a suspected data breach prompted the firm to “proactively” suspend its entire operations last week.

The company published a statement on Friday 24 September that confirmed it had temporarily- suspended all services and taken all of its systems offline after “suspicious activity” was detected on its network two days before.

This course of action was taken as a “measure of caution”, according to the statement, but has resulted in potentially thousands of contractors who provide services through the firm not being paid as expected on Friday.

“We appreciate that getting paid in a timely manner is of the utmost importance and this is a responsibility we take extremely seriously,” the statement continued.

“We are working hard to ensure as minimal disruption to payment schedules as possible, and we will confirm that your payroll is back to normal at the earliest opportunity.”

In a follow-up statement, published over the weekend, the company confirmed that it managed to process 8,000 of the outstanding wage payments, but – at the time of writing – there were still reports emerging online from contractors that are yet to have been paid.

Some of these have been shared via the anonymous contracting whistle-blower site, OffPayroll.org, which features numerous complaints from contractors who have not been paid as a result of the issues that appear to have blighted Giant’s operations in recent days.

Read more about umbrella companies and IR35

Many of the complaints raised reference the fact that all of Giant’s lines of communication have been down since Wednesday 22 September, making it impossible for contractors to contact the firm via phone or email.

“Giant has apparently been hacked, and all [their] systems are down,” wrote one disgruntled contractor. “[What I] don’t understand [is] how [they] don’t have business continuity in place or more honest and open communications. Totally unacceptable [to] not just pay last week’s pay as a workaround.”

Another contractor also expressed surprise at Giant’s lack of a disaster recovery strategy, “Sure being hacked is tough, but they should have been able to implement a new solution in 12 hours max – most firms practice for events like these.”

Computer Weekly contacted Giant for a further comment on this story, but had not received a response at the time of publication.

Giant is renowned for being one of the biggest umbrella companies in the market, and the most recent financial accounts of its parent firm – Giant Group – have it listed as a £218m turnover company that made a profit before tax of £1.5m during the 12 months to 31 May 2020.

The company is not the only umbrella firm to have run into technical difficulties that have prevented it paying the contractors on its books, as fellow payroll services provider – Unified Payroll – has also run into problems too.

Severe issues

A post on its website said it “experienced some severe issues” with its payroll system over a two-day period starting on 16 September 2021 that resulted in a “security issue” with its bank account that has left it “unable to remit any payments to any workers” for these payrolls.  

“We do apologise for this unprecedented and very unfortunate situation; we are hoping this is resolved in a very timely manner and we will immediately pay all workers due payment,” the company statement added.

Computer Weekly contacted the company to establish when it hopes to have its system issues resolved, but – at the time of writing – no response had been forthcoming.

Anecdotal evidence suggests the number of contractors that provide services through umbrella companies is likely to have surged in recent months, in the wake of the IR35 tax avoidance reforms being rolled out to the private sector in April 2021. 

The changes saw responsibility for determining how contractors should be taxed shifted off them and onto the medium-to-large private sector firms that engage them, but many companies in-scope of the changes have sought to side-step them by refusing to hire limited company contractors. 

Instead, many firms have introduced policies that state they will only use contractors that are employed via umbrella companies because this absolves them from having to decide how the contractors they engage with should be taxed, because the contractor is classified as being an employee of umbrella company. 

The presence and need for umbrella companies to exist within the extended contractor-to-end-client labour supply chain is a contentious topic, and one that is source of on-going debate at present, with the government repeatedly facing calls to introduce statutory regulation for these firms.

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