Umbrella Schemes

katies_mum

Please does anyone know about these? hubby went for agency driving job this morning and the company uses one of these...we are rather confused as to how they work as they say you can claim expenses etc but you don`t get them they are offset against your hourly rate/pay.. :eek: I`ve read up on the company that is running the scheme but its as clear as mud. The basis pay they were offering was a paltry £8 an hour.
I thought agencies paid their staff the hourly rate less tax and NI.
Just remembered they want £24 a week for you being in this scheme.
Any advice would be great, I want to tell him to run a mile..and keep looking.

Notmyrealname

£8/hr is good for a driving job. Truck drivers get paid less than shelf stackers at Tesco.

Basically you sign away all employment rights for the ability to claim expenses such as travel to work and get an extra few quid in your wage packet.

The agency gets out of all that pesky employers liabilities and also doesn't have to pay Employers NI.

I would avoid it.

Uncertain

Notmyrealname wrote: »

I would avoid it.

Which is fine providing you have a better alternative available.

TrickyWicky

katies_mum wrote: »

Just remembered they want £24 a week for you being in this scheme.

If you have to pay to be in it then its rather pointless really isn't it. As you put it, it's a 'scheme'.

If you can support your partner while they're out of work (assuming they currently are) then I'd tell them to avoid this like the plague.

katies_mum

Thank you all for replying we have decided to give this a miss. I`m sure there must be plenty more agencies with jobs that pay you in the proper way! He has only been looking properly since yesterday so must be patient.
Thanks again, you have just confirmed what I was already thinking.

patman99

It's basically a way of avoiding tax. A chap I worked-with was in one for the first part of his assignment ( took him a while to convince the Agency to allow him to do it mind). The way he explained it was that he worked-out his weekly travel costs (fuel and wear & tear), food and mobile phone costs and divided it by the hours worked.
His umbrella Co. then paid him his wages minus the expenses which he then got paid separately for by submitting an invoice. By invoicing £75 a week in expenses, he saved a fortune in tax. In fact for the 6 months of his initial assignment, he only paid £170 in tax (bear in mind he was on £10.17 p/h) thats quite a saving.

Notmyrealname

Uncertain wrote: »

Which is fine providing you have a better alternative available.

Set up your own Ltd Company. Employment agencies that use umbrella companies pretty much all accept drivers who are set up as their own Ltd Company. Some will accept you if you're a sole trader but not many.

katies_mum

Now its getting confusing! Ltd Company? help?
Didn`t realise it could be so complicated. Hubby has been employed for the last 40 odd years and has recently been made redundant. He thought he might be able to get a driving jobs trhough an agency and then get paid.

Have things really changed so much, or could it just be some agencies that run this umbrella way? I`ll have to read up about Ltd Companies as havn`t a clue.

Russe11

working for £8 an hour as an unmbrella arrangement with a £24 a week fee its boarder line meeting NMW.

Russe11

I've just done the calculation, working £8 per hour under a umbrella company with £24 a week charge work out at...

£2.25 per week more than a NMW 37.5 hour week.

So the employer (agency) has to pay no employers NI, gets a back hander or even owns the umbrella taking the fee and the worker gets £2.25 a week more for the "scam".

Umbrella arrangements are not suitable for low paid workers.

PasturesNew

I used to be a contractor and had a Ltd company .... if I do it again I'd use an umbrella company because they're easy, especially if you're not sure how long the work will last etc.

An umbrella company takes the £8/hour for the job and they ask you if you've any expenses that need paying. If, say, the site is 10 miles from home and you go there/back for 5 days, you can "claim" 40p/mile, so that's 40px100 miles = £40. If you're on the road and get a hot meal and some cups of tea for, say, £8 each day, you can "claim" that back too, which is another £40.

The umbrella company make a charge for this effort. Let's call that £20/week (I've no idea how much it is).

Now, the umbrella company also have to make sure you're paid at least NMW and they have to put aside holiday pay (which you'd get back when you take days off) and EmployERS NI contributions.

So, roughly, the figures might work like this:

£8/hour for 50 hours' work = £400/week

£400 Invoice for work
-£40+40 expenses
-£20 umbrella charge
======
£300 left in the kitty
£30 set aside for holiday pay
====
£270 left over.

This £270 would become the basic wage.... except there's a problem as £270/50 hours is less than NMW. So you'd have to drop some of the expenses claims to make it balance. So, say you don't put in a "claim" for £40 for lunches/cups of tea, the basic is now £310/50, which is roughly NMW.

But hang on, you've still got to pay the EmployERS NI, so drop that other set of expenses....

You'd therefore actually be paid NMW and no expenses.

That £8 has to cover more than just wages. You're paying your own holiday pay, your own employers NI and paying an umbrella company £20 to work all that out and produce you a payslip.

However, if/when the work comes to a grinding halt, you can get a P45 straight away and sign on.

£8 doesn't really make it worth the hassle ..... and barely covers NMW. But, work's work, so if that's all there is might as well go for it.