Agency work and holiday pay

BeBetter

My Husband has got a new job with a company to start in 2 weeks but they deal with agency workers so he had to register with an agency so he could start this job.

Sometimes after a while, the company will take the agency workers on and give them full time employment with the company itself, that's what my Husband is hoping will happen with him.

He's been advised to register with an umbrella company and they deal with his tax and insurance etc. The umbrella company have given him the option of deducting 12% from his weekly pay to cover holiday pay.

What we don't understand is what benefit there is in them doing this?

Why can't we just put aside however much 12% is every week and save it up ourselves? Is there a reason why it's better for the umbrella company to do this?

The job is likely only to be temporary at the moment (unless he gets kept on by the company themselves.) I don't know if that makes any difference to the answers?

He's never dealt with agency work before, it's all new but lots of companies in this field (driving) seem to work like this now. It all seems very complicated.

BeBetter

I thought someone had answered to help. You're just spamming.

anamenottaken

BeBetter wrote: »

My Husband has got a new job with a company to start in 2 weeks but they deal with agency workers so he had to register with an agency so he could start this job.

Sometimes after a while, the company will take the agency workers on and give them full time employment with the company itself, that's what my Husband is hoping will happen with him.

He's been advised to register with an umbrella company and they deal with his tax and insurance etc. The umbrella company have given him the option of deducting 12% from his weekly pay to cover holiday pay.

What we don't understand is what benefit there is in them doing this?

Why can't we just put aside however much 12% is every week and save it up ourselves? Is there a reason why it's better for the umbrella company to do this?

The job is likely only to be temporary at the moment (unless he gets kept on by the company themselves.) I don't know if that makes any difference to the answers?

He's never dealt with agency work before, it's all new but lots of companies in this field (driving) seem to work like this now. It all seems very complicated.

What rate has been offered by the agency?
Did they quote that as being inclusive of holiday pay?

How did he find the job? Through the agency or direct with the company who then directed him to the agency?

What rate of pay would he have if employed directly by the company?

Is there evidence that the company does actually take people on as employees? Did they mention 12 weeks in respect of this?



[And I've clicked the Spam button re judypink - both here and in another thread]

patman99

The reason for using an umbrella company is for Tax avoidance purposes. He can submit receipts for travel expenses (car Tax, insurance, mot & fuel, or train/bus fares) along with his mobile phone & even lunch & they will deduct this from his wages & pay him these as 'expenses', thus no Tax to pay.

One of my now ex colleagues got paid via a U/C when he first started his Agency placement & in 6 months only paid £200 in Tax despite earning £10k.
The only downside is that you don't get holiday pay (and the Agency won't increase his pay by 12.07% compensate either). Nor do you get SSP.

TBH, it will save the Agency 12.07% at a cost to your O/H. He will need to work out whether he can save more in Tax/NI than 36 days he would have as paid holiday.

Basically, if he is on £90 p/day, then he would need to earn (or save) an extra £3240 to cover the costs to him of funding his own 'paid' time off.

I would say that unless he is on a massive wage then he is best advised to steer-clear of the U/C & go direct with the Agency. I feel they are trying to encourage him to go visa a U/C to save them the hassle of deducting his Tax/NI & producing a payslip.

LittleVoice

patman99 wrote: »

The reason for using an umbrella company is for Tax avoidance purposes. He can submit receipts for travel expenses (car Tax, insurance, mot & fuel, or train/bus fares) along with his mobile phone & even lunch & they will deduct this from his wages & pay him these as 'expenses', thus no Tax to pay.

One of my now ex colleagues got paid via a U/C when he first started his Agency placement & in 6 months only paid £200 in Tax despite earning £10k.
The only downside is that you don't get holiday pay (and the Agency won't increase his pay by 12.07% compensate either). Nor do you get SSP.

TBH, it will save the Agency 12.07% at a cost to your O/H. He will need to work out whether he can save more in Tax/NI than 36 days he would have as paid holiday.

Basically, if he is on £90 p/day, then he would need to earn (or save) an extra £3240 to cover the costs to him of funding his own 'paid' time off.

I would say that unless he is on a massive wage then he is best advised to steer-clear of the U/C & go direct with the Agency. I feel they are trying to encourage him to go visa a U/C to save them the hassle of deducting his Tax/NI & producing a payslip.

Where are you finding 36 days for paid holiday?

patman99

Standard Agency holiday accrual is normally 12.07% of standard hours (some even include o/t hours as well).
This equates to .75 days accrued each week which equates to 36 days holiday (you don't accrue holiday pay whilst on holiday). The 36 days includes Bank Holidays as well.

LittleVoice

patman99 wrote: »

Standard Agency holiday accrual is normally 12.07% of standard hours (some even include o/t hours as well).
This equates to .75 days accrued each week which equates to 36 days holiday (you don't accrue holiday pay whilst on holiday). The 36 days includes Bank Holidays as well.

The reason agencies use 12.07% is because that represents statutory (therefore minimum) annual paid leave entitlement. Statutory holiday entitlement is 5.6 weeks (= 28 days per annum for someone working 5 or more days a weeek).

BeBetter

anamenottaken wrote: »

What rate has been offered by the agency?
Did they quote that as being inclusive of holiday pay?

Average hourly rate for the job. Sorry, I don't know if it's inclusive.

How did he find the job? Through the agency or direct with the company who then directed him to the agency?

Someone he worked with previously was employed this way, then company took him on full time employed by them after a few weeks. My Husband had already submitted a CV to them on the off chance there would be a job available. He got a call from the company to say he could get a start but he'd have to go through an agency they use (in effect he got his old workmate's job when workmate became employed by company).

What rate of pay would he have if employed directly by the company?

Not sure exactly but think it's the same. He can ask his workmate what his hourly rate is now.

Is there evidence that the company does actually take people on as employees? Did they mention 12 weeks in respect of this?

See above. No nothing mentioned about 12 weeks, at the moment it's just temporary (no length of time stipulated) and as and when needed.




[And I've clicked the Spam button re judypink - both here and in another thread]

Adding 10 characters.....

BeBetter

patman99 wrote: »

The reason for using an umbrella company is for Tax avoidance purposes. He can submit receipts for travel expenses (car Tax, insurance, mot & fuel, or train/bus fares) along with his mobile phone & even lunch & they will deduct this from his wages & pay him these as 'expenses', thus no Tax to pay.

One of my now ex colleagues got paid via a U/C when he first started his Agency placement & in 6 months only paid £200 in Tax despite earning £10k.
The only downside is that you don't get holiday pay (and the Agency won't increase his pay by 12.07% compensate either). Nor do you get SSP.

TBH, it will save the Agency 12.07% at a cost to your O/H. He will need to work out whether he can save more in Tax/NI than 36 days he would have as paid holiday.

Basically, if he is on £90 p/day, then he would need to earn (or save) an extra £3240 to cover the costs to him of funding his own 'paid' time off.

I would say that unless he is on a massive wage then he is best advised to steer-clear of the U/C & go direct with the Agency. I feel they are trying to encourage him to go visa a U/C to save them the hassle of deducting his Tax/NI & producing a payslip.

He has to travel 250 miles a week to get to work and umbrella company has said he can claim mileage and a meal allowance. That would help increase his wage.

Job isn't a set 9-5 type, the hours worked each day can be different but he's expecting somewhere in the region of £150 per day roughly.

He's unlikely to be working like this for any length of time and wouldn't be taking holidays anyway so we're wondering what the point is of getting deductions made?

He's under the impression he has no choice and that he has to go with an umbrella company but I'm not sure he's understood the agency properly. He's an industrial worker, he deliberately avoids paperwork and facts and figures etc. I might phone the agency and umbrella company myself without mentioning him and try to get some more information.

Is there anything specific I should ask if I do?

anamenottaken

BeBetter wrote: »

He has to travel 250 miles a week to get to work and umbrella company has said he can claim mileage and a meal allowance. That would help increase his wage. I hope they also said he needs to keep receipts for the "meal allowance". These should demonstrate that items at least to the value of the allowance were purchased on the working day. It isn't, for example, an allowance for taking sandwiches made up at home. They are unlikely to ask for these to be submitted to them but your OH would need to have them available in case HMRC investigate.

Job isn't a set 9-5 type, the hours worked each day can be different but he's expecting somewhere in the region of £150 per day roughly.

He's unlikely to be working like this for any length of time and wouldn't be taking holidays anyway so we're wondering what the point is of getting deductions made? The idea (backed up by WTR which include the right to paid leave) is that payment should be made when the holiday is taken, the exception being that leave accrued but not taken at the time of termination of employment can be paid. However it is also an advantage to the umbrella company or agency in that they receive the pay from the client during the course of the assignment and can hang on to it for a while too help cashflow.

He's under the impression he has no choice and that he has to go with an umbrella company but I'm not sure he's understood the agency properly. He's an industrial worker, he deliberately avoids paperwork and facts and figures etc. I might phone the agency and umbrella company myself without mentioning him and try to get some more information.

Is there anything specific I should ask if I do?

Thanks for answering my questions too.

It is good that the company requiring the work do actually have a track record of taking someone on after testing them out via the agency. (I have done something similar in the past when recruiting someone where their references were taking a long time to come through and it seemed safer to employ through the agency until we had received them.) I had asked about the 12 weeks and pay level for employees because agency workers do acquire rights to equal pay with directly employed staff after 12 weeks work.

An agency, like the UC, would also be expected to pay for leave when it was taken or on termination of the assignment.

When contacting the umbrella company, I suggest you ask whether rates they quote (assuming it is the agency which has quoted a pay rate) is the rate which will be paid per hour (or per day) or whether they are quoting it as inclusive of holiday pay. This is so you can work out how much is actually going to turn up in weekly or monthly pay. It is also important to know because of the comparison with a directly employed person. (After 12 weeks, it has to be no less than what someone directly employed by the company would receive in that situation.) Remember too that the rate an employee receives if quoted as an hourly rate does not include holiday pay - because they will be paid their normal hourly rate when they are on leave.

PaddyPaws

When I was looking for an umbrella company I spoke to a few and was quoted how much I would "take home" based on hours and rate of pay. The umbrella company I chose also sent me an example pay slip so I could see how the money was made up which really helped.

Points to remember (which were new to me working this way and the sample pay slip helped me to understand - apologies if you already know this)

The UC will take a management charge out of the money paid (taken before tax)
The employers NI will come out of the money (taken before tax)
Any expenses (unless the employer has agreed to pay these over and above the hourly/daily rate) will come out of the gross pay (so you don't get this as "extra money" you just don't pay tax on that bit) and then be added back onto the take-home pay
Holiday pay will come out of the gross pay (I get paid mine rather than leaving it with the umbrella company)
And the usual tax and employers NI will come out of the gross pay

I would suggest ringing the umbrella company and asking for a quote (with a full breakdown) of how much you would earn through them. You don't need to say who the job is with just the hourly rate and number of hours. Also talk about the expenses, and how these would be handled and also ask what the options are with holiday pay. And ask them to email you the quote with breakdown showing all the info

HTH
PP