Agency or umbrella company

sonniemell

Hi everyone

I am currently temping in a job at the moment (ongoing), which I did get through a recruitment agency. before I started the job, they offered me the chance to get paid through an Umbrella Company, If I chose to get paid through the agency I would be on £7 ph, If I went through Umbrella I would be on £8.50 ph this would be for 37 hrs PW....

So I chose to be paid by Umbrella, with it being more money per hour and also as I have a fair bit of travelling and was told if I had expenses I could claim it back. (which is not true, it just gets offset against your tax).

I have now started to get paid and I received an email from the agency before my pay went in.....

We can confirm that a payment will be made on 22/08/2014 for £385.06 relating to timesheets processed for week ending 17/08/2014. If you are being paid directly by ****** a payment advice will be sent to you shortly.

IMPORTANT, if you are working through an Umbrella/Limited Company, the amount shown above will be transferred to their designated bank account and may include VAT so this communication is for your information only. The umbrella/Limited company will provide you with a payslip in relation to the funds they transfer into your own account.





Then when I actually got my money in my account from the Umbrella company, I received £245.10. Is this right.....

I did ring the umbrella company and asked them about my expenses and why did I get an email from the agency telling me how much I THOUGHT I was getting, they stated that was if I went through Agency, and not Umbrella, and that obviously I had to pay tax £9 and ni £10.22 with them and that they banked £28.75 in a separate account, to cover holiday pay if it was needed, (but since I complained about my pay) they said that they would stop banking the hol pay,now and give me all of my wage.

NOW what I want to know is .....

1)Why did I receive the email from the agency stating that amount ?? and why have I received a lot less from the Umbrella company, where would the remainder of my money go from agency to umbrella ??????

2) Should I go through Agency (a lot less pay @ £7ph) or stay with the Umbrella company @ £8.50 ph????

Obviously I want to earn as much as I can, but I do not appreciate being ripped off, can anyone advise me on this ...


Kind regards




Sonnie

GB350

You should have taken the £7.00 p/hour paye the agency offered.
The uplift or raise in your rate to enable you to take home the same amount via an umbrella company would be 33%.
So in your case a rate of £9.31 would have given you the equivalent take home pay.
I'm going to guess that they probably didn't explain to you that through an umbrella company you are paying Employers NI as well as your own.
They also deduct 12.07% of your pay and put it aside as your holiday allowance which is then paid back to you at your request albeit less 20% tax and generally a week in hand.
Finally deduct a fee of between £20 and £30 a week which they will charge for the privilege of using their service and you are left with a pittance....

patman99

Don't forget that by being paid via an umbrella company, you get no holiday pay. If you book a day off, then you get no pay as you are considered to be self-employed.

If I were you, I'd inform the Agency that you wish to be paid directly by them a\nd will accept the £7 p/h they initially offered.
They won't like it as they then become liable to pay you holiday pay, so be prepared to get stern with them.
If they point-blank refuse, then make sure to max-out your expenses sheet that you should be submitting to the umbrella company each week.

When I was forced to accept pay for an Agebcy placement through an umbrella company, I claimed £5 per day for food (even though I took a pack-up) and also rounded-up my daily mileage to/from work to the nearest whole number.

sonniemell

Thank you for giving me advice on this matter.

Yesterday I wrote the Agency an email address stating my concerns about this matter:-

I have a few issues I have in relation to the contract I am doing with you and C**....

1) Issue of pay.

On 20/8 I recieved an email from ***** services for £385.06 relating to timesheets processed for week ending 17/08/2014. in which I was actually paid £245.10 + 28.75=(which has been accrued/banked) by C*** .... see pdf.....

Has the remainder (£111.21) gone to ***? and if so for what exactly ?

2) Do I accrue holidays/hours with you for what I work??? I did with R******* P******l (previous agency)and was being paid by an umbrella company,(S*** - S***** C****** ) but I had never had to bank my wages in a pot, to be paid my own money that I have earned, taken out of my wages to cover for my holiday pay, which C** state I have to do with them.

3) The reason why I went with the umbrella company was obviously I would be on £8.50 an hr, and that I could claim back my expenses, which I have found out is not the case as this gets offset against my tax.

The problem I have is it is costing me £41.10 pw just to travel to this job. and If I am only clearing (£245.10 pw) minus travel £41.10 which I cannot claim back as originally thought. It leaves me £204. divide that by the hours I work which is 37, then what I earn, works out at just over 5.50 ph which is less than minimum wage in itself, and that is through the Umbrella company, going through you would be a lot less.

So what am I supposed to do in this situation.

I do like the job, but surely you can see what I am saying with regards to this matter.

Kind regards



........................................................

As you can all see, I worded it the best way I could but ill see what the Agency come back with and hopefully something will get resolved, I mean I love the job but the travelling in itself is a pain and the expense too, like stated my other agency used to pay my wages through the an umbrella company and was getting my accrued hours I had, paid for my days off I wasnt aware you dont get paid for any accrued hours with any agency work, it is very confusing.

patman99

It is very unusual to be paid holiday pay when you are paid via an umbrella company. The whole idea for the agency using them is so that you are not directly employed by the agency, so they don't have any obligations towards holiday pay.
The umbrella company useually classes you as a contractor in much the same way as someone employed in the construction industry.

If, as you state in your letter, your previous umbrella company were paying you holiday pay, then I would assume that on top mof their usual charges they would have had a 12.07% deduction based on your hourly rate x the hours worked. This would have then been your holiday pay.

GB350

I work in construction and have been bumped into the umbrella company payment method against my will due to recent government legislation. It was that, or form my own limited company which was not something I wanted to do.
The government legislation was meant to deal with the problem of false self employment, but has instead landed me and many others in the position of false PAYE employment.
You are PAYE in the eyes of the taxman and liable to pay, via an umbrella company, both employees & employers NI contributions as well as income tax.
Under government PAYE rules you are entitled to 28 days paid holiday per year, which the umbrella company deducts from your weekly pay at 12.07% and then allows you to claim back at a later date. usually a week in hand and taxed again at around 20%.
You have none of the benefits of being an employee yet your tax burden is 33% greater.
As for the expenses thing, forget it. Even as an employee you can claim back your travel expenses at 45p a mile so long as you are not working in the same place for longer than 2 years.
Umbrella companies are parasites, and a loophole which has been left open by HMRC for reasons known only to them.

getmore4less

GB350 wrote: »

Under government PAYE rules you are entitled to 28 days paid holiday per year, which the umbrella company deducts from your weekly pay at 12.07% and then allows you to claim back at a later date. usually a week in hand and taxed again at around 20%.

Holidays have nothing to do with PAYE and any monies held back are not tax again they only get taxed once.

GB350

As a PAYE employee, I think you will find that holiday leave or entitlement is by law , part of the package.
" Most workers who work a 5-day week must receive 28 days’ paid annual leave per year. This is calculated by multiplying a normal week (5 days) by the annual entitlement of 5.6 weeks".
That is quoted straight from the government's own website.
By most, they mean anybody working under PAYE rules and not self employed.
Umbrella companies seem to be oblivious to the following government edict which states :
" Holiday pay should be paid for the time when annual leave is taken. An employer cannot include an amount for holiday pay in the hourly rate (known as ‘rolled-up holiday pay’). If a current contract still includes rolled-up pay, it needs to be re-negotiated".
The rules are pretty clear so far as I can see, it's just that everyone seems to be ignoring them and getting away with it at the moment....

GB350

Holidays have nothing to do with PAYE and any monies held back are not tax again they only get taxed once.

Holiday entitlement has everything to do with PAYE employment.


The 12.07% that umbrella companies hold back for you as holiday pay lowers your taxable income for that week but obviously is taxed at a later point when they pay it out to you.
And yes it is only taxed once.... Apologies if one of my previous posts had suggested otherwise.