Agency not paying the promised rate .

fuzzracket30

Hi there,

I've recently started on a new temporary construction assignment through an agency.
First contact was made about 3 weeks prior to starting job and in the run up to the work starting there were about 5 or 6 phone calls between myself and the agency, each one it was reaffirmed that myself and the other two workers would be getting paid £200/night or the equivalent hourly rate. Just before the work actually started I asked via email for confirmation of the pay as I'd not seen or signed any sort of written confirmation. Received an email confirming a rate of £22/hour based on 9 hour shift (£198) - close enough I thought.

Was then notified I would be paid through an umbrella company and asked to sign up, made aware of their £18/week fee, fine. Signed up.

Began work, received first payslip:

PAYROLL COMPANY Income: 45hrs x £22 = £990

Deductions:
HMRC Payment NIERS £98.83
Company Margin £18.00
Paid to Employee £873.17
My own tax and NI deductions come after this.

I do some research into NIERS (Employer's National Insurance), accept that it has to be paid, but not so happy that it's coming out of my share of the pay.

Talk to the Umbrella company, they say it's normal that it gets taken off of what the Agency sends them. Suggest I phone the agency and ask to be paid directly. So I do...

The agency says "If you get paid directly by us, the rate you'll get is £17.46/hr, plus £2.10/hr holiday which you can claim at the end of the contract". (£19.56/hour)

I argue that at no point am I ever getting the advertised £22/hour or £200/night which was promised all along and there was no mention of the Employer's National Insurance contributions being taken off of my pay rather than the agency's own margins.

"All I can do is apologise" was the response.


What can/should I do? I'm down near £100/week on what was the promised rate.

Is this normal practice?

Thanks

motorguy

fuzzracket30 wrote: »

Hi there,

I've recently started on a new temporary construction assignment through an agency.
First contact was made about 3 weeks prior to starting job and in the run up to the work starting there were about 5 or 6 phone calls between myself and the agency, each one it was reaffirmed that myself and the other two workers would be getting paid £200/night or the equivalent hourly rate. Just before the work actually started I asked via email for confirmation of the pay as I'd not seen or signed any sort of written confirmation. Received an email confirming a rate of £22/hour based on 9 hour shift (£198) - close enough I thought.

Was then notified I would be paid through an umbrella company and asked to sign up, made aware of their £18/week fee, fine. Signed up.

Began work, received first payslip:

Company Receipts Units Rate Amount Company
PAYROLL COMPANY Income: 45hrs x £22 = £990

Deductions:
HMRC Payment NIERS £98.83
Company Margin £18.00
Paid to Employee £873.17
My own tax and NI deductions come after this.

I do some research into NIERS (Employer's National Insurance), accept that it has to be paid, but not so happy that it's coming out of my share of the pay.

Talk to the Umbrella company, they say it's normal that it gets taken off of what the Agency sends them. Suggest I phone the agency and ask to be paid directly. So I do...

The agency says "If you get paid directly by us, the rate you'll get is £17.46/hr, plus £2.10/hr holiday which you can claim at the end of the contract". (£19.56/hour)

I argue that at no point am I ever getting the advertised £22/hour or £200/night which was promised all along and there was no mention of the Employer's National Insurance contributions being taken off of my pay rather than the agency's own margins.

"All I can do is apologise" was the response.


What can/should I do? I'm down near £100/week on what was the promised rate.

Is this normal practice?

Thanks

Yes. Its normal practice.

The client you're engaging with are paying £200 a day for your services.

You have been set up as an employee of the umbrella company and are taxed as such. Employers NI has to be paid and therefore that comes out of the £200 a day.

Its come up before :-

https://forums.moneysavingexpert.com/discussion/5751056

An alternative might be to look at working through your own limited company but it depends what type of work you are doing for the end client.

fuzzracket30

motorguy wrote: »

Yes. Its normal practice.

The client you're engaging with are paying £200 a day for your services.

I disagree, the client are paying £200 plus the agencies margin, which can be as much as 40% ontop.

I can sort of appreciate the umbrella taking their NI out as they are unaware what has been agreed (or not..) between the agency and myself. But, the agency suddenly only offering £19.56 when their NI could/should be coming out of their own margin - especially as it's never been mentioned before when talking about my pay.

edit: Surely the agency should have just said I was getting paid £19.50 or £175/night all long and not £22/200?

It's been a good few years since I last worked through an agency and I seem to remember normally being offered a higher rate if I wanted to be paid through an umbrella for this very reason, to account for their added costs.

agrinnall

The agency's margin is nothing to do with you, and regardless what you think it is perfectly standard for employer's NI to be taken out of your gross pay. The only thing I might find a bit odd is the agency deducting it rather than the umbrella company, but it it's a practice that the umbrella is happy with then I can't see that it's a problem.

fuzzracket30

Well, ignoring the umbrella for a minute as they're not really part of the issue here..

Agency advertises X pay to worker. Agency takes 20% X margin from client.
Agency actually pays 90% X to worker. Agency uses worker's 10% X to pay their own NI. Agency still gets 20% X margin.


Surely it should be:

Agency advertises X pay to worker. Agency pays X to worker.
Then either;
Agency takes 20% X margin from client and pays their 10% X NI. Agency keeps 10% X margin.
OR
Agency negotiates 30% X margin from client and pays their 10% X NI. Agency keeps 20% X margin.


Edit: I should clarify: After speaking to the umbrella, I phoned the agency and asked to be paid by then directly - they said OK but at a rate of £19.54/hr because they had to pay their own employer's NI.

I guess the underlying point I'm trying to make is this:
The agency, at no point, intends to pay the worker the rate they repeatedly promise. They're always planning on taking a percentage of the worker's pay to cover their own employer's national insurance, rather than from their own employer's margins.

Maximising their profit by taking it from the worker rather than factoring the cost in to negotiations with the client.

sangie595

There is something wrong with the explanation. If they are operating as they should then they should be deducting employers contributions for you. That is what they do. Standard practice. The agency should not be keeping it. But if the agency pays you then you are an employee of the agency, and the terms are what they stipulate. The original terms offered to you were those for a contractor. In other words, you are being paid what was promised - but net, not gross. Nobody that I know of quotes wages net instead of gross.

But what their profit margin is has nothing at all to do with either. That is their business, not yours, and is not negotiable.

fuzzracket30

In any other job advertisement (non-agency) where they state your salary, you expect to get paid that salary. You don't expect your employer will take 10% from it without telling you and pay their own National Insurance contributions from it, do you?

Surely it's called Employer's NI for a reason.. not "Employee's fee for being employed"

unforeseen

This is obviously your first contractor type role.

sangie595

fuzzracket30 wrote: »

In any other job advertisement (non-agency) where they state your salary, you expect to get paid that salary. You don't expect your employer will take 10% from it without telling you and pay their own National Insurance contributions from it, do you?

Surely it's called Employer's NI for a reason.. not "Employee's fee for being employed"

No. You expect to be paid net of lawful lawful deductions. The agency isn't your employer. You have no employment rights with them. You are a contractor and tax law says that you pay the employers contributions because you aren't an employee of the agency. That is what umbrella companies do. Did you do any basic research before signing an agreement to enter into a contracting role? Because I'm afraid it is your responsibility to know what you are doing, not the agency or the umbrella company to tell you. So they are not charging you a fee for employing you. They are telling you what the terms are if you wish to be a contractor or if you wish to be directly employed. Your choice. If you don't like the terms, then you walk. But either way you will not get that money - someone pays it, and the choice is you or the agency. Depending on whether you decide to be an employee or a contractor. Or, possibly, out of work if you can't come to some decision on the two choices, because there isn't a third choice.

robpw2

dude -welcome to the world of contracting - in essence your self employed and thus you have to pay out of any monies recieved NI employee rate and Ni employers rate plus tax etc

Now if you use an umbrella company they also charge a fee and will take a percentage of the money to cover holiday and sickness and agree an amount you will recieve each month.

you can however set up your own limted company and agree what your paying yourself but then you have to arrange your own payroll etc and you would invoice the agency for the amount you have agreed to receive into the company and then pay your self a wage out of the money received but there are other things that need paying such as corporation tax , payroll software etc and of course if you dont work unless you save some money you dont get paid.

patman99

How would the Agency feel about you seting up a limited company and billing them through that?.

That does seem to be the way all the contractors I know work. It makes sense as you can reduce your Tax liabilities by paying yourself expenses. It is worth makingsure that you pay Class 1 NIC rather than the Class 2 that S/E people normally pay.

This then keeps up your entitlement to full benefits when you have periods of no work.