Umbrella companies and employer Insurance

sarahbartram05

I have started working for an agency as a supply teacher and I recently noticed that the umbrella company are not only taking their admin costs, which is fine, but also employers insurance.  Some weeks this has worked out as half a days pay.  The agency give me a booking and a rate of pay which is fine but this is not my real rate of pay as I then have money taken off.  I have spoken to the agency who just pass me on to the umbrella company and they say that they invoice the agency and it is not me paying the money.  I feel I am being penalised for working for an agency as it is not as if I am earning more than any other teaching job.  If I was offered a permanent contract for example and the job was advertised at £24,000 per annum I would have tax and NI deducted as expected but  there would be no deduction for Employee Insurance.  So why am I paying it for the agency surely they should be paying it from the fee that they charge the school for my work.  I have been to citizen advice but they are unable to help and I am about to write to my MP as I don't think this should be allowed.  If anyone else is experiencing the same issues would be great to hear from you.  I hope this makes sense.  Thank you

General_Grant

sarahbartram05 said:

I have started working for an agency as a supply teacher and I recently noticed that the umbrella company are not only taking their admin costs, which is fine, but also employers insurance.  Some weeks this has worked out as half a days pay.  The agency give me a booking and a rate of pay which is fine but this is not my real rate of pay as I then have money taken off.  I have spoken to the agency who just pass me on to the umbrella company and they say that they invoice the agency and it is not me paying the money.  I feel I am being penalised for working for an agency as it is not as if I am earning more than any other teaching job.  If I was offered a permanent contract for example and the job was advertised at £24,000 per annum I would have tax and NI deducted as expected but  there would be no deduction for Employee Insurance.  So why am I paying it for the agency surely they should be paying it from the fee that they charge the school for my work.  I have been to citizen advice but they are unable to help and I am about to write to my MP as I don't think this should be allowed.  If anyone else is experiencing the same issues would be great to hear from you.  I hope this makes sense.  Thank you

I think the deduction you are objecting to is for EmployERs National Insurance.

You need to explore more about how working via an umbrella company works.  I think a search on MSE forums will assist you.

motorguy

sarahbartram05 said:

I have started working for an agency as a supply teacher and I recently noticed that the umbrella company are not only taking their admin costs, which is fine, but also employers insurance.  Some weeks this has worked out as half a days pay.  The agency give me a booking and a rate of pay which is fine but this is not my real rate of pay as I then have money taken off.  I have spoken to the agency who just pass me on to the umbrella company and they say that they invoice the agency and it is not me paying the money.  I feel I am being penalised for working for an agency as it is not as if I am earning more than any other teaching job.  If I was offered a permanent contract for example and the job was advertised at £24,000 per annum I would have tax and NI deducted as expected but  there would be no deduction for Employee Insurance.  So why am I paying it for the agency surely they should be paying it from the fee that they charge the school for my work.  I have been to citizen advice but they are unable to help and I am about to write to my MP as I don't think this should be allowed.  If anyone else is experiencing the same issues would be great to hear from you.  I hope this makes sense.  Thank you

Yup.

The end client is paying a day rate to the agency.  The agency take their percentage and pass the remainder to the umbrella company.  You are an employee of the umbrella company, who must therefore make all deductions necessary so they do so out of your day rate.

Out of your day rate you are paying Employers National Insurance and probably Apprenticeship Levy too.

Sadly thats how it works.  Someone has to pay that 14% thus the umbrella company take it out of the day rate they're getting for you.

The agency will be getting a small percentage of a fee - they certainly wont be getting enough to pay outgoings like that.  The umbrella company will be getting little more than a handling fee.

I take it you didnt read what you signed up to then?

In future, negotiate a better day rate if you find the end result unpalatable.

sarahbartram05

I was not informed of this when I signed up.  I would think that the agency should pay this  before they pay me.  It just does not seem right that full time permanent  employees do not pay this but we do. Or they should give you the real rate of pay When they offer the work so you have no surprises.  If I am told I am getting £12 an hour I expect to get £12 an hour not less.

Savvy_Sue

sarahbartram05 said:

I was not informed of this when I signed up.  I would think that the agency should pay this  before they pay me.  It just does not seem right that full time permanent  employees do not pay this but we do. Or they should give you the real rate of pay When they offer the work so you have no surprises.  If I am told I am getting £12 an hour I expect to get £12 an hour not less.

But did you read what you were signing up to? You may not think it should be allowed, but it's absolutely standard for umbrella companies to do this, and you're expected to be able to do the maths yourself. The rate they say they are paying you is the rate they are paying you: there are deductions you were not expecting but they are set out in the agreement you signed. 

MinuteNoodles

sarahbartram05 said:

I was not informed of this when I signed up.  I would think that the agency should pay this  before they pay me.  It just does not seem right that full time permanent  employees do not pay this but we do. Or they should give you the real rate of pay When they offer the work so you have no surprises.  If I am told I am getting £12 an hour I expect to get £12 an hour not less.

After decades of experience working for agencies I doubt very much you weren't told. If you were told you'll be paid by an umbrella company and one they recommend then they'll have given you information about it and its charges.

You're a teacher and therefore supposed to be educated a bit higher than the masses and so if there was any doubt about it you should have done some research. To quote an often used teachers retort "you should have done your homework."