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Recently there has been some confusion over differences between PAYE and umbrella rates. It is not helping that some agencies quote umbrella rates in their ads.
When you see a job advertised paying Ł15 per hour you would usually assume that this is a pay as you earn rate (PAYE) i.e. you would accrue your holiday entitlement and the employer would pay their share of national insurance contributions.
Increasingly, less reputable agencies are quoting umbrella rates. As such, there is nothing wrong with this practice provided that they clearly specify that it's an umbrella / limited company rate, meaning that your holiday entitlement is included, you will be required to pay the employer's national insurance contributions and pay the umbrella company for their services (unless you have your own limited company).
Ł15 umbrella rate would work out at just Ł10.50!
So what to do if you've been caught by this and suddenly realise that your pay is about 30% less than you thought? It's always worth talking to the agency. Sometimes - depending on the situation - a compromise can be reached. I once managed to agree that the client would cover the employer's national insurance contributions. That happened as I told the agency that I wasn't able to take the booking at a much lower rate than I had thought due to them not being clear.
Sometimes this fails. Then the options are either to accept the booking and say good-bye to that 30% or walk away.
In theory, you could make a complaint about any agency using this practice. However, unfortunately most regulatory bodies couldn't care less.
In some industries, such as IT, umbrella rates are the norm. These are often quoted as daily rates.
When you see a job advertised paying Ł15 per hour you would usually assume that this is a pay as you earn rate (PAYE) i.e. you would accrue your holiday entitlement and the employer would pay their share of national insurance contributions.
Increasingly, less reputable agencies are quoting umbrella rates. As such, there is nothing wrong with this practice provided that they clearly specify that it's an umbrella / limited company rate, meaning that your holiday entitlement is included, you will be required to pay the employer's national insurance contributions and pay the umbrella company for their services (unless you have your own limited company).
Ł15 umbrella rate would work out at just Ł10.50!
So what to do if you've been caught by this and suddenly realise that your pay is about 30% less than you thought? It's always worth talking to the agency. Sometimes - depending on the situation - a compromise can be reached. I once managed to agree that the client would cover the employer's national insurance contributions. That happened as I told the agency that I wasn't able to take the booking at a much lower rate than I had thought due to them not being clear.
Sometimes this fails. Then the options are either to accept the booking and say good-bye to that 30% or walk away.
In theory, you could make a complaint about any agency using this practice. However, unfortunately most regulatory bodies couldn't care less.
In some industries, such as IT, umbrella rates are the norm. These are often quoted as daily rates.
