Can someone point me in the right direction for some sort of definitive information about how these things work.
My son’s just signed up with a new agency, he thought he was on PAYE but it appears he’s on one of these managed schemes where he gets meal and mileage allowances but also gets deductions tax, NI & holiday pay. He’s still a student and only doing a few weeks work before heading off abroad until next term, so he just wants a straightforward payment system that he can be sure he isn’t being ripped off. My biggest concern is the holiday pay because they seem to have deducted a fairly large amount for this, which I assume he’ll eventually get back but as it’s a new agency (to him) he wants to be sure. Also it’s the bit about being able to claim mileage, food etc. but still apparently being PAYE that I can’t get my head around. And before anyone says it, yes I know he can set up limited co. etc & do the accounts himself, but this isn’t a long-term thing so it’s not worth it to him. So just want an official page with it all laid down in black & white so he knows where he stands.
Welcome to the ■■■ reaming which is “umbrella company”. Whereas on PAYE you’d be paid the hourly rate and then an amount equal to 10% would be put away by the employer as holiday pay, they instead take off about 10% off the hourly rate to put away for holiday pay. So you see a £9/hr and think its a good rate but its not - its actually equivalent to approx £8/hr PAYE.
Agencies get away with conning lorry drivers into working via umbrella companies because lorry drivers on the whole are a stupid breed with poor maths skills and completely oblivious to employment law in regards to employer NI and statutory holiday pay. This allows an agency to pay peanuts whilst agetting away with not having to honour their obligations as an employer, such as employers NI, SSP, holiday pay etc - they’ll just say your umbrella company is your employer which is right.
Working the way he is, two people win - the agency and the umbrella company (which may also be the same agency trading under a different name). It isn’t the poor sap doing the graft.
Conor:
Welcome to the ■■■ reaming which is “umbrella company”. Whereas on PAYE you’d be paid the hourly rate and then an amount equal to 10% would be put away by the employer as holiday pay, they instead take off about 10% off the hourly rate to put away for holiday pay. So you see a £9/hr and think its a good rate but its not - its actually equivalent to approx £8/hr PAYE.
Agencies get away with conning lorry drivers into working via umbrella companies because lorry drivers on the whole are a stupid breed with poor maths skills and completely oblivious to employment law in regards to employer NI and statutory holiday pay. This allows an agency to pay peanuts whilst agetting away with not having to honour their obligations as an employer, such as employers NI, SSP, holiday pay etc - they’ll just say your umbrella company is your employer which is right.
Working the way he is, two people win - the agency and the umbrella company (which may also be the same agency trading under a different name). It isn’t the poor sap doing the graft.
Agreed. Any agency that gives you no option but to go down this route, tell them to get [zb]ed and find one that does PAYE (assuming you’re not already Ltd Co. and don’t want to be one).
Thanks for replies. I know that umbrella/managed co.s are a con but I still haven’t seen an official link to anything in black & white. I always thought that the bit about being able to claim subsistence and mileage was only if you were SE in any shape or form, but these companies are selling their benefits as the driver being PAYE, but still being able to claim.
If you ask the taxman what the definition of self-employed is they say you’re probably self employed if you:
run your own business and take responsibility for its success or failure
have several customers at the same time
can decide how, when and where you do your work
are free to hire other people to do the work for you or help you at your own expense
provide the main items of equipment to do your work
none of which covers the average agency driver. So I’m guessing there are some separate rules that the managed co.s go by, but where are they written down?
Sure if you work away from your base you can claim all this yourself i.e. mileage and meal allowance but not sure how it works, I would assume your Agencies address is your base but you are travelling to other places to work.
Not sure how they work holidays but an Agency has to pay holidays like any other Employer and to give you them as and when you require given the correct notice as stated in your sons employment contract with said agency.
Never sign a contract without reading and understanding the thing but holidays for part time workers are pro-rata which means you accumalate them the same as a full time worker but the amount you get depends on how often you work, tell him to phone and request a weeks holiday or ask how much holiday pay he is due.
I registered with manpower once and they offered to claim my travel for me which sounded great but I never did a shift for them, not all agencies are out to shaft you and some are good to their drivers but we are all in it to make as much as we can, you just have to be wary of the ones who want profit and dont care how they get it.
Rob K:
Agreed. Any agency that gives you no option but to go down this route, tell them to get [zb]ed and find one that does PAYE (assuming you’re not already Ltd Co. and don’t want to be one).
Do we take it then Rob that your foray into working through one of these so called “umbrella companies” was a brief one?
Rob K:
Agreed. Any agency that gives you no option but to go down this route, tell them to get [zb]ed and find one that does PAYE (assuming you’re not already Ltd Co. and don’t want to be one).
Do we take it then Rob that your foray into working through one of these so called “umbrella companies” was a brief one?
You do take it correctly! When I was young, green and naive it all seemed like a good idea at the time but it turned out to be one of (very) few times in my life that I was wrong.
I think the reason they look so appealing is because people assume that setting up and running a Ltd company is complicated and expensive so they see the £20+ a week charge as being quite cheap where in reality, its about four times what an accountant would charge.
darkseeker:
I’m on paye and never had anything in the way of holiday pay from three separate agencies. I’ll have to look into that one!
If you left any of them and recieved a P45 I doubt you`d be able to re-coup the lost holiday pay.
However you should still be due holiday pay from any current agys. The holiday year for each agy will run from the anniversary date you signed up with them and is sometimes printed on payslips.
Providing you worked reasonably continueous over the year your looking at holiday ££`s in the region £1000 - £1500
When I worked for them on PAYE I used to draw my holiday monies twice a year the monday prior to 11th July & 11th Dec each year (my agy anniversary date was 12th dec), I was getting around £750 - £1000 each time + wages.
Remember… most agys pay holiday money, worked out on an accrued average of 12-13 week earnings. Most drivers get caught out post xmas when work drops off, and the daily average nose dives faster than a japanese pilot, and by the time you realise theres very little in the pot, so get into the habit of drawing the bulk of the monies before the work drops off, and deffinately before the anniversary date
that probably explains it then, I’ve had no more than about 3days a week from any of them until recently - I assume that knocks the holiday money to zero?
darkseeker:
that probably explains it then, I’ve had no more than about 3days a week from any of them until recently - I assume that knocks the holiday money to zero?
No it means you get them pro-rata.
If you do 24 hours a week then you will be due 24 hours for a weeks holiday or something like that.
it all seemed like a good idea at the time but it turned out to be one of (very) few times in my life that I was wrong. 