PAYE v Umbrella Schemes

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
1

The Gig Economy

Not too long ago agencies were a specialist niche. They catered for part-timers, or those who wanted temporary work and they saved you the trouble of having to find that kind of alternative work yourself.

Then employers discovered that employing someone had high overheads. Accountants, statutory sick pay, holiday pay, maternity leave, employers NI … It was expensive and so they started to farm out their work to agencies. For one payment per worker they could wash their hands of overheads and it would be an agency problem.

These overheads will have been factored into what the company paid the agency for the worker, but the agencies too are a business and also quickly discovered that paying for what the employer had previously paid for was costly. For another couple of pounds an hour they sold the employee on to umbrella companies (for a commission) and avoided having to pay anything themselves, which also increased their profits.

The former employee now became an employer who employed themselves as an employee.

By this stage the employer had got rid of their overheads and so too had the agency. The worker paid employer NI to employ themselves whilst paying PAYE. The umbrella company took a commission and the now dual employer/employee paid for their own statutory entitlements out of a wage that was supposed to cover the cost of their labour.

Unfortunately, it looks like the immediate future HGV gig economy is an umbrella scheme. Agencies can’t force their employees to give up PAYE, but what they can do and are doing is making a PAYE contract such a low rate it’s no longer worth working for.

‘Britain’s booming gig economy has more than doubled in size over the past three years and now accounts for 4.7 million workers, according to a report laying bare the increasingly precarious nature of employment.’

‘Delivery fleet companies can expect a greater focus from the authorities on enforcing employment status for drivers following the Government’s response to last year’s Taylor Review into working practices.’

‘Temporary workers say they are losing thousands of pounds in wages because they are being exploited by so-called umbrella companies.’

2

Come one Grandpa this subject has been done to death.

3

Still a good summary though.

Worth noting that as far as both HMRC and the Traffic Commissioners are concerned, you can probably only be a self-employed truck driver if you’ve got a truck and an O licence.

Even the old contract haulier model of ‘lease the truck off the company you work for’ is now under scrutiny.

I suspect the days of umbrella companies are numbered…the HMRC is catching up with them

4

Yes, I know it’s a subject done to death, but it’s just my interpretation of it. It’s not going away though, it’s increasing. Every agency I’ve come across is now offering two rates of pay. The government support umbrella schemes. What they’re cracking down on are the differences between an employer and an employee and the loss of statutory benefits for those who are legally employees, but who the umbrella companies are turning into employers.

5

Grandpa:
The Gig Economy

Not too long ago agencies were a specialist niche. They catered for part-timers, or those who wanted temporary work and they saved you the trouble of having to find that kind of alternative work yourself.

Then employers discovered that employing someone had high overheads. Accountants, statutory sick pay, holiday pay, maternity leave, employers NI … It was expensive and so they started to farm out their work to agencies. For one payment per worker they could wash their hands of overheads and it would be an agency problem.

These overheads will have been factored into what the company paid the agency for the worker, but the agencies too are a business and also quickly discovered that paying for what the employer had previously paid for was costly. For another couple of pounds an hour they sold the employee on to umbrella companies (for a commission) and avoided having to pay anything themselves, which also increased their profits.

The former employee now became an employer who employed themselves as an employee.

By this stage the employer had got rid of their overheads and so too had the agency. The worker paid employer NI to employ themselves whilst paying PAYE. The umbrella company took a commission and the now dual employer/employee paid for their own statutory entitlements out of a wage that was supposed to cover the cost of their labour.

Unfortunately, it looks like the immediate future HGV gig economy is an umbrella scheme. Agencies can’t force their employees to give up PAYE, but what they can do and are doing is making a PAYE contract such a low rate it’s no longer worth working for.

Gig economy in Britain doubles, accounting for 4.7 million workers | Gig economy | The Guardian
‘Britain’s booming gig economy has more than doubled in size over the past three years and now accounts for 4.7 million workers, according to a report laying bare the increasingly precarious nature of employment.’

Government tightens rules over self-employed status of drivers
‘Delivery fleet companies can expect a greater focus from the authorities on enforcing employment status for drivers following the Government’s response to last year’s Taylor Review into working practices.’

MPs to investigate 'umbrella companies' after worker complaints - BBC News
‘Temporary workers say they are losing thousands of pounds in wages because they are being exploited by so-called umbrella companies.’

Alrite

I did a post about this few week back.
I have left the agency due to this.
I saw a job…rang them up and I started working.
Before I knew it on the Friday 1st payday I had a firm contacting me saying sign this as we have your wages!!
I signed it and read the details…I occurred 18 quid admin fee and 60 quid employers no charge.
Bollox to paying 300 a month to just get paid.
Absolute scum.
I’ve now left that agency but the firm want me to stay and work under them…but I also have a interview At asda so not sure what I’m doing as I like the work in doing but the agency has just ■■■■■■ me off.

6

It can be talked about as many times as you want it don’t change some drivers mentality
You will always get the type that don’t have life sence, unfortunately they don’t know any better
They come in all forms and sizes and it’s that type that has the job ruined, and it will never change never
Working for a low wage and long hours plus treated like drirt is all they know

7

There has to…

Be a point at interview stage or job advert or a simple question from the applicant asking about PAYE or brolly payments.

Who in their right minds say’s to themselves ‘I’ll change from a payment system I’ve been on my entire working life to a payment system that is being forced upon me by a two-bit here today gone tomorrow agency’?

EVERY single time I’ve been told that I have to go through the brolly company or I can’t work there, I’ve stated it’s PAYE or I walk. EVERY single time the agency has capitulated on it.

8

Alrite

I did a post about this few week back.
I have left the agency due to this.
I saw a job…rang them up and I started working.
Before I knew it on the Friday 1st payday I had a firm contacting me saying sign this as we have your wages!!
I signed it and read the details…I occurred 18 quid admin fee and 60 quid employers no charge.
Bollox to paying 300 a month to just get paid.
Absolute scum.
I’ve now left that agency but the firm want me to stay and work under them…but I also have a interview At asda so not sure what I’m doing as I like the work in doing but the agency has just ■■■■■■ me off.

I know what you mean buses, but it’s not just your agency. By the time you’ve paid Employers NI to employ yourself and PAYE NI as an employee, add on the commission, subtract your own holiday pay … You’d be on a take-home minimum wage. I refused to go umbrella and was offered 10.25ph PAYE on nights tramping! Thinking about it, it’s probably what I’d end up with under an umbrella scheme at 12.50ph. I did read somewhere that under the umbrella scheme you stand to lose around 46p in the pound. An absolute disgrace!

These schemes focus on those who earn a decent wage whether by hours or profession - truck drivers, supply teachers, NHS staff and construction workers. Maybe the only way around it is to work for a few months and then ask the employer if they’ll take you on their books? In the next recession, I hope that those recruiters and those working in these umbrella schemes earning a commission suffer the most!

9

yourhavingalarf:
There has to…

Be a point at interview stage or job advert or a simple question from the applicant asking about PAYE or brolly payments.

Who in their right minds say’s to themselves ‘I’ll change from a payment system I’ve been on my entire working life to a payment system that is being forced upon me by a two-bit here today gone tomorrow agency’?

EVERY single time I’ve been told that I have to go through the brolly company or I can’t work there, I’ve stated it’s PAYE or I walk. EVERY single time the agency has capitulated on it.

Have a quick look on the Internet and compare PAYE to umbrella. They’ve made the PAYE rate slightly above minimum wage. There’s a law that says you can’t be forced to work under an umbrella, but it’s either that or 10ph. I got told 10.25ph and refused.

10

Perhaps greed will also be the downfall? I’m looking at a job and it’s 11ph PAYE, or 12ph Ltd. For that difference I’d stay PAYE.

A question for anyone? Container work. I’ve never done it, but hear you need something called a Rhides certificate? Is that right, or can you do it without one?

11

Grandpa:
Perhaps greed will also be the downfall? I’m looking at a job and it’s 11ph PAYE, or 12ph Ltd. For that difference I’d stay PAYE.

A question for anyone? Container work. I’ve never done it, but hear you need something called a Rhides certificate? Is that right, or can you do it without one?

RHIDES…

Road Haulier IDEntity System. You need to be on the system to pick up or drop off boxes or wait around forever in 3 mile queues. No card no tip no load no bloody great big queue.

rhides.com/

12

yourhavingalarf:

Grandpa:
Perhaps greed will also be the downfall? I’m looking at a job and it’s 11ph PAYE, or 12ph Ltd. For that difference I’d stay PAYE.

A question for anyone? Container work. I’ve never done it, but hear you need something called a Rhides certificate? Is that right, or can you do it without one?

RHIDES…

Road Haulier IDEntity System. You need to be on the system to pick up or drop off boxes or wait around forever in 3 mile queues. No card no tip no load no bloody great big queue.

rhides.com/

Cheers. So it’s companies that need the card, not the driver. Thank God for that, my wallet is already weighed down enough with useless cards.

13

Grandpa:
The Gig Economy

Not too long ago agencies were a specialist niche. They catered for part-timers, or those who wanted temporary work and they saved you the trouble of having to find that kind of alternative work yourself.

When was that? I started with agencies in the early 90s working full time at places. At Hygena half the night shift were agency who were in there 4/5 nights a week, week in, week out.

14

Grandpa:
Cheers. So it’s companies that need the card, not the driver. Thank God for that, my wallet is already weighed down enough with useless cards.

Your wallet…

Is gonna get another useless card.

15

Conor:

Grandpa:
The Gig Economy

Not too long ago agencies were a specialist niche. They catered for part-timers, or those who wanted temporary work and they saved you the trouble of having to find that kind of alternative work yourself.

When was that? I started with agencies in the early 90s working full time at places. At Hygena half the night shift were agency who were in there 4/5 nights a week, week in, week out.

The actual assault on employment rights began in the 1970s.

Prior to 1963 the vast majority of workers were employed at-will anyway, and there were very few rights. It’s why there were constant wildcat walkouts and you could walk out of a factory in the morning and be in another by the afternoon, but it was seen as harming economic productivity and the national interest.

As the 60s and 70s wore on however, there were increasing differentials in the taxes and obligations between hiring employees and contracting with traders. The Wilson Labour government in 1965 extended the basic right to notice introduced under the Tories in 1963, with a system of redundancy payments.

This encouraged a series of legal cases in which the judges (who are always habitual right-wingers) found that certain contracts were not employment contracts at all.

The case of Construction Industry Training Board v Labour Force Limited [1970], concerning the training levy (which had been introduced part to try and stop employers free-riding on the training and apprenticeships ran by responsible employers), was the first case that I’m aware of that declared that agency workers were not employees. The implication in that case was that the employer didn’t have to pay the training levy, but it eventually had broader implications in allowing employers to return to at-will/casual employment which had been outlawed in 1963, provided they hired labour via an agency.

A later case, O’Kelly v Trusthouse Forte plc [1983], incorporating the thinking of legal academic Mark Freedland’s developed in the 1970s, basically declared that casual employment was not employment at all as it lacked “mutuality of obligation”. This meant that employers didn’t even have to involve an agency anymore in order to avoid their employers’ obligations.

And that’s why by the 90s, as union solidarity really started to fall away, it had become common enough to see those involved in general labour denied basic employment rights, either because the employer treated them as casuals or because they were hired via agencies.

A lot of people in sectors that were not previously casualised, imagine it’s all a recent thing, but we have been sliding down this slippery slope for decades.

The more recent Autoclenz case in the Supreme Court (2014) has finally kyboshed the most grotesque excesses that reached a zenith during the Blair years. “Mutuality of obligation” has been reduced to a simple rump test, basically just meaning the worker works for pay - whereas previously it was interpreted to mean that the employer had chosen to offer a continuing, secure employment contract. Industrial juries (i.e. the Employment Tribunals) have also been instructed to return to using common sense about the nature of the relationship between workers and employers, rather than simply interpreting paper contracts.

A series of EU laws providing for workers’ rights, in which the definition of “worker” is cast more widely than the English judges’ definition of employment, and various crackdowns by the taxman on PAYE avoidance, have also reduced the profit available to employers from many wily schemes.

But in our sector, the massive over-supply of drivers, combined with the increase in computer and communications technology which has made it easier to administer grotesque contracting and tax-avoidance schemes, and the continued willingness of judges to give the employer the benefit of legal grey areas (and the ineffectual remedies even if they don’t), means that casualisation basically persists.

16

Conor:

Grandpa:
The Gig Economy

Not too long ago agencies were a specialist niche. They catered for part-timers, or those who wanted temporary work and they saved you the trouble of having to find that kind of alternative work yourself.

When was that? I started with agencies in the early 90s working full time at places. At Hygena half the night shift were agency who were in there 4/5 nights a week, week in, week out.

When was that? Even 15 years ago. The big companies now have a small core of in-house drivers and everyone else is agency. Come the next recession the umbrellas and Ltd will be got rid of overnight, without any redundancy.

17

yourhavingalarf:

Grandpa:
Cheers. So it’s companies that need the card, not the driver. Thank God for that, my wallet is already weighed down enough with useless cards.

Your wallet…

Is gonna get another useless card.

But I won’t have to do a week’s induction and assessment for it. :laughing:

18

I’m looking through the jobs and reading that there is a shortage of drivers. They (wherever I read it) say that an estimated 15% of HGV vacancies aren’t filled. I believe it. The jobs are there, from £10ph to ‘earn £800-900 a week’, there’s plenty of them. The problem is the low take home pay after everyone has dipped into it.

After several years away from it all I’m slowly getting the hang of it. Tramping gets you between £100/125 tax free nights out. It helps boost the low PAYE wage, or the higher umbrella rate helps pay for the employer NI and commission. Nights out was once a bonus, now it helps pay for the overheads of working so that you actually get your wage, less the normal employee deduction. I can’t see any other way around it.

19

It’s less to do with the decline of the unions as it is the rise of the gig economy. You can even put a date on this – Blair. When those East European flood gates opened and the equivalent £1ph drivers flooded in what did we expect to happen? You don’t hear the East Europeans complaining about low pay or non-holiday pay. For £10ph they think they’ve died and gone to heaven!

It just slowly got worse and whatever the companies could get away with cutting they did and if we didn’t like it, zxggobsmacked from wherever took the job. The same is happening in the distribution warehouses, the construction industry and the NHS. I’m getting offers now with ‘Must be able to speak English’ as a criteria!

Hard Brexit and start sending them home? When the Trucking industry get short of English truckers and can’t fill the vacancies on the cheap, that’s when you’ll see wage rises. Be honest, as we oldies retire and if you had a son or daughter in their early 20s, what’s the last career on earth you’d recommend to them? :frowning:

20

Grandpa:
I’m looking through the jobs and reading that there is a shortage of drivers. They (wherever I read it) say that an estimated 15% of HGV vacancies aren’t filled. I believe it. The jobs are there, from £10ph to ‘earn £800-900 a week’, there’s plenty of them. The problem is the low take home pay after everyone has dipped into it.

After several years away from it all I’m slowly getting the hang of it. Tramping gets you between £100/125 tax free nights out. It helps boost the low PAYE wage, or the higher umbrella rate helps pay for the employer NI and commission. Nights out was once a bonus, now it helps pay for the overheads of working so that you actually get your wage, less the normal employee deduction. I can’t see any other way around it.

Welcome to the mad house, how bad does it have to be if you have to sleep in a truck to get an average wage
For God’s sake it’s 24 hours a day and most still don’t cop on
If you’re lucky you will get a lunch allowance as well but very few do
So 25 quid for what you tell me
As I said many times its the blind leading the blind and they put it all together and come up with what they think is, that it’s all worth it.
Forget about tramping there are people out there doing 70 to 80 hours for 500 a week
Work it out yourself 250 a week