Why am I paying EMPLOYERS NI?

[Linton]

They phoned me again today, no email, so more off the record stuff.

The person said as far as they can tell, they add 11% for NI and the rest is for holiday payments.

I've got to admit, I'm lost in the percentages and figures here, can someone break it down for me?

[Malvolio]

Without going into details, AIUI they will take some fixed costs out of your gross:

1. All liable taxes - PAYE income tax, Employees NIC and Employers NIC
2. Something to cover Holiday pay, in order to meet their obligations as employees to provide paid hoiliday
3. Possibly something for pension cover, although that is a bit of a grey area so don't quote me on it!
4. Their fees.

You will note that you fund all this. Most of it is at set percentages, some of which, like taxes, are inescapable. If you want a detail breakdown, ask them for one. If you don't get it, look around for someone who will give you one (there must be some...). Ultimately it's your money they're using, nobody else's and certainly not thier own. You have every right to know where it's going.

[Linton]

OK, here's what I did in the end:

I made the assumption that holiday and sick pay were already included in my hourly rate. So I took the £32.50 agency PAYE rate and worked out what THEY would have paid in employers NI.

I then, side by side on the spreadsheet, showed what I was paying in employers NI by going through an umbrella.

They didn't add up, so they've agreed to up my rate and backdate my pay (probably because I mentioned getting the REC involved).

So that's a good result. Next question though:

Why do agencies always want to do things "off the record"? They always promised that they would email a confirmation of our discussion, but none was ever forthcoming.

Something to hide?

[Malvolio]

Accountability. When their finanicial management decides not to play ball, or when renewal comes around, where is your evidence of what was agreed?

LIke I said, if you're that bothred about the minutiae of payment structures, stop handing it off to someone else to screw up, get your own company and control it yourself. You not only take home more net, you know where it all went.

[Pistachio]

Surely though, if he was offered two rates:

1) Agency PAYE rate
2) Umbrella/limited company rate

Then he would have been stiffed regardless Malvolio? You would have been having this exact same discussion with the agent yourself in his situation.

[Malvolio]

I don't get offered rates by the agency , I usually say what I am going to accept. I've certainly never had a conversation about going PAYE with the agency, why should I?

Clearly, in this market, you may haggle a bit, but you end up with something you are happy to get for the work in question. Why then, after agreeing what was an acceptable rate, do you start pulling apart the sums to gain a few quid more? Why is the previous rate suddenly unacceptable?

If you want to dictate (or even eliminate) the agency margin then all you have to so is source the work yourself. What you get is what you agreed and barring significant changes in the work itself, you should stick with it until renewal.

Plus the OP was arguing about a few pounds a day. He could improve his net by around 15% with just a little effort. All seems a bit disproportionate to me.

[The SMG]

Originally Posted by Malvolio

I don't get offered rates by the agency , I usually say what I am going to accept. I've certainly never had a conversation about going PAYE with the agency, why should I?

Clearly, in this market, you may haggle a bit, but you end up with something you are happy to get for the work in question. Why then, after agreeing what was an acceptable rate, do you start pulling apart the sums to gain a few quid more? Why is the previous rate suddenly unacceptable?

If you want to dictate (or even eliminate) the agency margin then all you have to so is source the work yourself. What you get is what you agreed and barring significant changes in the work itself, you should stick with it until renewal.

Plus the OP was arguing about a few pounds a day. He could improve his net by around 15% with just a little effort. All seems a bit disproportionate to me.

I take your point Mal, but there are agencies out there that deliberately under-inflate the limited company rate to increase their margins. It may not make much of a difference at your salary range, but when you're talking £10 per hour it can amount to a sizeable difference in take home pay between the agency PAYE rate and the supposedly inflated umbrella / limited company rate.