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Are umbrella companies essential?

Discussion in 'Supply teaching' started by celestial_sonmi, Dec 3, 2018.

  1. celestial_sonmi

    celestial_sonmi New commenter

    I started supply teaching today, the agency said I would be contacted by an umbrella company (which I have been) who say I am paid through them at a fee of £15 per week. I only get paid £70 a day as is and if there is only work for one or two days that week it hardly makes it worth my time after travel etc.
    I am registered self employed on the government gateway for a small business I run from home, so seeing as I'm already doing my own tax returns anyway can't I just be paid directly? Or are umbrella companies a necessity?

    Also, in my previous pay-e job I was part time and under the threshold so didn't pay tax, the umbrella company mentioned me having to pay tax then getting a rebate in April. Is this true?

    Any help is greatly appreciated! Supply teaching is a whole new world and I'm really in the deep end in every aspect!

  2. nearmiss

    nearmiss Lead commenter

    No, they're a total rip off.
    pepper5 likes this.
  3. celestial_sonmi

    celestial_sonmi New commenter

    Just to add : does anyone know of any agencies South East that are PAYE? If so, please pm me.
    pepper5 likes this.
  4. keyportfolio

    keyportfolio New commenter

    Did the umbrella company give you a salary illustration to show what you’d be taking home each week with a rate of £70? I’d recommend asking them for one. Hopefully they’ve also told you how they can support you in your career and what benefits you’ll get from working with them but if not, get them to explain it.

    There’s more than one umbrella company around and they all have different benefits and margins. For example, some will retain a percentage margin rather than a flat amount, which works out better for those who might only work a day or two in a week. You should always feel free to do your own research until you find the umbrella you like best. They’ll be your employer, so it’s important you’re comfortable with them.

    Once you’ve got the full picture, you’re then in a better position to decide whether £70 a day is an acceptable rate. If it’s not, speak to your agency and ask if they can increase it. An agency’s rate for an umbrella worker needs to factor in certain deductions (like the umbrella’s margin) that a PAYE rate does not, so an umbrella rate should be higher than a PAYE rate and it’s okay to negotiate on that basis.

    If they can’t increase the rate and you’re not happy with your take-home pay or the overall package being offered, umbrella might not be best for your circumstances. You can’t be self-employed for supply teaching in the public sector, though. It’s umbrella only, or PAYE if your agency offers that option.

    What you say about having to pay tax then get a rebate in April, even if you're earning less than the tax-free allowance, seems strange. If you're on a cumulative tax code like 1185L, you'd pay exactly the right amount of tax each week and wouldn't need a rebate. I work for an umbrella company and based on what you've said, our advice would've been to contact HMRC and make sure you're on the best tax code for your circumstances.

    Best of luck with the supply teaching!
    JohnJCazorla likes this.
  5. blazer

    blazer Star commenter

    pm sent
  6. nearmiss

    nearmiss Lead commenter

    There is an umbrella company called Key Portfolio. As their spokesperson, which I take it you are, can you guarantee that your company rigorously honours every single supply teacher's right to full pay under Agency Workers Regulations? Can you likewise pledge to accept liability in those instances where supply teachers have not received the statutory uplift and claimed back pay? Do you offer compensation or just the sum owed, in the event of a case where AWR breaches have occurred? Are you able to explain your company's policy on AWR and reclaims for unpaid wages? Thank you.
  7. keyportfolio

    keyportfolio New commenter

    Hi @nearmiss. I do work for Key Portfolio, yes. Very happy to answer your questions.

    The responsibility for honouring a supply teacher’s right to equal pay after 12 weeks in the same role is shared between the recruitment agency, the hirer (e.g. the school) and the umbrella company. Sometimes there are even multiple agencies and multiple umbrellas involved. We work with these other parties, and the supply teachers themselves, to make sure that our employees get everything they’re entitled to under the AWR.

    Of course. In law, the liability is shared between several parties, including us.

    We wouldn’t pay compensation unless there were unusual circumstances to consider.

    We have FAQs on our website that explain this. I know I’m not allowed to link here, but if you visit our website, go to ‘support centre’ and search for ‘AWR’, it’s all publicly available.

    Overall, our advice to supply teachers is to learn about everything you’re entitled to under the AWR (it’s not just equal pay, of course) and keep your own records of where and when you’re working so you can identify the point at which your rights kick in. This isn’t always straightforward, especially for day-to-day supply teachers, but there’s advice in our support centre on how to do it – it was written for our own employees, but will be helpful for all agency workers. In the event you believe you aren’t getting something you’re entitled to under AWR, an informal chat with your agency and umbrella gives them the chance to sort it out as quickly as possible.
  8. 50sman

    50sman Lead commenter

    You do not have to work for an umbrella company - if the agency says you you have to then report them to HMRC
    pepper5 likes this.
  9. keyportfolio

    keyportfolio New commenter

    On what grounds?
  10. jamtart20

    jamtart20 New commenter

    I wonder how far back in time AWR breaches can go before your case ends, as someone who was not paid to scale after 12 weeks. I worked in the school for half the year.
  11. blazer

    blazer Star commenter

    So is using an umbrella company better than PAYE? Is the opportunity to claim a bit back for travel etc worth paying the employers NI and then the fee to the umbrella company on top? Otr am I missing something?
  12. les25paul

    les25paul Star commenter

    Its now been almost two years since I left the world of Supply Teaching and UCs so things might have changed in that time but when I was with a UC (and it was KeyPortfolio) it was no longer possible to claim travel expenses. There was no advantage to a UC but my agency didn't offer PAYE.
  13. 50sman

    50sman Lead commenter

    HMRC maintain spplybteachers are not for tax purposes self employed therefore do not need umbrella company - supply teachers should not be paying both employers and employees National Insurance contributions - it something I’d do with IR35 and has been discussed in this forum before - there are those who know more about it than me.
  14. nearmiss

    nearmiss Lead commenter

    All the education unions advise against umbrella payroll, BBC Moneybox advises against them several agencies make a point of not using them either. It's looking like a consensus. Umbrella company payroll is not necessary.
  15. blazer

    blazer Star commenter

    So umbrella companies are just a mechanism for the agencies to pass on their costs to their employees. Much in the same way as Uber.
  16. keyportfolio

    keyportfolio New commenter

    Supply teachers who are paid through an umbrella company are not self-employed. They are employees of the umbrella company.
  17. keyportfolio

    keyportfolio New commenter

    For lots of people, using an umbrella company is better than PAYE. This can be for a variety of reasons - some like having a contract of employment and the associated benefits that come with it, such as sick pay and maternity pay. Many work with more than one recruitment agency and find it simpler to have all of their pay centralised through the umbrella. This can be extra helpful for anyone who needs to prove their income, for example for a mortgage or visa application. Others value the role that a good umbrella company plays in supporting and advising them on matters relating to their tax, pay, career and employment. Little perks like cheap cinema tickets and shopping discounts are nice to have too.

    Expenses still have a very small part to play, but @les25paul is correct in saying that it's no longer possible for most supply teachers to claim travel expenses.

    Other people will prefer PAYE for whatever reason and if that's an option, then that's fine too.

    You mention paying employer's NI and a fee to the umbrella company. When you're employed by an umbrella company, the daily rate your agency agrees for your assignments includes employer's NI and the umbrella's margin, and so you need to make sure you're happy with the rate offered on that basis. If you were paid PAYE, the rate would not include these things, because your agency would pay them separately. For this reason, an umbrella rate should be higher than a PAYE rate.

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