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Have you been forced to join an Umbrella Comany while Supply Teaching and forced to pay for your employer's National Insurance?!!

Discussion in 'Supply teaching' started by Anonymous, Dec 26, 2012.

  1. Anonymous

    Anonymous New commenter

    I was forced to join an umbrella company through an agency who told me they would not be able to offer me work unless I did and that this was their policy. I had heard some agencies have the same policy, but by no means all, so although I wasn't keen on paying an umbrella company to do my tax and insurance, which I could easily have done for myself, I needed the work so was not too concerned about it.
    Recently I received a breakdown of my first pay and discovered that I was being charged not only my own tax & national insurance but an 'employer's national insurance' too. I have queried this with the agency and am waiting for a reply, and also with the umbrella company. The latter told me that when I signed with an umbrella company I became an employee of theirs, yet I was given to believe I was employed by the agency. The umbrella company said they have an 'agreement' with the agency whereby, according to legislation, an employer's liability for national insurance gets passed on to the employee. In effect this means I am being charged 2 lots of national insurance - my own and that of my employer ! I have never heard of such a thing ever. Despite what the umbrella company say, I am still not sure who I am actually employed by - them or the agency !
    Has anyone ever heard of this or is in the same situation? What with being forced to pay a fee to the umbrella company for something I could do for myself + 2 lots of national insurance, when I receive my pay there isn't a lot left ! I am thinking of contacting DWP or the national insurance office for clarification. As far as I can see there seems to be no way I can have this 'employer's national insurance' refunded. It really sounds like a bogus arrangement similar to the scam of forcing people to apply for multiple CRBs, or at best, a loophole exploited by agencies and or umbrella companies whereby they can offload their legal liability on to the hard-pressed employee.
    I really can't get my head around the fact that it might be legal to make an employee pay an employer's national insurance ! Any reponses appreciated.


     
    rolysol likes this.
  2. Anonymous

    Anonymous New commenter

    I was forced to join an umbrella company through an agency who told me they would not be able to offer me work unless I did and that this was their policy. I had heard some agencies have the same policy, but by no means all, so although I wasn't keen on paying an umbrella company to do my tax and insurance, which I could easily have done for myself, I needed the work so was not too concerned about it.
    Recently I received a breakdown of my first pay and discovered that I was being charged not only my own tax & national insurance but an 'employer's national insurance' too. I have queried this with the agency and am waiting for a reply, and also with the umbrella company. The latter told me that when I signed with an umbrella company I became an employee of theirs, yet I was given to believe I was employed by the agency. The umbrella company said they have an 'agreement' with the agency whereby, according to legislation, an employer's liability for national insurance gets passed on to the employee. In effect this means I am being charged 2 lots of national insurance - my own and that of my employer ! I have never heard of such a thing ever. Despite what the umbrella company say, I am still not sure who I am actually employed by - them or the agency !
    Has anyone ever heard of this or is in the same situation? What with being forced to pay a fee to the umbrella company for something I could do for myself + 2 lots of national insurance, when I receive my pay there isn't a lot left ! I am thinking of contacting DWP or the national insurance office for clarification. As far as I can see there seems to be no way I can have this 'employer's national insurance' refunded. It really sounds like a bogus arrangement similar to the scam of forcing people to apply for multiple CRBs, or at best, a loophole exploited by agencies and or umbrella companies whereby they can offload their legal liability on to the hard-pressed employee.
    I really can't get my head around the fact that it might be legal to make an employee pay an employer's national insurance ! Any reponses appreciated.


     
  3. mereside

    mereside New commenter

    This happened to me and it seemed that it was entirely legal - though it still beggars belief. I have been told that it is illegal for an agency to force you to be paid through an umbrella company, certainly the agency I was with agreed to pay me through PAYE again when I told them I did not want to be paid through an umbrella company. If the agency is a member of a trade organisation it is probably worth contacting them for clarification as to whether you can be forced to be paid via an umbrella company.
     
  4. Guest

    Thank you for your response. I didn't know it was illegal for an agency to force a person to be paid through an umbrella company. Someone else on another thread where I raised this issue, suggested as you did, that I should ask the agency to be put on PAYE and that if they refused I should tell them I wanted to be paid directly and would sort out my own national insurance and tax. Also that I could contact the inland revenue for their opinion.
    It was also said that umbrella companies will proliferate as agencies try to avoid paying according to the AWR rule and that I and others in this situation are being treated as both the employer and employee, hence the 2 lots of national insurance, while the umbrella company is categorised as simply a company who pays the tax and NI on my behalf. Yes, it does beggar belief that this is legal!
    I will contact the trade organisation as you suggest and follow through on the other suggestions.
    Incidentally, I recently signed with another agency who said I could not use the existing umbrella company as it was not one they dealt with and that I would have to use one that they did deal with !
    Thanks again.
     
    rolysol likes this.
  5. historygrump

    historygrump Established commenter Forum guide

    I have been in that position of being forced to join an umbrella company and I find it objectionable to pay a company to process your pay, I accept that in theory there are benefits. Also I am under the impression that techically when you become a member of the umbrella company, who become an employee of the company, rather then the agency that finds you the work, i.e. they become just the middlemen in the supply system when it comes to pay. It saves the agency even more money
     
    Flowers19 likes this.
  6. is it possible to set up your own limited company and get paid directly into that? Would an agency pay into that? Temp workers in other industries do this.
     
  7. Guest

    Yes, when you join an umbrella company you become an employee of the umbrella company. This is what the company have said twice in writing to me and also what the agency have told me verbally. And yes, the umbrella company are the middlemen which saves the agency even more money as you say.
    I've been following through on this issue by contacting HMRC who've told me I should not be paying employer's NI, only my own. I had to contact them 3 times though before finding this out ! I could not get an answer as to whether it was illegal for the umbrella company to be charging me employer's NI & was referred to ACAS who in turn referred me back to HMRC by stating, correctly, it is a HMRC matter. For the 4th time I contacted HMRCand was repeatedly told they could not comment on its legality as they were not trained in that area. They gave me another HMRC number to call who deal specifically with umbella companies. I will post here what I am told from them about it.
    I then followed a suggestion from another poster and asked the agency to put me on PAYE. They said they didn't have a PAYE system in place so it couldn't be done. Following another suggestion, I asked to be paid directly by the agency as a self-employed person, they told me it was illegal !!!! I said it was not illegal, had been told this by HMRC and also knew teachers who are self-employed. I was then told the person would have to speak with the director of the agency about it as they themselves had no knowledge of it.
    By the way, how did you get out of being employed by the umbrella company? It would be very useful for me and others in the same position to know.
     
  8. Guest

    I would say that it is definately possible to do that. HMRC would be able to give you info on that, or look up their website.
    However, from my experience of agencies, I could see a problem of them agreeing to pay directly into it. They told it was actually illegal to pay a self-employed teacher !!! Completely untrue ! See my post above. The reason for the problem being, as I see it, is that agencies and umbrella companies have a cosy relationship of mutual benefit, where I suspect there are deals between the two which a teacher is not in a position to know about. What these deals are, I cannot say as I am outside of the cosy relationship, but I deeply suspect that this is what is going on. So, if you have a Ltd company you would in effect be disturbing the cosiness and 'wrecking' their mutual benefits !!! And why would they allow that to happen when they have a system that works for their mutual benefit where the teacher foots the bill for everything ??? It's not likely is it?
    I know other temp workers have a Ltd company but for reasons I don't understand, teaching seems to be caught in a straitjacket of red tape and exploited loopholes. If you find out anything different please share the information which could help stamp out the exploitation and strangle-hold on people.
     
    rolysol likes this.
  9. historygrump

    historygrump Established commenter Forum guide

    Darryann
    It was quite simple, I do not work for the agency that operates the umbrella system anymore and the agencies that I do work for have their own pay departments at the moment.
     
    rolysol likes this.
  10. Guest

    Ok, thanks. I've decided that either the agency pays me directly for the temp work I'm doing at the moment, or if they refuse, I will not work for them anymore. Of course it means I will probably be sacked and they will try to replace me with another supply teacher for the duration of the contract they have with the school, one who doesn't know the set-up, but I am really not willing to go along with them exploiting me in this way, especially as it's against the law applicable to an employer's statutory obligations. In future I will check out any agencies who operate an umbrella system and do as you did - not work for them in the first place.
     
    rolysol likes this.
  11. I had to do exactly the same, I just didn't work for them, I found an agency that used a gross payroll service as too expensive to set up limited company.
     
  12. Anonymous

    Anonymous New commenter

    So yours and Historygrump's experience is a lesson to the rest of us - just don't work for agencies that operate an umbrella system. If the majority of people did this it would put a stop to the exploitative system.
     
  13. aliceinwunderland

    aliceinwunderland New commenter

    Hi, I finally got one assignment for supply teaching before Christmas. It's my first "proper" job ever, not just for NQT supply.
    And I can see for pay for that day says Employers NI = 0.
    But nothing was deducted from my gross pay.
    The questions is, if the umbrella company doesn't actually deduct employers NI from your pay, is there actually a problem? So no one pays the Employers NI. What happens then? The tax person can't force you, the employee to pay the "employers" NI?
    Obviously when I get paid in the future, i'll see if anything is deducted from the daily rate.
     
  14. Anonymous

    Anonymous New commenter

    On the one hand there doesn't seem a problem as employer's NI isn't being deducted from you - from your gross pay. But what about the net pay? Have you checked that? Can you check it in the sense of whether the information is made available for you to check? If it's not available but only the gross pay is, that seems strange to me. I can check both my gross and net pay. You should be able to do the same. Gross and net pay should be printed on the pay slip, no difference whether it's electronic or paper slip.
    On the other hand it means no contribution is being made toward your pension. I don't know what is worse - no employer's contribution being made or being made to pay for both contributions yourself! You're right to say the tax man cannot force you to pay employer's NI, that's the employer's responsibility, but the tax man might look into it and contact the umbrella company. That of course is not your problem but there is still the fact that no other contribution is being made towards your pension apart from your own employee's NI.
    Maybe you should make a speculative phone call to the tax office to ask about the situation? But I think you will find from them that this situation isn't right either. I am still waiting to find out whether my agency is willing to pay me directly as a self-employed person.
    I have heard from another non-teaching seasonal job I do that the government is keen to make employer's pay a contribution to employee's pensions, i.e employer's NI. This job did not make any contribution before this at any time whatsoever. Neither was employee's NI deducted. Now they have contacted people to tell them about this and have said there is an opt out option for employee's. This means that if an employee opts out of the system, neither they or the employer will have to pay NI. Because there is a move to 'encourage' employer's to make a contribution, this is another reason why your situation sounds a bit strange to me. When you find out what's going on, it would be good to post back here in order to share the info.
     
    rolysol likes this.
  15. I think having any truck with an umbrella company is just not worth the hassle. In the short-term, you will find that with both NI deductions, handling fees, etc, you will be lucky to get half of any money you earn, if you are lucky to get any money out of them, at all. In the longer-term, you will have problems with HMRC.
    I have only done it once, and the e-mailed payslip was very difficult to follow, showing two deductions for NI and another of £10 for 'insurance', whatever that was.
     
    rolysol likes this.
  16. Anonymous

    Anonymous New commenter

    What problems could a person have with HMRC in the longer term? Have you had them yourself? I don't know about these problems myself and have been assuming that any come-back would be on the umbrella company for not following the law on paying employer's NI. But I could be wrong. Can you say what these problems could be?
    True that with all the deductions there isn't a lot left ! I haven't been charged an 'insurance' fee by the umbrella company but I am being charged £18 fee for them to deduct my tax and NI and to deduct the employer's NI which by law they should be paying themselves ! But whether they call it 'insurance' or 'fee' means exactly the same thing.
    I was also told by the agency that if I wasn't with an umbrella company I wouldn't be able to claim for things like travel, lunch etc. and my tax would be higher. But this is blatantly untrue because there is quite a detailed list of what a person is able to claim tax deduction for on HMRC website. And even they say the list is not exhaustive. Umbrella companies and agencies are simply relying on people not knowing about the implications of being paid through an umbrella company, just as I and other people didn't. You only become aware of it when you receive your payslip and see how little there is of it !
     
  17. Anonymous

    Anonymous New commenter

    A lot of problems with agencies and umbrella companies would not exist if schools stopped using untrained people to teach students.
    Here is a very good petition against this happening. Everyone on supply or unemployed should sign this petition to protect what is left of the profession. It is anonymous so no need to worry about your school, agency etc finding out that you signed it. Not that it should make any difference. After all, we are supposed to be living in a democracy [​IMG].
    http://epetitions.direct.gov.uk/petitions/40106
     
  18. mereside

    mereside New commenter

    Tell the agency you want to be paid by them not the umbrella company. If they refuse find out what trade bodies they belong to and whether they have "The Quality Mark". Get in touch with them and ask if they should be offering you PAYE on their payroll.
     
  19. Hi Darryann,

    Interesting that you should post a topic such as this, I've gone through the exact same thing myself recently. I was doing work for a school between September and Christmas on the books of an agency, but was paid by an umbrella company, who, like you, deducted two lots of national insurance from me. Unfortunately, I only discovered this towards the end of the year when I had to hand in 2 timesheets at a time instead of the usual 1, and saw that I was getting just over half my gross income, which was a huge shock.

    The company allow you to claim expenses for travel but apparently this is a grey area in terms of the law, as that is meant for those who are truly self employed. I have been in touch with HMRC and they say they can't do anything about it, because they are getting their tax, and it's not done illegally. However, I also spoke to someone at ACAS and he said to email the agency and find out why I'm being deducted twice. Once I've got that email, I've to get back in touch with ACAS and take it from there.

    No mention of any of this was made to me at the beginning of my contract, and none of the documentation that I have says anything about this. I do intend to fight this, so I'll let you know how I get on. I probably won't get very far, but I'm not about to just let them walk away with money that I have earned and that should I have gone into my account, not to pay their tax with.
     
  20. Anonymous

    Anonymous New commenter

    Hi Ironic, pity you only found out about the 2 lots of NI towards the end. I was told by HMRC to contact ACAS about this but when I did, ACAS said, correctly, it was a HMRC matter ! The first person I spoke to at HMRC said categorically to contact the payroll of the umbrella company and to tell them from him that they should not be deducting 2 lots of NI from me but only my own as the umbrella company were responsible for paying employer's NI. I did this but they denied deducting employer's NI even though it is in black & white on the payslip as 'employer's NI' and the amount ! They denied it 3 times !!! It is impossible to get them to admit they are deducting it even though they have printed this on the payslip themselves ! It's completely unbelievable !!! You might have the same trouble with your company admiting this too. Just a warning.
    HMRC didn't tell me they could not do anything about it. They were non-commital but very definate it shouldn't be happening. Who knows, maybe there's a purge of these practices planned?
    No one is ever told about paying 2 lots of NI. If they were, very few people would agree to be paid through an umbrella company. You're right to fight it because as you say, this money is paying their tax bill. All of us paid by these companies are paying not only our own tax and NI but their tax and NI as well ! It's completely outrageous. Yes, please post back here to let people know how you get on. Shared information is very useful and can help stamp out these exploitative practices.
     
    rolysol likes this.

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