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Why am I paying Employer's NI as well as employee's?

Discussion in 'Supply teaching' started by jhagan99, Nov 19, 2018.

  1. jhagan99

    jhagan99 New commenter

    I have googled this but am none the wiser. I have just signed up with three supply agencies, two of whom are insisting I have to be paid through their recommended umbrella company (the other has payroll but pays a pittance). Having accepted my first assignment today I rang the umbrella company to check a few details and discovered that not only do I have to pay them a fee, but I have to pay employer's NI in addition to employee's NI. I have never heard of this before. I will be employed by them so why must I pay their contribution as well as my own? I had thought I had negotiated a reasonable daily rate but this puts a new perspective on things, and I am unsure how to work out how much I will pay. As I understand it, NI is paid on any weekly income over £162 at a rate of 13.8% for the employer and 12% for the employee. Does this mean I pay a whopping 25.8% before my tax comes off as well? Or am I looking at this wrong? Hoping some sympathetic tax-savvy teacher can help me out.
  2. thewritingsupply

    thewritingsupply Occasional commenter

    Just a warning, avoid umbrella companies at all costs. I was selected by an FE college via an agency to cover 2 weeks paternity in my specialist subject - a different city to my own but easy to get to and not a million miles away. Negotiated my rate etc.

    When it came to talking to the Umbrella Company, it soon became apparent that in total there would be about £250 deducted each week. This meant I would be getting the same amount as day to day work - the difference being, I don’t have to plan or mark for that and I don’t travel to a different city!

    I pulled out of the assignment, refusing to be forced to accept these terms. There was a reply from the agency about negotiating with the college and upping my daily rate, but, to be honest it left a sour taste in my mouth and I said do one.
  3. thewritingsupply

    thewritingsupply Occasional commenter

    In my own circumstances, if an agency can’t pay me PAYE, I won’t work for them.

    I get work through four agencies, all pay me PAYE.
    agathamorse and zarahzezze like this.
  4. jhagan99

    jhagan99 New commenter

    Thanks for your replies. Can I ask what your daily rate is? It seems to me that the agencies are able to shaft us experienced teachers because they know they can fill posts at a greater margin with NQTs. In other words if I insist on my own rates and terms I just won't be offered much work. So far I have told all 3 agencies I won't work for less than £165 per day. One has said I probably won't get much work and has called a couple of times offering me a day for £120. This agency I believe has its own payroll but I have no idea whether it would make me pay employer NI as well. The others are offering work but insisting they don't have payroll and that I have to use unbrella. I hate the idea of being taken for a ride, but when I talk to others it seems their experiences are similar. Other than that supply is very appealing right now. Anyone else have any suggestions?
  5. educ80

    educ80 Occasional commenter

    Hi jhagan99
    Any agencies worth their salt should be able to offer you the option of PAYE vs Umbrella. If they don't, my first thought advice would be to not register/leave them. What the Umbrella 'system' is designed to do is incur Supply Teachers more cost and make more profit for agencies in the following way:
    You sign up to an Umbrella Company, which effectively sets you, jhagan99, up as a director of your own company "Hagan Supply", and any supply work you undertake is effectively Hagan Supply invoicing the schools for the provision of staff. The inherent problem for you is that as Hagan Supply is employing jhagan99 to provide the service, you are classed as both employer and employee - hence two sets of NI contributions. It isn't fair and it isn't right, and its why all the big players have pretty much abandoned it - or maintain they have. Some agencies carry on doing it because they can quote you a pay rate of say £160 a day, but actually you end up after standard tax, charges and double NI contributions coming out with about £100 a day. So the headline rate is appealing but totally inaccurate. It also means that the agency DONT have any NI contributions to make so increase profits.
    I manage a supply teaching agency and have continually fought against this practice, I have petitioned the Crown Commercial Service to alter their stance on this but it is still rife.

    The alternative; Speak to schools locally about which agencies they use and take their lead. If they recommend the agencies you are currently with then it could be worth indicating their practices to the school or going to that agency and saying "If you force me to work on a payment product then my wage has to be inflated to cope with the charges you put on top. It is illegal to force me to be paid in a certain way and then charge me for the 'privilege'" If an agency cant be bothered to set up its own payroll system and instead outsources it, then they should recoup that cost in a way that doesn't impinge on you the candidate.

    Alternatively do some shopping for other agencies, like you would with car insurance for example. Get quotes, assurances of work levels, wage, PAYE etc Speak to the consultants and see if you feel that the people you are speaking to are trustworthy and capable of representing you in the next stage of your career (there are good, caring and trustworthy people in this profession - despite the ill-placed vitriol on these and similar groups stating they are all millionaire teenagers bleeding the education system dry) When you find a good agency, join them.

    Lastly, although I appreciate the strength of character to hang on to your £165 demands, the majority of agencies are driving down pay to undercut rivals in the market and maximize profits. Unfortunately this means wages are constantly being driven down and the standard market pay is less as a result - I don't know where you work so I cant comment precisely. But what I would possibly recommend is considering having a conversation with your agency whereby you agree to a slight cut during the quieter times of the year to get your face known and then when, from roughly Dec-May, its incredibly busy, you will insist on your standard rate. The market fluctuates and supply/demand shifts, if you don't offer any flexibility then it could well be you price yourself out of the market entirely - just some friendly advice as it may improve your saleability.

    Good luck.
  6. zarahzezze

    zarahzezze New commenter

    Umbrella company is a rip off AVOID completely. you will have to pay EMPLOYER'S NI and as well pay EMPLOYEE MARGIN then you will now pay for your TAX and NI and any other reductions. PAYE all the way!
    agathamorse likes this.
  7. Tess2006

    Tess2006 New commenter

    I phoned up an agency yesterday who said they only used an umbrella. So I said thanks, but no thanks! Best avoided.
    agathamorse likes this.
  8. schoolsout4summer

    schoolsout4summer Star commenter

    Educ80 is always up-front about being an Agency. Nice to see honesty.
    agathamorse likes this.
  9. blazer

    blazer Star commenter

    I always thought that by using an umbrella company you were classifying yourself as self employed. Thus you are your own employer and so liable to employer's NI? The agency isn't your employer so does not pay employer NI.
    agathamorse likes this.
  10. Jolly_Roger15

    Jolly_Roger15 Star commenter

    UCs get up to all sorts of scams, such as issuing a payslip for every day you work, collecting a fee for each one. When I was first supplying, naively I did some exam invigilation, for which I was paid about £15. What with both sets of NI, tax the UC fee, and the fee for the payslip, I made a loss on the day. I owed the UC money!
    agathamorse and Tess2006 like this.
  11. jhagan99

    jhagan99 New commenter

    Thanks educ80 and everyone for your replies. Looks like I need to do some more research. I did carefully select the agencies I signed up with on the advice of acquaintances already on supply as well as the person responsible for cover at my previous school. I suppose this work will never pay me my worth as an experienced teacher. And after the day I've just had i will be paying out a fortune in wine. Maybe it's time to look outside of teaching altogether...

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