Do I have to pay employer's NI contribution in a temp contract job offered via recruitment agency?

[ALittleCurious]

Hi,

 

A couple of days ago I received a call from a Recruitment Agency asking if I am interested in a temporary office job assisting a company (their client) with their back log. This would be a contract job for 5 days. I completed the interview process and agreed to the job starting soon.

 

Today I received an email from Recruitment Agency's umbrella company with the breakdown of my salary. Income tax, my NI contributions, company margin net and employer's NI contributions are all being deducted from my salary. What I don't understand is why do I have to be liable for my Employer's NI contributions? Surely that's for the employer to pay?

 

Can anyone please advice me why employer's NI contributions would be deducted from my salary and is this a normal practice?

[Swoosh84]

Is the amount definitely being deducted from your final pay? Employers NI is obviously for the employer to pay. Having looked at some of my staff's wage slips, each one of them details both Employers NI and Employees NI. However, only Employees NI is deducted form the total. The Employer NI is there for information purposes only.

[ALittleCurious]

I definitely have to pay the employer's NI contribution - it's broken down in the "Estimated Net Income" document sent to me. However, it seems that I would be paying Employer's NI contribution for the "umbrella company" rather than the Recruitment Agency. ??

 

I got it broken down and the document entitled "Estimated Net Income" starts with "Company ([Name of Umbrella Company]) Gross Margin" and shows substantial deductions for "Employer's costs including employer's national insurance". Then, whatever is left in the Gross Payment section follows to the next section where my net payment is calculated after my tax and NI.

 

It's looking like I am being offered "Assignment income reconciliation" services by this umbrella company, for which I have to pay employer's NI contributions. It seems by accepting a temp job via recruitment company I'm forced to become an employer for the umbrella company, if I'm getting this right?

 

Any views?

[ALittleCurious]

PS: there is also a "Conduct Regulations" "Opt-Out" form that's been sent. I'm not very clear what that form represents but I'm presuming by opting out I am getting rid of this umbrella company?

 

Never experienced this before, but it all seems well dubious...

[Swoosh84]

Sounds strange, it would be worthwhile if you could scan/photograph the said documents and posting them here. Be sure to remove any personal information from them. Someone more clued up will no doubt be along shortly who may have heard of such a process.

[topcat1802]

Sounds a very peculiar setup if you ask me surely if its temp work you are being employed by the recruitment agency not the other way round.

 

 

By opting out you are not getting rid of the umbrella company!

[Inspiron 1525]

Ive worked for various Umbrella companies and yes they do indeed get you to pay the employers NI.

 

 

Something I believe its not legal..but "gotten around" by the terms and conditions of employment.

[ALittleCurious]

What I don't understand then is why do I have to use the "umbrella company" who deduct Employer's NI contributions. Why is it that the Recruitment Agency would not pay me instead, without using an umbrella company? I was told that I must use an umbrella company, but I don't understand why this. Surely if I pay employer's contributions for the umbrella company, then that means I am hiring them. But what if I don't want to hire an umbrella company altogether. Is there a law or a rule that one must use such a company that I don't know about?

 

A random question: So what happens if a Recruitment Agency gives someone a temp admin job on a national minimum wage and then an umbrella company deducts employer's contributions. Then the person will end up technically working on an illegal wage?

 

Also, according to my Google search it seems recruiters get around £100 for referring clients to these umbrella companies. There appears to be an obvious intensive for the recruiter to push clients to use these umbrella companies.

 

Sounds very odd to me...

[MaxxPower]

This is pretty much how contracting works in my experience. Either by using an Umbrella company, or your own Limited company, you still get technically classed as 'self-employed' I believe, so it's down to you to pay the Employers NI because you are technically speaking your own employer.

You're right about the referral fees being a very dodgy area. I've worked with some agencies that will only give you a job provided you use one of their 'approved' umbrella companies (aka the ones that will give the kickbacks) unless you have your own Limited company to go through.

 

Make sure though that you get all the tax expenses you're entitled to as well. Ie you can claim for things like meals, travel to work, any use of home office, anything you had to purchase to do the job, etc.

You aren't claiming these back as an actual expense, but their cost can offset against your tax meaning you pay less tax overall.