With hundreds of provider’s advertising their wares within the Umbrella Payroll market space it is difficult for a contractor to compare all of the different figures that they are provided. Finding the right Umbrella Company is important as these will be the companies that ensure that a contractor is paid accurately and on time. Since the implementation of the IR35 changes in April 2017, the main grievance from contractors who have had to utilise an Umbrella Company’s services, has been that not everything is as it seems.
Many of these contractors are questioning unexpected costs that have not been made clear to them compared to advertised rates. The biggest grievance is occurring when the contractor has been provided with a pay rate by their recruiter and have not been advised that this rate is uplifted because they will be encouraged to use an Umbrella Company. The contractor will expect to receive the pay rate they have agreed with their recruiter but the employment costs which include Employers’ National Insurance, having not been made clear means the contractor receiving far less net pay than they anticipated.
These grievances are increasing considerably for Umbrella Companies and effective communication needs to be maintained with recruiters to ensure that the contractor is fully aware that the rate of pay they are being offered has already been uplifted to accommodate the employment costs suffered when utilising an Umbrella Company.
The consequences for this lack of transparency are considerable. A number of contractors already believe that these deductions are unlawful because of the lack of education from the outset as to how they will be paid and what they are to expect. This practice could potentially be seen as unlawful deductions and could leave recruiters facing large re-imbursement costs, reputational damage and further investigation by HMRC.
A recent case has highlighted the need for transparency in this matter. A recruitment agency has been accused of engaging a group of contractor’s through an Umbrella Company and advertising the rate of pay as £21 per hour when the contractors’ net pay only equated to £8.75 per hour. Now this example is an extreme case as it has been highlighted that the recruiter had actually only agreed the rate to be £17 per hour, no uplifted rate was provided even though advertised and the recruiter had been accused of withholding funds from candidates. However, similar practices on a much lesser scale seem to be prevalent and only leave the contractor’s questioning whether they are being paid as they had agreed.
It is vital that a contractor is advised of their correct pay rate from the outset and what they can expect to receive. Here at ePayMe we ensure that all new registrations are provided with a full breakdown of all employment costs that will be involved in their payroll process and we maintain a strong relationship with our agency partners to ensure we are providing compliant advice and support to all of our contractor’s.
ePayMe are proud to be the trusted provider for the leading recruiters in the UK via both their Preferred Supplier Lists and Sole Provider Agreements demonstrating our commitment to compliance for our contractors and agency partners.
We are always happy to provide guidance and support to agencies to create a robust and compliant process when choosing their outsourced providers.
We have an experienced team on hand to aid and support agencies and their workers alike.
Contact our team on 01252 863700 and we’ll be happy to discuss your requirements further.
Author: Michael Meany, Compliance & Finance Manager – ePayMe Limited