Employment Costs???

[Craig28uk]

Hi all!

This seems like a very good place to post as there seem to be some very clued up people here!


Im wondering if someone can help? just after a bit of knowledge, I am very new to contracting so forgive my ignorance!


If I am on a match pay model with a agency what exactly are these employment costs? I was under the impression (albeit foolishly) that my margin was my costs..... Are these legal?

[cojak]

Hi all!

This seems like a very good place to post as there seem to be some very clued up people here!


Im wondering if someone can help? just after a bit of knowledge, I am very new to contracting so forgive my ignorance!


If I am on a match pay model with a agency what exactly are these employment costs? I was under the impression (albeit foolishly) that my margin was my costs..... Are these legal?

We'll I'm not new to contracting and I have no idea what you are talking about.

But a match pay model sounds as if you are matching pay with an equivalent permie? FTC maybe?

As for employment costs - not a clue.

Whatever it is it doesn't sound good. I would have asked you if you are in the UK but since your login suggests you are.

The old question around here is what does your contract say? It should explain everything there...

[cojak]

Ok, I've a quick google and found this - w ww.planitservices.co.uk/AWR.html

Are you using an umbrella company rather than your own Ltd?

This why I don't know - I use a Ltd company and am in control of all my money.

[ASB]

Hi all!

This seems like a very good place to post as there seem to be some very clued up people here!


Im wondering if someone can help? just after a bit of knowledge, I am very new to contracting so forgive my ignorance!


If I am on a match pay model with a agency what exactly are these employment costs? I was under the impression (albeit foolishly) that my margin was my costs..... Are these legal?

I imagine that you asked whoever is actually paying you? If not it might be a sensible place to start.

General employment costs are the deductions which are calculated from payroll costs. These are employers ni, employees ni and income tax. There may be others in accordance with any contract signed.

[Craig28uk]

Hi and thanks for the replies.


Yes I am based in the uk, I am with Parasol and am puzzled as to how I pay the margin and then employment costs aswell? it appears that from what they say they retain 13.8% to cover their employment costs (I thought the margin was this cost???) they say they send this money to the HMRC, ? as for asking them, I find I got more questions than answers.

[Anonimouse]

Oh dear parasol to be avoided at all costs! make sure they haven't stuck you on Swedish deravation as well. A change from them to a decent brolly almost doubled my take home.

[TykeMerc]

Ah, what you're calling "employment costs" are made up of:-

Umbrella company fee this is typically a percentage of the day rate - they're in business, they have costs in administering your payroll and they have to make a profit or they go bust.

Employees NI and Income tax - They deduct these via PAYE the same as in any other employment.

Employers NI - In past employments you won't have seen this cost, but the Umbrella displays it and it's a percentage of the amount you're paid. It's something they have to pay and the money has to come from somewhere, that somewhere is from your day rate.

[ASB]

Hi and thanks for the replies.


Yes I am based in the uk, I am with Parasol and am puzzled as to how I pay the margin and then employment costs aswell? it appears that from what they say they retain 13.8% to cover their employment costs (I thought the margin was this cost???) they say they send this money to the HMRC, ? as for asking them, I find I got more questions than answers.

I dont know how long you have been working etc, but employERs NI does cause confusion. This is around 14% and is paid by the employer.

But, in an umbrella context this means you. Qiick sanity check; you get say 1000 a week. Your brolly takes a 20 quid fee. There is a pretty obvious problem given employers ni of 140 quid odd is due.

It may be the case that employers in brolly terms could perhaps be clearer in their explanations.

[LisaContractorUmbrella]

Hi and thanks for the replies.


Yes I am based in the uk, I am with Parasol and am puzzled as to how I pay the margin and then employment costs aswell? it appears that from what they say they retain 13.8% to cover their employment costs (I thought the margin was this cost???) they say they send this money to the HMRC, ? as for asking them, I find I got more questions than answers.

As others have said - the employment costs refer to employer's national insurance contributions which the umbrella company has a legal obligation to pay to HMRC; this is a very common question and should not give your umbrella company a problem to answer.

The match perm pay that you refer to is a compliance requirement under the Agency Workers Regulations - as a contract worker you are entitled to the same pay and basic conditions as a permanent employee in the same role.

HTH