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]]>Recruiters and Umbrellas Welcome Extension of Digital Right-To-Work Checks
- June 30, 2021
- 10:47 am
Gov’t decides to delay the return of in-person right-to-work (RTW) checks
The recruitment industry has welcomed the news that the UK Government is to delay the return of in-person right-to-work (RTW) checks until September 1st at the earliest. The decision means the continuation of a more efficient, less logistically-challenging procedure that many are petitioning heavily to make a permanent feature moving forward.
All employers have an obligation to prevent illegal working in the UK and this includes carrying out right to work checks on all employees before they start work. Prior to March 2020 RTW checks were mandated to be in-person as an integral part of the hiring process. Pandemic restrictions would have made this impossible for recruiters; thankfully the digital checks were introduced in effort to continue the hiring process remotely as COVID remained a concern.
But surely this digital approach to RTW checks is one of the forced adaptations that should stay in place for the long-run? The pandemic has forced the world of business evolve. Any sales team choosing to negate the power of Zoom to once again suffer the logistics and expense of face-to-face meetings may be seen as naïve or even lacking environmental consciousness, digital RTW is just another process that COVID has forced refinement upon.
The digital approach has increased safety for all involved, saved time and resource for the supply chain and has no-doubt helped to slow the spread of the virus. Becoming digital has also widened its reach – this format of RTW check was available to some foreign nationals and pre-COVID, but the pandemic meant that accessibility increased to UK residents/citizens also.
Without the digital platform, over 300,000 people a week faced a potential delay in starting work assignments due to face-to-face RTW logistics. Currently checks are being performed based on scanned copies or photos of original documents. Checks can also be carried out over video link, with the original documents in the possession of the individual. Alternatively, the employer may use the Home Office’s right to work check tool, with the permission of the individual, while in contact with them over video link. This provision has kept the recruitment industry moving during difficult times, and reverting to in-person screening would almost feel like a step backwards post-restrictions.
The recruitment industry body REC has stated that a digital check takes around 5 minutes to complete, whilst an in-person check can take up to 10 times longer. REC’s Jobs Recovery tracking software recorded a surge in job adverts and vacancies in May 2021, and it is widely being reported that there is a skill shortage in many industries (due partially to the fact that foreign workers are faced with travel and quarantine restrictions). Surely reintroducing in-person checks during such a dip for the recruitment industry would be a serious disadvantage to those seeking new employment, especially since many companies are still choosing to work from home?
Stats show that highest weekly number of job ads listed since the pandemic began was from May 17th – 23rd 2021, with a whopping 224,000 new vacancies being posted (followed by 208,000 the following week). There are drastic shortages in the hospitality industry and there have been marked increases in adverts for other skilled occupations such as teachers and welders.
The digital RTW check approach has proved to be an administrative and logistical lifeline for employers and job seekers to this point. The question to be asked of the Government as September approaches is whether it is fair, and in the best interests of all parties, that in-person checks once again become mandatory while the country is still on the path to economic recovery.
It is really vital that employers are satisfied that they have done all required checks during this time in full compliance with either the standard prescribed requirements or the Covid-19 adjusted checks, as inevitably the liability falls on them if any illegal working is discovered. In addition to these responsibilities we have the introduction of the EU Settlement Scheme and the extent to which employers will be required to undertake additional checks against them from July 2021 is still uncertain.
Have you attained a new role during the pandemic?
How did you find the RTW checking procedure?
Are you a recruiter?
What is your vantage point of the two RTW processes?
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]]>Why do Companies Hire Contractors and Umbrella Employees? Read More »
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]]>Why do Companies Hire Contractors and Umbrella Employees?
- June 9, 2021
- 2:51 pm
If you’re considering getting into contracting it’s important to know your worth and to understand why a company may choose to engage you instead of taking on a permanent employee.
There are a few distinct reasons that a business may choose contractors over “permies” – let’s use a very common industry in the contracting world as an example, IT.
Cost-effectiveness
The world of IT moves at an extreme pace, those at the top of their game have refined their skillset and knowledge to be able to solve problems that others simply cannot. This level of education and professional intricacy drives up your hourly or daily value significantly, so how exactly are you a cost-effective choice?
Well, you’re cost-effective because you’re temporary. You’ll be hired to fulfil a specific assignment (likely within a determined timeframe) to which your skillset will align to. It may be the case that no other person within the company’s internal organization (permanent staff) could complete said assignment with efficiency or effectiveness. Asking a permanent staff member to get up to speed to complete this task would mean investment in training, time, and software – then there is the anxiety of the first attempt being slightly off target result (trial-and-error is not an effective approach when deadlines are involved). The alternative is much more attractive; pay a little more over a shorter timeframe for someone who has the expertise to nail the assignment in one attempt. Once the job is done the company has no further obligation to you, you were a temporary, and worthwhile expense.
Lack of sustainable work
Of course, the alternative to hiring you as a contractor would be to take you as a permanent staff member, but we’ve already established that your skillset demands a high pay rate, so your salary would likely need to be substantial. This is all well and good if there is a sustainable workload to warrant such a high salary on a permanent basis.
There are 2 risk factors here; the ongoing work (outside of the integral assignment you were hired for) is below your skillset – therefore does not justify your salary. Or, you get bored and look for challenges elsewhere.
It makes far more sense to hire you as a contractor than a permanent staff member. If there is a need for your skillset once again, they can simply set up new assignment parameters and it would be your choice to accept the new role or not.
Tax and other liabilities
Engaging you as a contractor means that the organization has very little liability for you from a tax perspective – this ties in with point #1: Cost-Effectiveness. If you are an employee of the organization then they are responsible for paying employers National Insurance costs of 13.8% of your income, that’s not exactly pocket change. If they engage you as a contractor then the end client is not liable for this expense, sure, they may have to consider paying “Umbrella Rates” which are slightly elevated to compensate the difference, but it’s unlikely that they would be consistently out of pocket to the tune of 13.8%.
Hiring a contractor also means that the business avoids any responsibility relating to pension contributions. This does not mean you’re left without a pension structure – your umbrella company should have a policy in place for you when you enrol.
Reduced recruitment and HR responsibilities
For the most part, an end client will not utilize their internal recruitment or HR structure to cater to contractors, they’ll likely turn to external recruitment experts with connections in the field that they’re approaching.
Again, this is a temporary expense – but a much more refined approach that once again would most likely yield quicker results while alleviating the need for a salary.
Contractors do not sit within the end client’s employee structure, which means standard HR procedures, practices, documentation, review/evaluation etc. would not be an essential part of the engagement – again, the workload is reduced and resources can be reallocated.
As a contractor working through an umbrella company, you do have the same rights as any regular employee, but it’s your umbrella that is responsible – not the end client.
The Booster Approach
When businesses need to evolve, adapt, re-configure or reinvent there is generally a call for quick, decisive, elaborate action. You are the solution to that problem. You’re the quick fix, the inspired rejuvenation, the newly oiled piston in the old engine set to fire cogs once again. You bring with you the brightest ideas and the skills to back them up. Your influence on that business, albeit temporary, will serve to inspire existing teams, add new exciting features and ultimately leave a legacy that will benefit the business long after your temporary assignment is over.
All in all, the attraction of contractors to businesses is easy to see. It is becoming common knowledge that progressive businesses are looking more and more towards gig economy workers for their innovation, productivity and motivated working style.
Contracting is becoming more mainstream throughout the UK, you are a valued commodity and the benefits to the end client far outweigh any perceived negatives.
If you have questions about becoming a contractor or how your assignments would work as an umbrella employee please do not hesitate to contact us. Good luck with your contracting ventures!
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]]>Contractor Mortgages: Greenwich Contracts & CMME Read More »
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]]>Contractor Mortgages: Greenwich Contracts & CMME
- May 26, 2021
- 8:16 am
We understand that being an umbrella employee contractor comes with a unique set of circumstances, meaning applying for a mortgage may come with some additional challenges. That’s why we’ve joined forces with one of the UK’s biggest names in the mortgage industry to support you with award-winning, expert services.
CMME are a contractor mortgage specialist dedicated to helping umbrella employees, contractors and independent professionals secure mortgage funding.
Whether you’re a first-time buyer, looking for your next home or simply looking to find a better rate, CMME understand the contracting world and will do all the hard work to find your perfect home.
Why speak to CMME?
- Borrow up to 5 x your annualised salary
- Access to some of the most competitive rates in the market
- Exclusive mortgage deals for CMME clients
- Dedicated advisor every step of the way
- 5/5 customer rating on Feefo
Start your enquiry through Greenwich Contracts today at [email protected]
Your home may be repossessed if you do not keep up repayments on your mortgage.
CMME is a trading name of CMME Mortgages and Protection Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: 2 Glass Wharf, Bristol, BS2 0FR. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.
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]]>Choosing an Umbrella Company – Top Ten Tips Read More »
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]]>Choosing an Umbrella Company – Top Ten Tips
- May 20, 2021
- 1:28 pm
Top 10 tips for choosing an Umbrella Company
IR35 reform took place on April 6th and since that date, there has been a marked increase in contractors looking for umbrella payroll services. To briefly recap a few educational articles we’ve released in the past – if your end client deems you to be inside IR35, you must operate under an employed status, paid with all PAYE deductions. For a variety of reasons many end clients do not want to employ temporary workers: it impacts their overheads, increases demands on HR, increases their payroll workload and means additional responsibilities post assignment terms – just to name a few. So, engaging an umbrella company as the employer is the solution for most, but where do you start with the umbrella selection process?
There is a huge number of umbrella businesses on the market and selecting the right umbrella for you can be a little overwhelming. So what should you look for in a brolly? Here are a few tips that we suggest:
Is the umbrella a UK incorporated company?
Always do a quick check on Companies House to see if the umbrella is incorporated in the UK. Their website may indicate it is, but that can sometimes be an office address, it’s always worth a quick look. https://www.gov.uk/get-information-about-a-company
If or when you register with an umbrella, check the paperwork that follows – ensure that the contract you sign names the umbrella company that you believe you have registered with. If another company name is used, always ask why.
Greenwich Contracts UK registration details are here.
Are you provided with a full breakdown of take-home pay before signing up?
You can always ask for a full pay illustration/quote from your prospective umbrella. This should give you a clear breakdown of all deductions based on your employment with the umbrella company and should result in a very close estimation of your net take-home pay.
When comparing illustrations from umbrellas check the exact specifics as to what you have been provided. This is because some companies may assume a working month is 21 days, or a working week is 37.5 hours, both of which may differ from your actual circumstances. Most illustrations will be created based upon the standard tax code which is currently 1275L. If you know that your tax code is different, you have another job or any deductions such as a student loan, let them know. Be specific, the umbrella should be able to work from your lead.
Greenwich Contracts will offer an indepth take-home illustration upon your request. This will include all fees and deductions for your review.
Is there entry or exit fees?
Although these fees are few and far between now, always check that there is no tie into the brolly; application and termination fees should not apply – you should have free will over joining or leaving without penalty. Also, be sure to ask about their minimum requirements for your employment, these may differ between umbrellas, notably minimum terms, minimum rates and any notice periods.
Greenwich Contracts has no entry or exit fees and will only charge you fees when you are actively billing and there is no minimum term or notice period. We do have a minimum hourly contract rate – this is to protect minimum wage thresholds, ask us for details.
What should the umbrella margin look like?
The margin is the fee that the umbrella takes for the employment administration and payroll processing.
Some umbrella companies charge a percentage, others charge a flat weekly or monthly rate based on how often you process timesheets.
Margins can differ massively from company to company. As a word of warning though, running an umbrella company is a costly venture, quality customer service representatives and reliable software are noted overheads – the old adage applies, you get what you pay for.
Greenwich Contracts has a set fee of £27.00 per billed week.
What is the holiday pay policy?
There are several ways that holiday pay can work with an umbrella. It can be accrued or advanced every time they make payment to you. (Your payslip and contract terms should specify). Either way, you are entitled to it – if there appears to be any confusion over holiday pay please ask the umbrella, they should be able to provide you with a full policy. If they don’t, it may be a red flag.
Greenwich Contracts holiday pay policy can be found in the footer of our website.
Is anyone you trust recommending them?
The umbrella world is the same as any other customer-facing industry, word-of-mouth and recommendations are a great indicator of quality service and product. Many contractors will take to social media to ask for recommendations, and you can be sure that those who have not received expected service levels will say their piece also. If colleagues, friends and peers have a positive experience, it is a good indication that you will too.
At Greenwich Contracts we constantly seek feedback from our contractors, we use this to refine our processes and service levels. Over the years we received hundreds of recommendations and colleague referrals due to our customer service levels and reliability.
Can you reach them on the phone? If so do they have the answers you’re looking for?
Many larger umbrella companies have a reputation of being unreachable when something goes wrong. Test this out early, find a number on their website and give it a call, if a friendly customer service rep answers then it’s a good indicator that they’ll be available when you need them. Don’t be afraid to ask questions; with employment legislation and rights changing constantly, a good umbrella company will educate their representatives to be able to answer any concerns that you may have.
Ultimately, the umbrella is dealing with your monetary affairs, you need to be confident that you will be looked after by friendly, polite, efficient, responsive, proactive experts.
One of Greenwich Contracts consistent objectives is to put the contractor first – we are available via phone, or email when you need us – try us out during business hours 02037 407530 and speak to one of our friendly advisers.
What about your pension?
Working via an umbrella means you are deemed to have an employed status – this means that you must be offered pension provision.
Most umbrella companies will offer a standard auto-enrolment model for your employment, your contributions towards your pension can be altered upon request. Others may reference salary sacrifice, be careful here, the definition of salary sacrifice in the eyes of HMRC may not quite reflect what the umbrella is offering – do your research and ask questions.
Greenwich Contracts auto enrolls you to the NEST pension plan, you will be notified of this and can opt-out of it and change contributions upon request.
“Hi is that Joe, Mel, Dennis, Sheila or Bob today?”
Looking after you should be a priority for your umbrella company, having a designated contractor service rep during your on boarding process and a small friendly team afterwards means that you have a reliable contact point which understands your assignment terms and your contracting journey so far. It also speaks for the integrity of the umbrella, having the confidence to assign a representative to you means there are no concerns over staff turn-over, i.e. it’s a nice place to work – generally that means a happier, more knowledgeable representative for you.
When you join Greenwich Contracts you’ll be assigned a personal contractor specialist during your on boarding process who you can contact as and when needed, we have multiple communication channels, please simply ask to speak with your specialist when prompted.
Strange terms
If you see any strange terms in your contract that are unfamiliar, always question these with the umbrella company and ask them to explain further. It is important to understand what you are signing before you put your name on the dotted line.
Greenwich Contracts is a PAYE umbrella payroll platform – we will only ever pay you, on a PAYE basis.
To conclude, there is a lot to consider when choosing your umbrella company, it requires a lot of thought and research on your part. But reliable, umbrella companies are out there and we believe Greenwich Contracts is one of them – try us out, call us directly on 02037 407530 we’ll be happy to explain all of our processes and procedures with you in full.
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]]>Confusing Terms Explained Read More »
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]]>Confusing Terms Explained
- April 27, 2021
- 1:20 pm
What does it all mean?
It can be confusing as a contractor starting out when you hear so many acronyms mentioned by both your agency and Umbrella Company.
You may hear things such as IR35, WTR, AWR, and SDC along with terms such as ‘Opting Out’. You will also see it on documentation that you are expected to sign, so what does it all mean?
We’ve tried to put things as simply as possible for an at-a-glance view:
ACAS – Advisory Conciliation and Arbitration Service
A government agency that gives employees and employers free impartial advice on workplace rights and rules, and assist with employment disputes. https://www.acas.org.uk/
AWR – Agency Workers Regulations 2011
These regulations are designed to provide temporary agency workers with equal treatment over pay and benefits as those who are permanent employees. As the name suggests, they only apply to contractors working via agencies. They are entitled to certain rights from day one of an assignment such as access to canteen facilities, and from week 12 of an assignment (qualifying period) the regulations also include breaks and annual leave. For further details please read our article – Agency Worker Regulations Explained
AWR Regulation 10 – The Swedish Derogation
This was a model facilitating pay between assignments used by many umbrella companies, but was abolished on 6th April 2020. It meant that after the 12 week qualifying period (in the same assignment with the same client), the client would need to pay the agency worker the same rate as direct employees.
EAA Conduct Regulations 2003
This is the Conduct of Employment Agencies and Employment Business Regulations 2003. The Employment Agencies Act is a piece of legislation created to set a minimum standard of conduct for recruitment agencies in the UK. There is much more information on this subject, but to summarise, the Conduct Regulations cover:
- Information required from/given to the client and provided by/to the contractor;
- The contractual documentation which must be in place;
- When a contractor must be paid; and
- When transfer fees can be charged to the client.
The Regulations permit individuals to opt-out of the Regulations if they are:
- Working through a limited company; and
• Not working with people under the age of 18 or vulnerable adults.
Your agency may send you a document to sign, and you will see this also on the signature page of the contract with ourselves.
EAS – Employment Agency Standards Inspectorate
The government authority responsible for the enforcement of certain agency worker rights to ensure that they are treated fairly. They are responsible for working with employment agencies and businesses to help them comply with the law, and investigate any complaints received from agency workers. The EAS is based within the BEIS – the Department for Business, Energy and Industrial Strategy, and they work closely with ACAS and a number of other organizations.
https://www.gov.uk/government/organisations/employment-agency-standards-inspectorate/about
IR35
IR35 is a legislation that targets contract workers who use an intermediary such as a limited company to provide services to clients, when in reality they would be classed as an employee if there was no intermediary. This is currently all over the news and internet, but to put it as simply as possible, as an employee of our umbrella company, you are classed as INSIDE IR35. If your agency mentions a role that falls outside, then you could opt to be paid to your limited company.
For further details please read our article – Your Contract: IR35 Determination or our Full IR35 Guide
KID Document – Key Information Document
This is a document that your umbrella company needs from your agency at the start of a new assignment. When you start a new role, we will ask your recruiter to send us details of your role (dates and rates), along with this document. This is a legal requirement post April 2020. The document will give you a breakdown of the deductions and expected take home pay for the assignment. Your agency must give you a copy and one to us as your umbrella company. If they don’t have one, we send them a template that they can complete. Once we have this information and you have approved the details, payment can be processed. For further details, please see our article – KI Documents Explained
PSL – Preferred Supplier List
This is a directory of suppliers/umbrella companies. Many agencies have one; a list of umbrella companies that they would like you to choose from for your payments. They may dictate that you can only choose from this list, or may have an ASL – Approved Supplier List of other companies that they have also checked and approved.
SDC – Supervision Direction and Control
This term is used when analysing a candidate’s IR35 status and also with regards to claiming travel and subsistence expenses through the umbrella company.
Supervision: this implies that there is someone overseeing, assisting or aiding the work being done to ensure that it is being done correctly.
Direction: this involves someone providing instructions guidance and advice as to how work is to be done.
Control: this is having someone dictate what work is done, how and even when.
If a person falls under even just one of the above categories, then SDC is deemed to apply, which affects a person’s IR35 status and ability to claim expenses through the umbrella. When unsure, a test can be conducted to check this.
Please see our article – Can I claim expenses through my umbrella for a more detailed explanation.
T&S – Travel and Subsistence
This refers to expenses for business travel including accommodation or food and drink purchased as part of the working day. Legislation changed in 2016 for workers using an intermediary such as an umbrella company. Please also see the article – Can I Claim Expenses Through My Umbrella?
WTR – Working Time Regulations
In short, these regulations are to protect an individual ensuring that breaks are taken and that no more than 48 hours are worked in a week (taken as an average over a 17 week period). You will see this as an option to ‘opt out’ on the signature page of your contract of employment. For further information on this, please see our article – Working Time Regulations… Know The Facts
There is much more detailed information that can be obtained from our FAQs with articles and links direct to the government website, and legislation is constantly changing. We will endeavor to keep you informed of any changes that may affect you, so please keep an eye out for emails from us.
Our compliance team are working hard behind the scenes to ensure that we keep up to date with all current and upcoming requirements for us as your employer, and ERA Services CIC has recently assessed our compliance with the Good Work Plan and other legal obligations, and this will be reviewed on an annual basis.
Please let us know if you need to understand something a little more; our contracts team will be happy to help you.
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]]>How do I claim holidays? Read More »
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]]>How do I claim holidays?
- April 26, 2021
- 1:00 pm
How do I request holidays as an Umbrella Employee?
As an employee of Greenwich Contracts, you are entitled to annual holidays just like any other employee in the UK. Taking holidays while contracting via an umbrella company is a relatively simple process, but if you’re new to this way of working sometimes it can be unclear where to start – we figured we’d help you out.
Annual Holiday Reminders
Firstly, don’t be surprised if you hear from us a couple of times each year to remind you that you have holidays to take – it’s our legal obligation to do so and we don’t want you to miss out on days that you are owed. Your annual allowance is 28 working days between April 1st and March 31st the following year (bank holidays should be included in this 28 day allowance).
Who do you need to tell and get the approval of dates from?
Well, as you know, your role is not a simple employee-to-employer set-up, there are other parties within the chain who need to be consulted should you wish to book time-off.
Firstly, chat with your line manager at your end client (the place you undertake your work for), it’s likely that any restrictions in the time that you request off will be at their end. Fingers-crossed all is approved for you, but your end-client may have specific holiday allocation procedures that they ask that you follow, and they may need to consider assignment deadlines or conflicting holiday requests from other integral contractors/employees before honoring your request.
If your end client does approve your requested dates then informing your recruitment agency would be the next step. It’s highly unlikely that your agency will dispute any dates that you’ve requested, but informing them will mean that they can record your time off in their systems accordingly.
Lastly… let us know! We are your employer, so informing us that you’re taking time off will allow us to maintain accurate records for you. We will have very little reason to ever question your requested time off, your absence from our services for a week or two does not affect your contract or employment with us and certainly does not impact the way we’re able to operate as your employer.
The great news is that Greenwich Contracts we do not charge our weekly fee for any weeks you do not bill through us so while you are on holiday, you do not need to worry about your umbrella fee’s.
What about holiday pay?
Again, we’ve got you covered. As our employee you are entitled to holiday pay, at Greenwich Contracts, we pay it to you in advance – each pay slip that you receive will show a line item reflecting your holiday pay for that period. It’s your choice whether you spend that as regular income or you keep it to one side for spending money during your actual holidays.
For more details about how your holiday pay works, you can read our Holiday Pay Policy located here.
If you’re still unsure, please do not hesitate to contact us, we are happy to help.
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]]>Working Time Regulations – Your Rights Explained Read More »
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]]>Working Time Regulations – Your Rights Explained
- April 26, 2021
- 10:15 am
Being a contractor can mean many things; perhaps you’re working as a freelancer, operating through your own company, you’re self-employed or you’re working via an umbrella company. The way you operate may alter your rights in relation to Working Time Regulations, but we want to focus on our customer base within the following article.
As a Greenwich Contracts contractor, you are, in fact, our employee and, as our employee, you’re entitled to the same rights as any other UK-based employee. Some of these rights are governed by the Working Time Regulations – a framework that you’ve likely heard of, but do you truly understand what it entails… let us explain:
What are Working Time Regulations?
Until October 1998, employee working hours and paid/unpaid leave allocation were subjects largely dictated by their employer. In 1998 Working Time Regulations (WTR) was introduced as a new statutory framework that would influence all contractual working relationships.
The 48 Hour Working Week
The 48-hour working week was introduced to support the health and safety of workers by setting a maximum requirement of working hours deemed appropriate/safe per week. Workers can agree individually or through a workplace agreement to exceed this limit if they wish, but an individual cannot be mandated to work more than 48 hours per week (on average over a 17 week period). This can include some variations of ‘on-call’ duties.
However, an employee of our company is entitled to ‘Opt-Out’ of this by ticking the statement on the contract of employment. Please note, for a few specific job roles, opting out is not permitted, but an individual would be made aware of this when negotiating the contract with the agency or end client.
Night Work
Where night work is concerned, the directive states that workers must not conduct more than an average of 8 hours in a 24-hour period. The average is usually calculated over a 17 week period also. Night workers have the right to receive a free health assessment, this may not need to be a full medical examination, as long as the individual doing the screening has medical training. If the worker is advised that they are suffering from health problems relating to their shift pattern they should be advised to consider a different role. If their current employer can they must transfer the worker to day work where possible.
The Right to A Rest – what are you entitled to?
- Workers are entitled to 11 consecutive hours rest every 24 hours while in employment.
- Workers are entitled to one 24 hour period of uninterrupted rest in any period of 7 days or 48 hours in 14 days.
- Workers are entitled to a 20-minute break if working a 6-hour shift. Whether this break is paid or unpaid is dependent on each contract and/or employer.
Annual Leave
Workers have the right to 5.6 weeks of paid leave per year. The number of entitled holiday days corresponds with the number of days in the week that the individual normally works. The regulations specify a holiday year, and any leave not taken in that year is forfeited. There is no ‘carry-over’ right unless approved by the employer.
WTR states that the notice period appropriate to take annual leave should be equivalent to twice the length of the requested holiday period – of course, this is merely a guideline, employers have the right to use their own discretion. A worker must provide some advanced notice or the employer can refuse to accept the annual leave request. Once annual leave is approved, the worker should receive their normal weekly/daily pay for the allocated duration.
Annual Leave during Sick Leave
The right to annual leave continues to accrue during sick leave and a worker who is on sick leave during a period of scheduled annual leave must be permitted to take the leave at a later date, and if necessary, in the following year. A worker is entitled to choose not to take leave whilst off sick, and cannot be forced to accept a payment in lieu.
Excluded classes of worker
The Working Time Regulations 1998 were amended with effect from 1 August 2003 concerning the classes of the workers who had previously been excluded from protection under the Regulations.
Workers engaged in sea transport, sea fishing, or inland waterway and lake transport have limited protection under the Regulations. They have protection under other regulations that guaranteed 4 weeks of paid leave, limits on working hours, and the right to rest days.
In addition to the excluded sectors above, several sectors are partially excluded from the provisions of the regulations. These include:
- Those employed in the Police, Armed Forces and Civil Protection where those duties conflict with the Regulations are excluded from all provisions except those specifically dealing with young workers.
- Mobile workers in the Civil Aviation Sector are excluded from all provisions except those dealing specifically with young workers. However, these workers do have protection under the Civil Aviation (Working Time) Regulations 2004 which guarantees 4 weeks of paid leave, rest days, and limits on flying hours and working hours.
- Mobile workers in Road Transport are excluded from all provisions except the right to paid annual leave and the right of night workers to be offered free health assessments. However, rights concerning limits on hours and rest days are provided in the Road Transport (Working Time) Regulations 2005.
- Trainee Doctors now fall within the full scope of the Regulations, with transitional arrangements in place to limit maximum weekly working time. The present weekly limit is 56 hours and this is in force until 31 July 2009.
- Domestic Staff is covered by the provisions on a daily and weekly rest, rest breaks, and annual leave.
- Workers whose working time is not measured or pre-determined, or is fixed by the workers themselves, are only covered by the provisions on the right to paid annual leave.
If you have questions about the Working Time Regulations or your rights as a contractor/our employee please be in touch, we would be happy to explain in full.
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]]>2021/22 Tax Changes
- April 21, 2021
- 9:15 am
New Tax Changes
The new tax year has begun, and necessary changes have been made by HMRC and the Government that will affect most people throughout the UK. These changes could see individuals gaining more in their monthly wages, but may also result in having to pay higher tax contributions.
We’ve complied the brief snapshot below to help you understand and navigate the new changes.
Income
The income tax threshold is increasing from £12,500 to £12,570, while the higher rate threshold will rise from £50,000 to £50,270. This means that workers will be able to earn a slightly higher amount before income tax needs to be paid on their earnings.
In addition to income tax rising, the National Living Wage will also rise by 2.2% to £8.91 an hour, and the age in which workers can earn this is lowered from 25 to 23. Those aged 21-22 will see their minimum wage raise 2%, from £8.20 to £8.36. For those aged 18-20 it will increase by 1.7% from £6.45 to £6.56, while those under the age of 18 it will increase by 1.5% from £4.55 to £4.62. In addition to this the apprentice rate increases by 3.6% from £4.15 to £4.30.
Savings
The increase in the income tax threshold means that the personal savings allowance threshold will also increase. This means that those who earn up £12,570 can earn up to £5,000 in interest on savings without paying tax. Savers will not enter the higher rate taxpayer threshold until they earn a minimum of £50,271.
ISA savers will see their tax-free ISA allowance re-set. The allowance for the new tax year will remain at £20,000.
Pensions
Retirees receiving the full state pension will see their pension rise by 2.5% resulting in them receiving £179.60 per week.
IR35
New off-payroll rules entitled IR35 will now affect both the public and the private sector this change in IR35 legislation will only effect you if you also get paid to your limited company/PSC for another role
IR35 will affect individuals supplying their services through an intermediary, such as a limited company/personal service company (PSC). The responsibility for determining if a person’s role falls inside or outside of IR35 now falls on the end client.
You can find more information about IR35 reform within our article pages.
If you have questions about how these changes may affect you as our employee or customer please do not hesitate to contact us.
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]]>Umbrella 101 – What is an Umbrella Company? Read More »
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]]>Umbrella 101 – What is an Umbrella Company?
- April 7, 2021
- 1:37 pm
April 6th and IR35 is here. Your agency has told you, you fall inside of IR35 and you now need to use an umbrella company. But what is an umbrella company? What does it do?
While there is no current legal definition of an umbrella company within the legislation, at the time of writing Wikipedia describes an umbrella company as “a company that employs agency contractors who work on temporary contract assignments, usually through a recruitment agency in the United Kingdom.”
Where does an umbrella company fit into it all?
In a nutshell, Wikipedia’s definition explains in brief exactly what an umbrella company is. The umbrella company employs a range of workers with various skill sets. It then supplies services (using these skillsets) to an agency which in turn supplies services to an end client. When the work has been undertaken, the umbrella company invoices the agency for the hours/days that have been supplied and in turn, the agency then invoices the end client for those same hours/days. The End client then pays the agency who pays the umbrella company who then pays the worker their agreed Salary Rate (which should be stated in the worker’s Contract of Employment with the Umbrella Company).
Admittedly this can sound like a complicated and long-winded process and is often easier to understand when broken down into three stages:
Why can’t the agency or end client pay me directly?
The Conduct of Employment Agencies and Employment Business Regulations 2003 prevents the employment business or agency from paying sole traders or self-employed contractors directly without first making the relevant tax and NI deductions.
In essence, the agency is forced to employ you themselves or pass on that responsibility to an intermediary such as a Limited company or Umbrella Company (which is often the more preferable option as the liability for all the employer and employee contributions is passed over to the intermediary as well).
What’s the difference? Agency PAYE vs Umbrella PAYE
So if you are a self-employed contractor who doesn’t want or can’t use a personal Limited Company your options are Agency PAYE payroll or Umbrella PAYE Payroll. What’s the difference? In terms of how the salary payments are calculated, not a lot as they both function in similar ways. The difference lies in your workflow as a contractor.
If you want to undertake multiple assignments but don’t want the hassle of keeping track of multiple employments with different agencies, bookkeeping, accounts and a self-assessment every year (not to mention what that can do to your tax code), and you want to retain the flexibility of picking your assignments and working hours (which would be lost by taking a permanent role), using an umbrella company is a good choice.
Being an employed contractor with an umbrella company provides you with a single employer who can process payments from multiple sources (acting a bit like a funnel for all your payments) and will deduct all the relevant tax and NI from your salary payments on a real-time basis for a small fee (which is also a cheaper option over engaging an accountant).
An umbrella company also provides you with a single P60 at the end of each tax year, allows you to accrue and provides employee benefits such as Statutory Sick Pay (SSP) and Maternity Pay (SMP), while still allowing you the flexibility to pick up and work multiple temporary assignments or ‘contracts’ offered by multiple agencies throughout the year.
When your workflow operates in this way an umbrella company is your best choice to streamline and simplify your payment process.
Is the Umbrella Option the best one for me?
It’s hard to give a simple ‘yes’ or ‘no’ response when someone asks if they should use an Umbrella Company. This is because everyone’s situation is different and everyone has different external factors which can impact this choice, especially if you are being asked to move away from your own Limited company.
If you are unsure, it is always recommended that you do your research, start by speaking with an umbrella company or two and see what kind of advice they can offer or are willing to offer. Do they try and find out about your situation so the information they can provide is as accurate as possible or do they offer you a generic answer?
The type of customer service you get from any company is always a good indicator of how they operate. Are the staff happy to take the time to get to know and find out your situation to provide help where they can? If they don’t know the answer do they admit this and point you in the direction of someone who can? If they don’t believe their company is the right fit for you, will they tell you? While the last one is rare, there are companies out there who do take this position.
Greenwich Contracts believes we are a company that fulfils these criteria, if you are in the market for or think you might need an umbrella company, give us a call and put us to the test.
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]]>Contractor Know-How: My Umbrella Salary and Deductions
- April 6, 2021
- 9:31 am
You’ve been asked to use an umbrella company, but one aspect that can be confusing is how an umbrella company calculates the salary payment you get at the end of each week or month. When you’re an employee of a company, the employer offers you an annual or hourly rate and calculates and deducts your tax and NI from that and you receive what’s left.
When you work through an umbrella company as an agency worker/contractor, the process works a little differently. As a contractor, you accept an assignment for an end-client but they do not pay you directly as their employee. There is usually a chain of companies involved in your assignment which the money has to travel through before it reaches you. It is important to understand how the chain works in order to understand what is happening with the money you are earning.
THE END CLIENT
This is the workplace, the company has a temporary assignment they need a worker for, and usually, they engage a recruitment agency to find and provide a worker for an agreed fee.
THE RECRUITMENT AGENCY
When used by the end client, the recruitment agency is the company that matches the contractor to the assignment(s) they currently have and negotiate the contract details with the end client (on the contractor’s behalf). While some recruitment agencies choose to employ a temporary contractor on their own payroll, many offer the option to use an intermediary party (which is usually an umbrella company) instead. In this relationship, the liability for all employment-related costs and responsibility is passed to the Umbrella Company.
THE UMBRELLA COMPANY
Employs the contractor and takes on all liability for all the employment-related costs and responsibilities. They have the responsibility to deduct the relevant tax and NI contributions from your basic rate and pay these over to the HMRC through Real-Time Reporting. As a contractor using an umbrella company is beneficial because it allows you to have one employer but undertake multiple assignments offered by multiple agencies. You also have the benefit of being employed and accruing employment benefits such as statutory sick pay and maternity leave etc.
So how does this work in relation to your Salary payments?
When an agency negotiates the assignment rate charged to the end-client, the rate should factor in the following deductions:
- Employers NI (or NIERS),
- Holiday Pay,
- Apprenticeship Levy and
- The employers Pension Contribution.
And still provide a basic salary rate equivalent to that of a permanent colleague at the end client doing the same role once those deductions have been taken. It is because of these deductions you may often hear an assignment rate called an ‘umbrella’, ‘charge out’ or ‘limited’ rate and you may also be told these rates include an ‘uplift’.
While as a contractor, you may expect to receive the rate quoted for an assignment, however the reality of the situation is that employment costs must be taken into consideration first.
The umbrella company will receive a remittance notification of payment from the agency or end-client, detailing the assignment rate and number of units (hours or days) worked.
When the Umbrella company receives the payment from the agency, the umbrella company retains a small margin or fee (which the contractor is made aware of before they agree to sign up) this is to cover administrative costs, insurances, internal salaries and usual expenditure for a business.
All employment costs are then deducted from the sum; Employers’ NI 13.8%, Apprenticeship Levy 0.5%, any pension contributions (if applicable) as well as a holiday pay.
Once all of these deductions have been made, the gross figure (or basic rate) is left and is treated as your earnings upon which employee tax and NI deductions are calculated.
All Tax, NI and pension contributions are reported to the HMRC through the Real Time Reporting system (RTI) to the HMRC and a payslip is issued to the contractor.
Most umbrella companies do not hide the fact that the Employer’s costs are included within the assignment rate offered by an agency. At Greenwich Contracts we make a conscious effort to let a contractor know about these employment costs during the initial enquiry/application stage, by providing an example payslip or illustration showing the full breakdown.
In addition to this, from 6th April 2020, the law now requires an agency to provide every contractor and their umbrella company with a copy of a Key Information Document (KID) which will detail all potential deductions that you can expect to see on your payslip – this is to ensure that everything is transparent and there are no unannounced surprises. (If you want to know more, please take the time to review our article on the KID document for more information). Our process is to always send a copy of this over to a contractor as well to ensure that you have the information you need.
If you are still unsure about how an umbrella company calculates your salary payment, just ask we are always happy to help!
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