New umbrella company required!

[The Spartan]

We deduct and pay back as rolled up holiday pay is not allowed Taking your holiday : Directgov - Employment.

It seems that parasol are also using rolled up holiday pay:

Paid holiday is your statutory holiday and you can earn up to 28 days paid holiday a year. Your holiday pay will be included in your normal weekly or monthly pay so you won’t receive any holiday pay when you take your time off. Unpaid holiday is your contractual holiday set out in your contract of employment and you have 22 days unpaid holiday a year.

[LisaContractorUmbrella]

It seems that parasol are also using rolled up holiday pay:

Paid holiday is your statutory holiday and you can earn up to 28 days paid holiday a year. Your holiday pay will be included in your normal weekly or monthly pay so you won’t receive any holiday pay when you take your time off. Unpaid holiday is your contractual holiday set out in your contract of employment and you have 22 days unpaid holiday a year.

It would appear so but I am at a loss to explain the 22 days unpaid leave

[The Spartan]

It would appear so but I am at a loss to explain the 22 days unpaid leave

Yeah that stumped me as well, I asked about the difference between Employer's NI and the amount for employment costs and got this:

Employment costs consist mainly of Employers' National Insurance Contributions (NIC) but they also include amounts to cover your insurance costs, as well as enough funds in order to pay you, should you be on sick leave or maternity leave etc.

[Wary]

Yeah that stumped me as well, I asked about the difference between Employer's NI and the amount for employment costs and got this:

Employment costs consist mainly of Employers' National Insurance Contributions (NIC) but they also include amounts to cover your insurance costs, as well as enough funds in order to pay you, should you be on sick leave or maternity leave etc.

So if you’re never off sick or never go on maternity leave, presumably they still keep this money for themselves? They may well have increased overheads as a result of recent employment legislation, but they should adjust their up-front fees accordingly, to ensure that overall they still make an acceptable margin. It still boils down to one thing ... unless they refund you this money should you not go off sick (etc), then they’re effectively increasing their fees but in a non-transparent manner.

Also, didn’t Lisa earlier confirm that it is the employer who is liable for these costs, not the employee?!?

I asked my Umbrella whose pocket any sick pay would actually come out of, given that this is a new concept to me as a contractor. The reply was “You would qualify for SSP, we would pay you the stat amount and reclaim this from the government.” So is it the case that an Umbrella can reclaim any sick pay in this way? If so, why would Parasol be making you pay?

[LisaContractorUmbrella]

Yeah that stumped me as well, I asked about the difference between Employer's NI and the amount for employment costs and got this:

Employment costs consist mainly of Employers' National Insurance Contributions (NIC) but they also include amounts to cover your insurance costs, as well as enough funds in order to pay you, should you be on sick leave or maternity leave etc.

Well if it is the case that deductions are being made to cover SSP/SMP then the Company is not fulfilling its obligations as an employer; if an individual has been employed with you for more than 26 weeks up to the 15th week before the baby is born HM Revenue & Customs: Statutory Maternity Pay: an overview

[LisaContractorUmbrella]

So if you’re never off sick or never go on maternity leave, presumably they still keep this money for themselves? They may well have increased overheads as a result of recent employment legislation, but they should adjust their up-front fees accordingly, to ensure that overall they still make an acceptable margin. It still boils down to one thing ... unless they refund you this money should you not go off sick (etc), then they’re effectively increasing their fees but in a non-transparent manner.

Also, didn’t Lisa earlier confirm that it is the employer who is liable for these costs, not the employee?!?

I asked my Umbrella whose pocket any sick pay would actually come out of, given that this is a new concept to me as a contractor. The reply was “You would qualify for SSP, we would pay you the stat amount and reclaim this from the government.” So is it the case that an Umbrella can reclaim any sick pay in this way? If so, why would Parasol be making you pay?

You are right Wary - SSP is payable by the umbrella company, as the employer, but it can the be reclaimed from HMR&C as a deduction from the monthly PAYE payment due. SMP can also be recovered but we can only reclaim 92% due to the size of the company.
HTH

[The Spartan]

You are right Wary - SSP is payable by the umbrella company, as the employer, but it can the be reclaimed from HMR&C as a deduction from the monthly PAYE payment due. SMP can also be recovered but we can only reclaim 92% due to the size of the company.
HTH

Lisa are you allowed to roll up Pay between assignments and pay it upfront?

[Wary]

You are right Wary - SSP is payable by the umbrella company, as the employer, but it can the be reclaimed from HMR&C as a deduction from the monthly PAYE payment due. SMP can also be recovered but we can only reclaim 92% due to the size of the company.
HTH

So why would Parasol or indeed any other umbrella be justified in deducting an allowance for this as "employment costs" when they claim back any money paid out anyway?!?

[The Spartan]

So why would Parasol or indeed any other umbrella be justified in deducting an allowance for this as "employment costs" when they claim back any money paid out anyway?!?

They're more or less doubling their margin on each contractor

[Wary]

Employment costs consist mainly of Employers’ National Insurance Contributions (NIC) but they also include amounts to cover your insurance costs, as well as enough funds in order to pay you should you be on sick leave or maternity leave etc.
The rate of Employer’s NIC is currently 13.8% of earnings above £136 per week.

At Parasol we calculate employment costs to be 13.8% of the invoice value we raise for your work, minus our margin and the NIC free amount of £136 per week. For example, if we raise an invoice for your work of £1,000 a week, the employment cost will be calculated as follows:

£1,000 - £27.50 Parasol margin - £136 NIC free allowance = £836.50

So in the example above the employment cost is £101.44

Been looking back at some old posts on this thread, and here's an explanation from Steve. He admits that their "Employment Costs" do include keeping some money to supposedly cover sick/maternity overheads. However, his "employment cost" calculation example does not contain any of this; it simply calculates the employers NI, implying that it is not the true calculation that they use. Indeed on post #45, Lisa queried as to whether the calculations he was quoting on this thread were the true ones that they use and asked him to clarify, but he suddendly went AWOL.

Steve - if you're confident that Parasol are acting in an ethical and legitimate way and you're no issue with total transparency, I really suggest that you come back on this thread and start providing some clarification on exactly how Parasol calculate their charges etc. Is it true that you actually claim most of the sick pay back? Would you pay contractors for time off between contracts, or has an allowance for this already been included within the monthly pay as per an assertion made on this forum yesterday?

Personally, I've no issue with any umbrella ensuring that they cover any increased costs due to employment law changes, but it should be as part of the upfront fee to ensure total transparency, and to allow contractors to compare one umbrella against another when deciding who to go with. Lisa has confirmed that this is how she operates.