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Total newbie to modern contracting!

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    Total newbie to modern contracting!

    Hi all - in case anyone asks, yes I am sitting in a bunker with a tin hat on in case of impending "INCOMING!".

    Recently took on a 3 month contract. I'm completely new to this modern way of contracting, but because of my unique situation, I thought it would be a good opportunity.
    The last time I did any contracting was around 10 years ago, when the agency would give you a fixed term contract to do a job for a client, and you was paid via the agency which had its own internal payroll, so you paid tax and NI via PAYE.

    The company advertising the contract said it would be £x / hour. There was no mention, anywhere that the £x / hour would be ALSO including a rolled up holiday pay rate, nor was there any initial mention anywhere either verbally or written that I would also have to use an umbrella company to provide payroll services.
    This only came after I accepted the contract - so, ok, fair enough says I, its a reasonable sounding contract, and the £y / week fee for payroll is a bit of a bugger, but oh well, thems the breaks.

    The payroll company is basically paying me at the rate of NMW, then on top of that I get paid a "holiday pay rate" and "assignment bonus", which takes me just close to the £x / hour that was initially offered.

    Only, I assumed, that I would be paid at a rate of £x / hour, which fair enough, after tax and NI and the the fee for payroll, that somewhere (eg from the client) I would be entitled to holiday pay.

    I've found out through digging around that the rolling up of holiday pay into the £x / hour rate without telling you is illegal, and that the agency that offered the contract initially is being very shy about clarifying where in their terms or contract conditions that this was originally accepted.

    Is this usual practice? Does anyone have a similar situation or has anyone been here before?

    I'm tempted (due to the lack of clarification regarding holiday pay and how it is paid) to put in a claim for back pay of holiday pay based on the hope that what they have done is made a whoopsie and thought they could get away with not paying me (in my belief!) correctly.

    So, there you go. Due to the offer of a substantial post after this contract anyway, I won't be using this agency ever again, so I won't have anything to lose by not using the agency again.

    Replies welcomed

    Cheers!

    #2
    What area are you in? Most people on here are IT contractors paid upwards of £150 per day. The £150 per day mark is if you are junior in your role.

    There is a link to your right --> under "CUK Navigation" called "Umbrella Companies" that explains how they work. I suggest you follow the links and read all the information.

    There is also a sub-forum called "Umbrella Companies" in the "accounting/legal" section of this forum (not this particular board) which will have posts on how umbrella companies work. I suggest you read through the threads there before posting as your question will have been covered.
    "You’re just a bad memory who doesn’t know when to go away" JR

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      #3
      Thanks SueEllen.
      It is a 1st line support / phone / servicedesk type of role.
      I've had a look through the forums so far, and havent really seen anything that is similar to my situation, but if there are similar threads that I have missed or not read, could you direct me to them?
      Thanks in advance.

      Comment


        #4
        It sounds like a confusion between the sort of contracting we do, which is a business relationship, and temping, where you have employee-like status. It seems you were expecting the second, but got the first. The umbrella relationship is a little different and should be optional - you'd use an umbrella where you have taken a contract as a business relationship, but don't want to set up a limited company. You then use the umbrella to provide that service - you do effectively become their employee, but everything - tax, NI, holiday pay - comes out of the money you've earned.

        So all sounds pretty normal for a contractor as opposed to a temp I'm afraid.

        If you're doing it long term, it's much more efficient to operate through a limited company, but make sure you're aware of IR35 and your obligations as a company director. Lots of comprehensive guides on the right, most accountant websites and from IPSE.

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