Reply to: Anyone contract through Hays

[TykeMerc]

I've made my calculations and if I'm going to work through an umbrella company - my hourly rate goes up by 13.5%. I am losing 2% pension (0.8% I'm paying + 0.20% paid by government + 1% Hays contributes), however I'm still earning 11.5% more + my expenses are paid.

The only downside - I have to put aside money for the holiday pay myself instead of Hays doing it to me.

Are there any other perks one should be aware before deciding to go self-employed?

It's very clear from your posts that you're either grossly misunderstanding the information you have got or are missing large chunks of vital information, in either situation I'm very concerned that you can't make a sensible choice.

Firstly the 13% "Uplift" if you went via an umbrella.
In your current contract with Hays they are in effect acting in many ways like an Umbrella company. You are paid as an employee of Hays, they are charging you to their client as a temp at a daily rate and paying you that rate AFTER they have already deducted the 13% Employers NI they must pay for employing you.
If you changed employer to an Umbrella then instead of deducting that 13% up front Hays will pay that to your Umbrella who will then deduct it in exactly the same way that Hays do.
Net effect on your rate of this 13% is NIL, nothing, zero, nada, nowt

Your employment status via Hays or Umbrella
In either case you are NOT, nor will ever be self employed, you will be a fully employed person on Hays or Umbrella payroll, subject to the terms of your employment contract.

Expenses and other benefits
I've never worked as a temp, but from what you've described the position on expenses may be better if employed via an Umbrella (where you still will be employed, NOT self employed) so that may be a positive, not forgetting that expenses can only be claimed to a non permanent place of work, i.e. your usual place of work should be elsewhere like your home.
To the best of my knowledge (which could easily be wrong) Umbrellas don't pay pensions you would have to investigate what's the true state of that. They also don't pay holidays or sick leave, you may get those via Hays as their employee.

Costs
You mentioned Hays are charging a management fee (percentage based) and the Umbrella is charging a fixed fee. There are many Umbrella companies out there and their charging structures vary, I'd assume that even the percentage fee ones have a minimum charge.

You really need to get much better informed before you jump into changing your current situation.

[DannyF1966]

the further you live from work the more beneficial it is for you.

Not necessarily. Mileage rates reduce after you've done 10,000 business miles per year, and if you've piled the miles onto your car you'll have to replace it sooner, plus it'll cost more in maintenance due to extra wear and tear.

Also, with claiming back expenses for food, bear in mind that you still have to pay for the food in the first place, it's not a free £5 or £10 that magically appears in your wallet. I've just switched to bringing a packed lunch to work because spending £24 a week just to reduce my CT bill by £4.80 is more expensive than buying the ingredients for a packed lunch out of my own pocket in the first place. I'd rather keep the money in the business and use it to build up the warchest or increase the company's pension contributions.

[kingcook]

[aphrodita]

Unfortunately, you are comparing gross with net.

Contract only states net rates, I didn't go deep into calculating net....

Another thing I understand - the further you live from work the more beneficial it is for you. If you're away for <10 hours, you're entitled to £5 meal/day + millage; if you're away from home for more than 10 hours, you're entitled to £10 meal/day + millage.

Another difference in net received comes from the fact that Hays take a particular % to handle your finances, while an umbrella company charges you £21-£28 pounds a week.

[aphrodita]

Hays are currently paying employers NI for you. With the umbrella it's deducted from your rate. This would account roughly for the 13.5% uplift.

Thank you for this one - I will make sure to ask this question with one of guys from an umbrella company. I just know that for other person who came on board, Hays was offering X amount of money, but net income would be about 0.7X. So he wanted to pass on the offer and only then they told him about umbrella companies. Now his income 0.85X after all taxes + expenses are paid.

He declared breakfast + lunch + millage, which came out at £143/week. I live closer to work, so my expenses might be £110-£130, but still... comes to a reasonable amount of untaxed expenses per month...

[JRCT]

I do compare gross rates - not net rates vs gross rates

Unfortunately, you are comparing gross with net.

Hays aren't going to say to you "tick box A and we'll pay you X, tick box B and we'll pay you X+13%. We don't mind how much it costs us"

[Contreras]

Hays informed me about the hourly rate I will have if I go self-employed. That hourly rate is 13.5% higher than my current one. My current pay rate also includes holiday pay that Hays puts aside for every hour I work, and repays me when I want to take a day off.

I have to consider that for the increased pay rate I have to manage my own pension, but this shouldn't be a problem. Hays uses NEST which is quite expensive comparing to other pension advisors anyway.

Hays are currently paying employers NI for you. With the umbrella it's deducted from your rate. This would account roughly for the 13.5% uplift.

[aphrodita]

Be careful that you not comparing post-tax rate as an employee vs. pre-tax hourly rate of a contractor.

This is a brilliant summary - thank you very much I do compare gross rates - not net rates vs gross rates, but it is indeed a good point.

As for expenses, I scanned a couple of those umbrella websites and it seems that expenses are not taxable (FPS website in the section "how it works"). My partner suggested it might be because I became self-employed....

I think you might be right about self-employment status, unless an umbrella company just does your taxes for you and takes a monthly fee for doing so...

[Contreras]

I've made my calculations and if I'm going to work through an umbrella company - my hourly rate goes up by 13.5%. I am losing 2% pension (0.8% I'm paying + 0.20% paid by government + 1% Hays contributes), however I'm still earning 11.5% more + my expenses are paid.

The only downside - I have to put aside money for the holiday pay myself instead of Hays doing it to me.

Are there any other perks one should be aware before deciding to go self-employed?

You wouldn't be self-employed, you would be an employee of the umbrella company and receive a salary proportional to your fee earning.

The umbrella will also deduct Tax + NI from your salary, since you are an employee.

The umbrella will also apply a management charge (weekly or monthly).

Expenses can be paid via the umbrella. Typically the expense amounts are deducted from fees you are earning, which means proportionally less salary. The benefit is that expenses are tax free.

If this is your only work placement through the umbrella then the expenses become taxable, in other words to be paid just as salary.

Be careful that you not comparing post-tax rate as an employee vs. pre-tax hourly rate of a contractor.

[aphrodita]

How have you calculated a 13% increase if Hays have said it wouldn't be of benefit to you?

Hays informed me about the hourly rate I will have if I go self-employed. That hourly rate is 13.5% higher than my current one. My current pay rate also includes holiday pay that Hays puts aside for every hour I work, and repays me when I want to take a day off.

I have to consider that for the increased pay rate I have to manage my own pension, but this shouldn't be a problem. Hays uses NEST which is quite expensive comparing to other pension advisors anyway.

[JRCT]

I've made my calculations and if I'm going to work through an umbrella company - my hourly rate goes up by 13.5%. I am losing 2% pension (0.8% I'm paying + 0.20% paid by government + 1% Hays contributes), however I'm still earning 11.5% more + my expenses are paid.

The only downside - I have to put aside money for the holiday pay myself instead of Hays doing it to me.

Are there any other perks one should be aware before deciding to go self-employed?

How have you calculated a 13% increase if Hays have said it wouldn't be of benefit to you?

[aphrodita]

In all honesty, I would advise you stay as you are and take the pension contribution.

I've made my calculations and if I'm going to work through an umbrella company - my hourly rate goes up by 13.5%. I am losing 2% pension (0.8% I'm paying + 0.20% paid by government + 1% Hays contributes), however I'm still earning 11.5% more + my expenses are paid.

The only downside - I have to put aside money for the holiday pay myself instead of Hays doing it to me.

Are there any other perks one should be aware before deciding to go self-employed?

[JRCT]

If you're working through Hays/Umbrella, your food/millage expenses are paid for and you get higher hourly rate. If you work for Hays only, they match your 1% pension contribution should you choose for it. No other benefits besides headache so far...

In all honesty, I would advise you stay as you are and take the pension contribution.

[aphrodita]

I've never worked for an umbrella and it's 15-20 years since I've been a temp but I'm pretty sure that in all circumstances the contract would always be with Hays, not the end client.

Thank you for your answer - in case I don't apply for a permanent contract within the company, I will be working for Hays. They sent me email back saying they never discussed umbrella company possibility with me as they thought it "will not be beneficial" for me.

As far as I understand I can switch now to work through Hays/Umbrella. Trying to sort out this question I've been reading a bit and my understanding of the difference between working through Hays and Hays/Umbrella, is that if I choose for the 2nd option, I become self-employed.

If you're working through Hays/Umbrella, your food/millage expenses are paid for and you get higher hourly rate. If you work for Hays only, they match your 1% pension contribution should you choose for it. No other benefits besides headache so far...

Hays has a list of umbrella companies they cooperate with. Anyone can advise which should I choose?

[JRCT]

Well, opt-out makes no point at this moment, as Hays contributing 1% to my pension "for free".

However, I'm not sure about self-employment status. I just figured out that most (if not all) contractors in my company working through umbrella companies, while Hays never mentioned that option to me and I'm trying to find explanation why. If I add up all expenses (which are not paid now) it comes to quite a substantioal amount per year I could have saved.

Now, I'm kinda working for Hays (and never saw the contract with my current employer). I am wondering if I can switch to one of umbrella companies now? Any ideas?

It sounds to me like you're a temp, working for Hays, which means you would have an employment contract with Hays who have placed you at that client "for now".

Some of the contractors that also work at the same client as you, it sounds like, have a different arrangement and have been recruited by Hays and in order to fulfill the contract that they have with Hays, they are employed by an umbrella company.

I guess there might also be contractors at the same place who run their own Ltd company and have also been recruited by Hays to work on a particular aspect of a project for the end client. They too will have a contract with Hays and Hays will have a contract with the client.

It could be that each of the three were brought in at different times, or for a different purpose or different skillset or undert a different budget for either Hays or the end client and that might explain why some are working under slightly different contracts or conditions to you.


I've never worked for an umbrella and it's 15-20 years since I've been a temp but I'm pretty sure that in all circumstances the contract would always be with Hays, not the end client.