Reply to: Parasol = Thats a lot of deductions!

[jet spanner]

Some interesting developments since I last looked on here. I got parasol to disclose how much of my employment costs consisted of NI contributions, but £24 a week was obtained very ambiguously. I believe they are calculating employers NI on the whole invoice, before expenses are deducted, and pocketing the difference between that amount and the correct NI figure.
I pushed them for some sort of recompense but the best I could haggle was 4 weeks margin free and 4 same day payments (although they will still be getting £24 a week from me!).
This whole debarcle has persuaded me to go limited in the new year (although that hasnt been straightforward). I considered employment tribunal, but decided against the hassle, although I'd be interested in how anyone gets on. I'd be willing to provide evidence of my particular case if that helps anyone.

[Wary]

I've been reading this thread with interest for a few weeks and have been in discussions with Parasol. Needless to say, I've got nowhere. Steven is helpful to find you someone to talk to, the problem is that Parasol flatly refuse to give a breakdown of the employment costs.

Seeing as I've been stung, I've decided to leave at the end of December. I want my "employment costs" (minus employers NI) back and am considering legal action to get it. If I do, I'll post here for if anyone else wants to clump together. Even though it's a small amount, they should have to pay the legal fees if found to be in the wrong.

I'm not working from 28th-30th, but haven't invoiced for December yet. I plan to call Parasol and tell them I'm sick on those days, and should recoup some of the money they've taken from me. From two invoices it's over £300 on top of NI. Am I running a risk too far? Does anyone think I should bite my lip and go the legal route instead? If it's worth doing, I urge other Parasol employees to do the same.

Cheers all.

Another satisfied customer, eh Steve!

Not sure about the false sick claim now. Although you haven't given your real name, there's probably sufficient detail in your post to identify you should you go ahead with it, especially if you also go down the route of legal action.

Legal action does seem like a good idea although you really need advice from an Employment lawyer. However, from what has been said on this forum, the legality of them passing these new employment costs onto their employees must be questionable. I'd also question the fairness of how they apportion them to each employee, which appears to be an arbitrary percentage of your expenses/pension contribution (some will be paying lots; others nothing), and whether they truly reflect their true increase in employment costs. Despite their claims that the contract contains a clause that allows them to deduct additional money, the legitimacy of doing it this way, as opposed to increasing the upfront fee and without even informing their employees, must be in doubt.

Good luck with it. I'd join you if I were with Parasol, such is my disgust with what they're doing.

[The Spartan]

To quote Stephen, Parasol PR manager, on this forum in March:

"Parasol don’t take any profit from the rate you are paid by your agency
to cover the cost of Employer’s NI, we only take our flat fee,
either weekly or monthly, regardless of what you get paid.
Everything you earn is passed on to you directly."

And indeed, until AWR, this was true (at least for me).

More recently, an email from Parasol describing the contract changes being brought in for AWR clearly states:
"However, you can rest assured - none of your assignment details will change
and there's no change to the way you currently work, just carry on working
in the way you always have done with us."

While the detail of the contract does state that payroll costs are "not restricted to" those items specifically mentioned, I think the spirit of our agreement (and Parasol's marketing and employee communications) would suggest that they will not simply grab some extra cash when they feel like it. Although that is exactly what they have done - they are effectively taxing my expenses to cover their business costs.

I have already resigned, and they now have a chance to refund the extra cash they took. Failure to do that will see an Employment Tribunal claim land on their doormat.

For those feeling nervous about the legal route - an ET claim costs nothing and employment law is largely on your side.

Time to put the cat amongst the pigeons then

[Yehudi]

To quote Stephen, Parasol PR manager, on this forum in March:

"Parasol don’t take any profit from the rate you are paid by your agency
to cover the cost of Employer’s NI, we only take our flat fee,
either weekly or monthly, regardless of what you get paid.
Everything you earn is passed on to you directly."

And indeed, until AWR, this was true (at least for me).

More recently, an email from Parasol describing the contract changes being brought in for AWR clearly states:
"However, you can rest assured - none of your assignment details will change
and there's no change to the way you currently work, just carry on working
in the way you always have done with us."

While the detail of the contract does state that payroll costs are "not restricted to" those items specifically mentioned, I think the spirit of our agreement (and Parasol's marketing and employee communications) would suggest that they will not simply grab some extra cash when they feel like it. Although that is exactly what they have done - they are effectively taxing my expenses to cover their business costs.

I have already resigned, and they now have a chance to refund the extra cash they took. Failure to do that will see an Employment Tribunal claim land on their doormat.

For those feeling nervous about the legal route - an ET claim costs nothing and employment law is largely on your side.

[The Spartan]

I'm leaving them on the 30th December and going to ContractorUmbrella, this time I'm confident I made the right choice.

Parasol will take all round the houses and there's no point in taking the legal route as it's specified in their contract about SSP, SMP etc. I had many a conversation with them and I do believe they're not meant to rollup your holiday pay either.

[DarrylMcFakeName]

I've been reading this thread with interest for a few weeks and have been in discussions with Parasol. Needless to say, I've got nowhere. Steven is helpful to find you someone to talk to, the problem is that Parasol flatly refuse to give a breakdown of the employment costs.

Seeing as I've been stung, I've decided to leave at the end of December. I want my "employment costs" (minus employers NI) back and am considering legal action to get it. If I do, I'll post here for if anyone else wants to clump together. Even though it's a small amount, they should have to pay the legal fees if found to be in the wrong.

I'm not working from 28th-30th, but haven't invoiced for December yet. I plan to call Parasol and tell them I'm sick on those days, and should recoup some of the money they've taken from me. From two invoices it's over £300 on top of NI. Am I running a risk too far? Does anyone think I should bite my lip and go the legal route instead? If it's worth doing, I urge other Parasol employees to do the same.

Cheers all.

[LisaContractorUmbrella]

Lisa,

Can you clarify how you recover SSP? Both of my previous umbrella companies have told me that it can only be recovered if it totals more than 13% of the company’s NI bill for the month and since they have a lot of employees the bill is enormous and recovery can never happen; hence it is a real cost to the umbrella. Or have I been mislead?

Yep sorry Gemma you are right - just as well I am the CEO and not in the payroll department But I can still confirm that SSP is a cost to business to ContractorUmbrella, as it should be with all UK employers and that we don't make a deduction from our employees to cover it

[Gemma]

Lisa,

Can you clarify how you recover SSP? Both of my previous umbrella companies have told me that it can only be recovered if it totals more than 13% of the company’s NI bill for the month and since they have a lot of employees the bill is enormous and recovery can never happen; hence it is a real cost to the umbrella. Or have I been mislead?

[LisaContractorUmbrella]

Thanks again Lisa; things are becoming clearer now. Just one point for clarification re the amount. Although it can’t be less than minimum wage, is there any reason why they’d ever be legally obliged to pay more?

Can I also ask similar questions re maternity/paternity pay ... not that these would ever apply to me! Rather, I’m interested to know exactly what the employer’s obligations/overheads are resulting from AWR:
• How much are they obliged to pay? Is it just a minimum of minimum wage again, with no obligation to pay more regardless?
• For how many weeks are they obliged to pay you?
• You say that 92% of maternity can be claimed back, but how about paternity?

The AWR guidance (think we are onto our 4th or 5th version) states that the pay between assignments must be 'At least National Minimum Wage' and as long as this requirement is fulfilled I can't see that there would be a reasonable requirement to pay more.
Most umbrella companies these days won't accept really short assignments due to the administrative burden and financial risks
Same applies to SPP - can only claim back 92% if your NI bill per annum is more than £45,000

[The Spartan]

If anything this thread and it's participants have proved which Umbrella's are trustworthy and those that can't be trusted.

[Wary]

Thanks again Lisa; things are becoming clearer now. Just one point for clarification re the amount. Although it can’t be less than minimum wage, is there any reason why they’d ever be legally obliged to pay more?

Can I also ask similar questions re maternity/paternity pay ... not that these would ever apply to me! Rather, I’m interested to know exactly what the employer’s obligations/overheads are resulting from AWR:
• How much are they obliged to pay? Is it just a minimum of minimum wage again, with no obligation to pay more regardless?
• For how many weeks are they obliged to pay you?
• You say that 92% of maternity can be claimed back, but how about paternity?

[LisaContractorUmbrella]

I’m interested to know more about a brolly employer’s obligations to pay you between assignments. Personally I wouldn’t expect anyone to pay me for this period, unless they were making unreasonable deductions whilst I was earning money, and because my current brolly charge low fees then I wouldn’t claim it. However:
• How much are they obliged to pay? Is it a flat rate for everyone or based on your previous assignment? The amount cannot be less than minimum wage
• For how many weeks are they obliged to pay you? 4 weeks
• Can they claim any of it back from HMRC? I wish
• You say that that can’t legitimately deduct an allowance from you each month in order to pay you between assignments (c/f holidays). I presume they can’t also use a rolled-up method whereby a portion of your monthly pay is deemed to be for such periods but they’re just “paying” you up front for it? You're right
• How do you personally cover the costs of such overheads? By setting your weekly fee at an appropriate level across the board and absorb it within that Just another cost to business really - no Ferrari for me this year

[LisaContractorUmbrella]

Lisa,

Thank you. Hence certainly (in your case at least) no hidden fees. It seems to me that there are 2 possible problems then:

1/ Holiday pay. This is retained (entirely reasonable) and paid to the employee when they take holiday. Equally there is a requirement to pay accrued holiday pay when somebody leaves employment.

The possible problem will therefore be paying people their accrued holiday pay if they choose not to leave employment or not to take holidays. It seems to me that you are caught between a rock and a hard place here. I can only comment on the way that we operate - any holiday pay not taken is paid back at the end of the financial year

It is therefore imperative that your employees either take their holiday (whether they want to no not) or accept they have to wait until they leave employment. I don't know if it is entirely accurate but business link

Paying workers holiday pay | Business Link

"Payment in lieu of annual leave
The only time you can make a payment in lieu for any outstanding holiday is when a worker's employment ends."

Clearly this problem is not of your making, it's the framework you have to work within. I guess possible workarounds might be:-

a/ The employee quits after an assignment and comes back after a week crystallising an ability for you to pay the accrued holiday pay (I doubt if this would work though since it would appear it's entire purpose is to defeat the protection being afforded).
b/ Implement a holiday policy which is a "use it or lose it" type of basis and pay a bonus equivalent to any leave foregone at the start of the next holiday year. Again I suspect this might be problematic if it were contractual.

Overall then it does appear that this is an unfortunate consequence of ill thought out well meaning legislation. Yep - we have a lot of that to deal with

2/ Pay between assignments.

This seems to be a particular risk. If you are not allowed to deduct it then just how are you supposed to fund it? As soon as you have a few employees out of assignment then you simply won't have the funds to do it (without making a loss). If the required rate was minimum wage then if somebody was between assignments for about 10% of the time you would be loss making on that person - since the minimum wage would be greater than your accumulated fees (this of course also assume your fee is pure profit which it obviously isn't). If the required rate was something like half of the average rate then the problem would be much worse.

I wouldn't have an answer to this, save that fees have to go up to cover it, but this of itself seems a little unfair on the employee - if they are not out of assignment. [Perhaps this is why I see people referring to fees of hundreds of Euro a month on overseas brollys]

It seems to me that the regulations may offer sensible protection for the standard "temp", where margins are higher and the agency finds the work etc. However it seems it falls completely on it's arse for the umbrella type scenario where the purpose of your business is largely to simply to act as somebodys payroll service.

It is a big risk and it means that my team here have to monitor things incredibly closely - you wouldn't believe how many new systems we have had to implement over the last few months

No doubt this was all raised with our political masters and completely ignored during the consultations.

I believe it was but unfortunately the TUC got involved in the discussions so it all got a bit complicated

[The Spartan]

This should be interesting if Steve does decide to respond

[Wary]

Thanks Lisa for the detailed explanation. So companies that deduct additional “employment costs” specifically to cover sick/maternity are:
1) Covering costs that they don’t actually incur themselves (apart from 8% of maternity)
2) Potentially acting illegally as they should foot the bill for any costs arising for these, as is their legal obligation as an employer
That’s interesting to hear. I wonder if Steve@Parasol would now be willing to justify on this forum why they engage in this practice?

I note that you withhold money and pay it when the contractor actually takes holidays. However, what if they don’t take their full holiday entitlement? Is this money at some point returned to the contractor and if so when?

I’m interested to know more about a brolly employer’s obligations to pay you between assignments. Personally I wouldn’t expect anyone to pay me for this period, unless they were making unreasonable deductions whilst I was earning money, and because my current brolly charge low fees then I wouldn’t claim it. However:
• How much are they obliged to pay? Is it a flat rate for everyone or based on your previous assignment?
• For how many weeks are they obliged to pay you?
• Can they claim any of it back from HMRC?
• You say that that can’t legitimately deduct an allowance from you each month in order to pay you between assignments (c/f holidays). I presume they can’t also use a rolled-up method whereby a portion of your monthly pay is deemed to be for such periods but they’re just “paying” you up front for it?
• How do you personally cover the costs of such overheads? By setting your weekly fee at an appropriate level across the board and absorb it within that?