Sub contractor having to pay a payroll company to be paid

[DolanContractorGroup]

If they are performing the services of an umbrella company, I thought they were now obliged to provide those key information documents that give a detailed breakdown?

This requirement applies to recruitment businesses, and will come into effect from 6 April 2020.

There's ambiguity whether an umbrella employer is within scope of the legislation, but the consensus is that they aren't.

Thanks

[DolanContractorGroup]

So many alarm bells!

See if you can get some guidance from your local citizens advice bureau.

I am struggling to see how you are considered self employed when the payroll company is behaving like an umbrella but I'm not familiar with all the models of operation out there.

Based on what you've said, it sounds like there's potential for a scam here. It really doesn't feel right.

Hi

This is a pretty standard CIS affair. The payroll provider/umbrella is registered for 'gross status' and so can engage CIS subcontractors and pay them CIS wages.

Paul C, this has been going on in the construction industry for a long time. If the contractor hasn't got the means to run payroll, they outsource it to an external party, but unfortunately fees will be charged. You should be getting pay statements though, detailing the breakdown of hours worked and the fee and taxes deducted.

EDIT: Oh, and another thing, depending on the insurance policies the payroll provider has in place, their public liability and professional indemnity insurance should cover you even though you're self-employed.

Thanks


Zeeshan

[ladymuck]

So many alarm bells!

See if you can get some guidance from your local citizens advice bureau.

I am struggling to see how you are considered self employed when the payroll company is behaving like an umbrella but I'm not familiar with all the models of operation out there.

Based on what you've said, it sounds like there's potential for a scam here. It really doesn't feel right.

[Paul C]

Thank you ladymuck that's very informative
We did not have the contact check over ,they told us we had to sign the contract or we wouldn't get paid!they have amended the contract twice.! We are payed on a hourly rate,we are contracted as self employed therefore we are deducted flat rate of less 20%
When I spoke to the company ( before xmass) they told me that most people would not understand a payslip with all our deductions and tax paid , hence it's very simple!!
I know the building company works out our hours and how much we should be paid weekly, sends the details to the payroll company.
And they pay us less there fees!
The whole thing just doesn't feel right to me and no one's makrs a fuss because they want to keep there jobs !.

[ladymuck]

If they are performing the services of an umbrella company, I thought they were now obliged to provide those key information documents that give a detailed breakdown?

Also, you should get proper payslips that detail all deductions and payments - it's your responsibility to make sure the right tax is being paid and if they're not providing that then there's no way you can confirm they're even using the right tax code.

A quick Google brought up the Payment of Wages Act 1991 which says all employees have the right to a payslip and the act details what should be included.

Under The Employment Rights Act 1996 (Itemised Pay Statement)(Amendment) Order 2018, employers are now required to provide employees who are paid according to 'time worked' details of the number of hours being paid on their payslip. This may not apply to your situation, depending on whether you're paid a flat daily rate or hourly. This was brought in to ensure employers were properly paying the minimum wage.

You're not making a fuss, you're exercising your legal rights.

EDIT - I know the Payment of Wages act excludes contractors and freelancers, as they will be paid by invoice, but it sounds like the payroll company is acting like an umbrella and therefore you have become an employee of it, which is why I think it may be relevant.

Also check the contract you should have signed with the company for clues as to your status; did you have opportunity to get it checked over before you had to start using the service?

[Paul C]

I understand take the hit on ones wages or walk away ,but £920 per year for liability insurance and so called help with tax returns, "24/7 Access to secure individual portal (Accessing all historic payslips, timesheets and expenses)
When I sign in to this individual portal it tells me my name and address and that's it..I had to phone and ask for a break down of my wages gross ,net,tax paid ect ,they eventually send me an Excel spreadsheet of this break down! then call my boss and said I was making a fuss! there not providing the service they state they do.what can I do about it ?

[cojak]

Nothing changed, I submitted the post twice by accident ( nervous newbie...

I’ll sort it Paul.

[wattaj]

Ok, serious answer: building company CBA with the hassle of a payroll, or in dealing with multiple payroll providers. Building company has a "mate" who will do all this for the building company. Building company mandates that all suppliers ("workers") now use this payroll provider. Job done.

Seems legal insofar as I can't immediately see anything illegal about this arrangement. BUT, I do not know this industry and nor do I know if there are any kick-backs in play that would benefit the building company.

The choice would seem to be simple: take the job and the associated hit on one's wage, or walk away.

It's a harsh assessment, but I think that it's the only one that's available.

Thoughts?


-- Edit --

Also, your point RE insurance:

...I have also asked for a copy of my personal liability insurance and got a copy of their liability insurance no mention of personal liability insurance !!...

This would seem to be analogous to "self-employed" IT contractors a working through umbrella companies: we become "employees" of the umbrella company and, therefore, do not need our own, personal insurances as we are covered by the umbrella's policies.

[ladymuck]

I would be questioning why this is necessary.

How do you currently manage your payroll? What's changed in your industry that makes the company want to take this route? We're pretty much all IT contractors here so are not experts on the building industry.

If it's just greed, and they will refuse to pay you if you don't use that solution, then you have two choices - accept it or walk away, sadly. I am not aware of any legal challenge you can make if the scheme is lawful.

[GhostofTarbera]

Sub contractor having to pay a payroll company to be paid

Seems fair to me, like all Business you have a Choice spend more doing it yourself or take thus option and stop whinging




Sent from my iPhone using Contractor UK Forum

[Paul C]

Nothing changed, I submitted the post twice by accident ( nervous newbie...

[wattaj]

I'am working for a building restoration company as a self employed contractor, we have to pay a payroll company £17.50 per week to receive our wages,the building company insist we have to sign up to this payroll company (both director's are mate) who states they have the following

• Free on going Accountancy, simplifying the end of year self-assessment for contractors (Helping Contractors Earn up to £3,000 per annum)
• Free Personal Accident Insurance Cover - £2m
• Free Public Liability Insurance Cover - £10m
• Free Drivers Negligence - £10m
• CIS Status Verified Directly with HMRC
• Daily Run Payroll
• Free Faster, Same Day Payment – Within 2 hours of receipt of funds
• Daily Text Confirming Payment
• All Tax paid directly to HMRC
• 24/7 Access to secure individual portal (Accessing all historic payslips, timesheets and expenses)
• Quick, simple and painless set up
• Dedicated Account Manager
• Full Back Office Function
• From £18 per week – No extra or hidden costs

We/i think this is a rip off and have no choice ,our weekly pay slips are very basic given us the amount we have earned less tax and payroll fee,no running totals, Gross net taxes paid,,our so called portal has non of this information on it just our names and address (again very basic) , you can add your expenses and that's it!
I have also asked for a copy of my personal liability insurance and got a copy of their liability insurance no mention of personal liabilityl insurance !!
We/i do not get paid that much and £17.50 per week £910.per year is a lot
They payroll company is making a lot of money off people without much money
Does anyone else have this problem or any advice
Thanks

What's changed since your earlier post on this topic?

I'am working for a building restoration company as a self employed contractor, we have to pay a payroll company £17.50 per week to receive our wages,the building company insist we have to sign up to this payroll company (both director's are mate) who states they have the following

• Free on going Accountancy, simplifying the end of year self-assessment for contractors (Helping Contractors Earn up to £3,000 per annum)
• Free Personal Accident Insurance Cover - £2m
• Free Public Liability Insurance Cover - £10m
• Free Drivers Negligence - £10m
• CIS Status Verified Directly with HMRC
• Daily Run Payroll
• Free Faster, Same Day Payment – Within 2 hours of receipt of funds
• Daily Text Confirming Payment
• All Tax paid directly to HMRC
• 24/7 Access to secure individual portal (Accessing all historic payslips, timesheets and expenses)
• Quick, simple and painless set up
• Dedicated Account Manager
• Full Back Office Function
• From £18 per week – No extra or hidden costs

We/i think this is a rip off and have no choice ,our weekly pay slips are very basic given us the amount we have earned less tax and payroll fee,no running totals, Gross net taxes paid,,our so called portal has non of this information on it just our names and address (again very basic) , you can add your expenses and that's it!
I have also asked for a copy of my personal liability insurance and got a copy of their liability insurance no mention of personal liabilityl insurance !!
We/i do not get paid that much and £17.50 per week £910.per year is a lot
They payroll company is making a lot of money off people without much money
Does anyone else have this problem or any advice
Thanks

[Paul C]

I'am working for a building restoration company as a self employed contractor, we have to pay a payroll company £17.50 per week to receive our wages,the building company insist we have to sign up to this payroll company (both director's are mate) who states they have the following

• Free on going Accountancy, simplifying the end of year self-assessment for contractors (Helping Contractors Earn up to £3,000 per annum)
• Free Personal Accident Insurance Cover - £2m
• Free Public Liability Insurance Cover - £10m
• Free Drivers Negligence - £10m
• CIS Status Verified Directly with HMRC
• Daily Run Payroll
• Free Faster, Same Day Payment – Within 2 hours of receipt of funds
• Daily Text Confirming Payment
• All Tax paid directly to HMRC
• 24/7 Access to secure individual portal (Accessing all historic payslips, timesheets and expenses)
• Quick, simple and painless set up
• Dedicated Account Manager
• Full Back Office Function
• From £18 per week – No extra or hidden costs

We/i think this is a rip off and have no choice ,our weekly pay slips are very basic given us the amount we have earned less tax and payroll fee,no running totals, Gross net taxes paid,,our so called portal has non of this information on it just our names and address (again very basic) , you can add your expenses and that's it!
I have also asked for a copy of my personal liability insurance and got a copy of their liability insurance no mention of personal liabilityl insurance !!
We/i do not get paid that much and £17.50 per week £910.per year is a lot
They payroll company is making a lot of money off people without much money
Does anyone else have this problem or any advice
Thanks