Minimum wage and sick pay

[Bamboozed]

Hello all,

I am ex contractor forced now to work via "one of the greatest umbrella companies" and have a few concerns.

If I understand correctly, IR35 rule came in to make everyone pay the same taxes? Contracting via LTD company was "stealing" from the pot, as many people were dodging taxes, etc. At least they say so.

Anyhow, no problems in paying "same" taxes like everyone else, but I am sure, there are others with similar concerns as me.

The Umbrella company I am working with pays me:

Employee Payments Units Rate
Basic xyz 8.91
Holiday Pay 1.00 xyz
Assignment Commission 1.00 xyz

The concerned part is the Basic rate, which is the minimum wage. I do understand that Umbrella companies don't make profit, they are poor, good guys, etc., etc...
But if go off sick, I will get paid SSP which is 96 something pounds.

So my question is, am I the only one concerned about this? Why do I have to pay "same" taxes as everyone else, but not get same if I go off sick?
Especially now, with covid around, it is very easy to get laid down without payment.

[Paralytic]

So my question is, am I the only one concerned about this? Why do I have to pay "same" taxes as everyone else, but not get same if I go off sick?
Especially now, with covid around, it is very easy to get laid down without payment.

Is your top line (before taxes) the same as the permanent staff doing the same job? I'd assume not (you'd have to be daft/naive to accept such a contract) and that's why you don't get the same sickness benefits as permies.

PS. No-one forced you to work via an Umbrella.

[DolanContractorGroup]

Hi Bamboozed,

Hope you're well.

Every business has to make some sort of profit to survive and cover overheads, and generally the "profit" for umbrellas these days ranges between £15-25 per week per worker.

The pay being split between NMW and bonus/commission is quite common; just make sure that there's no other weird stuff going on resulting in higher take home pay.

Sick pay policies for umbrellas will always be the statutory minimum because SSP can't be recovered, unlike SMP. Umbrellas will be covering the SSP from their bottom line.


Thanks


Zeeshan

[eek]

SSP will be the minimum because SSP is paid by the company and cannot be reclaimed from the HMRC so anything above the minimum is completely discretionary.

Then given the fee an umbrella receives there really isn't enough to support paying more than the legally required minimum - 1 person on sick pay consumes the fee of 5 or more workers depending on the umbrella's margin.

Likewise the minimum wage is there with everything else as a bonus in case an agency doesn't pay the umbrella as the umbrella does need to pay you the minimum wage even if the agency doesn't pay up.

[DolanContractorGroup]

Likewise the minimum wage is there with everything else as a bonus in case an agency doesn't pay the umbrella as the umbrella does need to pay you the minimum wage even if the agency doesn't pay up.

Hi eek,

Yes, absolutely. Umbrella employers have to pay NMW for all confirmed hours regardless if we have received the money or not; but this scenario is rare thankfully.

One of the main reasons for the NMW and bonus split nowadays is pension contributions via salary sacrifice (much like with expenses pre-April 2016). We can only reduce the salary to NMW, so it helps having this as a base and apportioned separately.

As we explain to contractors all the time that are moving over from Ltd companies, the mechanism may seem strange but it's there for a reason and won't affect their pay.

Thanks


Zeeshan