Employers fees & deductions inside IR35 - Civil service / public sector

[Tommo9]

Hello - Does anyone know if this is true? (From here )

'The contract fee-payer is liable for employer’s National Insurance Contributions (NIC) (13.8 per cent) and the Apprenticeship Levy (0.5 per cent) in addition to the fee for the work of those deemed as employees under IR35 off-payroll rules.

Following the introduction of the rules in the public sector in April 2017, some employers tried to pass on these costs to contractors. This is potentially unlawful.'

I'm freelancing within IR35 for a civil service department and the umbrella (Paystream) are taking about 20% from my day rate for:

• Margin
• Employers national insurance
• Apprenticeship levy
• Employers pension

Obviously, I'm not thrilled about it.

Thanks

[Protagoras]

'The contract fee-payer is liable for employer’s National Insurance Contributions (NIC) (13.8 per cent) and the (0.5 per cent) in addition to the fee for the work of those deemed as employees under IR35 off-payroll rules.

'Following the introduction of the rules in the public sector in April 2017, some employers tried to pass on these costs to contractors. This is potentially unlawful.'

I'll have a go!

The first clause is essentially true. A deemed employer is responsible for making the payments identified. The question is whether the employer is entitled to deduct all of these costs from your 'day rate', or not.

The second clause may be true, but what's important is what documentation you have.

What is the definition of your 'day rate'? For example, perhaps you were issued with a KID (Key Information Document), or similar, that sets out the basis of deductions.
On the other hand maybe you have documentation or emails describing your day rate as your 'pay'. Or the documentation is unclear or doesn't exist.
[See the discussion https://forums.contractoruk.com/umbr...g-problem.html]

If this was all explained properly to you, then you 'suck it up' (in common forum parlance). If you'd like to reduce the deductions, then as a brolly worker about the only option is to make more pension contributions.

[ladymuck]

As Protagoras said, what information were you given before you agreed to take on the contract? Once you have that, you can start considering whether the deductions are lawful or just not to your liking.

[eek]

The question comes down to

What did the agency tell you
What did the umbrella tell you
Does your contract have a very clear definition of what the agency is paying you and a clear definition within the contract of the deductions the umbrella is taking from the amount the agency pays.

This is the relevant case for deductions https://www.gov.uk/employment-tribun...112-slash-2022

[northernladuk]

I've run slap in to this in the last two days. One agent told me top rate and explained take home rate was lower. The other just gave me a figure and I had to enquire if this was the 'umbrella rate' which was gross with NI and AL to be taken off. Two different agents with two different approaches within an hour. One explained it, the other didn't and I had to ask. Obviously the one I had to ask created disappointment but nothing really changed. It's the rate they pay the brolly and stuff has to come off.

If you 'get used' to agents quoting brolly rate and knowing this is coming off the rate you won't be as disappointed to find out if you get me. Was a bit of a shock to me as well but got over it now.

Obviously, I'm not thrilled about it.

I am wondering how you started without finding this out first though? There are plenty of touch points to query and understand this before you get your first pay.

[eek]

I've run slap in to this in the last two days. One agent told me top rate and explained take home rate was lower. The other just gave me a figure and I had to enquire if this was the 'umbrella rate' which was gross with NI and AL to be taken off. Two different agents with two different approaches within an hour. One explained it, the other didn't and I had to ask. Obviously the one I had to ask created disappointment but nothing really changed. It's the rate they pay the brolly and stuff has to come off.

If you 'get used' to agents quoting brolly rate and knowing this is coming off the rate you won't be as disappointed to find out if you get me. Was a bit of a shock to me as well but got over it now.



I am wondering how you started without finding this out first though? There are plenty of touch points to query and understand this before you get your first pay.

I would say go and read the employment tribunal above....

He was querying things all the time and was still able to win the case (much to my surprise)...

[northernladuk]

I would say go and read the employment tribunal above....

He was querying things all the time and was still able to win the case (much to my surprise)...

Blimey. Reading most of the way through that it looked like he was gonna have his ass handed to them and then in the last page it ruled in his favour. That is surprising. So many of the claiments claims had no weight placed on them and read like ignorance is a defense which we always say it isn't. I can't see how he won that one. Just on one point of lack of clarity and boom, he won.
Doesn't that open the flood gates that every AMS contractor can claim?

Funnily enough had a call from AMS about a role and he quoted the top price and never mentioned deductions. Will be interesting to see if this one goes further what they've done to correct this.

[andymalory]

Doesn't that open the flood gates that every AMS contractor can claim?

Probably as long as they are not out of time. Surely all they need to do is quote this case and whilst all ET's are not bound by this decision, the chances are the circumstances are the same.

From what I know about AMS/PSR is that they rely on the same documentation. The KID was probably produced by them, top and tailed, and forced on the umbrella to give to the contractor.