Employers NI contribution.

I have been offered agency work that I am keen to take. However, the agency person has told me (telephone call) that employers NI will not appear on my payslip (I am paid PAYE). I queried this and was told it is because ‘NI is deducted at source’. This person is trying to pull the wool over my eyes.

The pay is high enough to attract employers NI and the agency (as the employer) is liable to pay it. I have asked for a written explanation and I have been sent an email which just talks about NI being deducted at source but makes no mention of employers NI as mentioned in the phone call.

I can’t find anything about why the agency would tell me employers NI will not show on my payslip.

Does anyone have any insights?

Am I right to be suspicious?


Additionally:

The agency person has advised me that NI at a rate of 13.8% is 'deducted at source'. I have performed my own investigations and I have found that 13.8% is the employer's contribution rate, so not deducted at all, but contributed. I think this 'deducted at source' phrase is being used in an attempt to confuse me (all NI and tax are deducted at source).

The person has also rolled up holiday pay into the basic rate (another story altogether).

I suspect the agency person thinks they are dealing with someone financially illiterate

I think they are using a PAYE umbrella scheme:

https://www.itcontracting.com/employers-national-insurance-umbrella/


The correct way:

https://www.reed.co.uk/career-advice/payslip-checker-your-payslips-explained/

I had my suspicions that they are planning to put my pay through an umbrella scheme behind my back. I will be having very stern words with the agency worker about this.

It looks like they are trying to classify me as self employed, behind my back and without my consent.

Many thanks Absolut and D. Appleby. This has really helped me see what they are up to

I may not be taking that job after all

I wouldn't trust any company that uses rolled up holiday pay in the main wage unless it was a very high hourly rate.

....no it is at the lower end of the hourly rate scale for my occupation.

The employer NI not appearing on a payslip does seem to indicate self-employment, which means you get to dictate who you work for, where and for how many hours. If you can't do that then it's a breach of IR35. No matter what it says in their paperwork you would clearly be an employee.

My last two payslips from two different employers don't show employers NI contribution, only the one deducted from my wages. I don't think it should be a problem. In any case, get a HMRC online account and you can check it from there.

Miguel1975 wrote:My last two payslips from two different employers don't show employers NI contribution, only the one deducted from my wages. I don't think it should be a problem. In any case, get a HMRC online account and you can check it from there.

If your earnings were less than £792 per month then the employer's contribution is zero. Any more than that and they are obliged to pay NICS. If they have not then they may have robbed you of the NI credits you are entitled to from the employer.

https://www.gov.uk/national-insurance-rates-letters

It is definitely a problem.

I may contact HMRC (I won't need an account to speak with them) and ask their opinion about the agency's operating procedures.

Absolut wrote:The employer NI not appearing on a payslip does seem to indicate self-employment, which means you get to dictate who you work for, where and for how many hours. If you can't do that then it's a breach of IR35. No matter what it says in their paperwork you would clearly be an employee.

I think that is exactly what they are up to. I see jobs advertised as 'outside IR35', which looks calculated to confuse

In this case, the job was not advertised. A former manager had asked the agency for me by name.

......Quite apart from the NI situation, the agency person seems unfamiliar with the correct calculation for holiday pay. I know it is 12.07% of pay (hourly rate). The agency person seems to know this but s/he seems to be taking that percentage off the basic in order to add it back on and arrive at the pay rate.

Since holiday pay is extra then 12.07% should actually be added onto the basic without taking it off first. I am struggling to find a web based resource to prove this. There used to be one on gov.uk but it has been altered and does not have the facility to perform a calculation based on an hourly rate.

Does anyone know of anything I can send this person to prove the above? Not sure if I am dealing with a fool or someone sneaky

Caker wrote:Since holiday pay is extra then 12.07% should actually be added onto the basic without taking it off first.

The confusion is the calculation of 12.07% and the fact that holiday pay is not extra, it's simply part of the overall yearly wage. We take the time and are paid for not working. We don't tend to take the money, hence the confusion.

Everyone is entitled to the equivalent of 4 weeks annual leave (pro rata) per year over 52 weeks, except an agency worker might only work for 4 weeks before moving onto something else. For simplicity, let's say the wage is £10,000 per year (no tax, no NI) and you work 20 hours per week. That is an hourly rate of £9.16 per hour. 20 hours x 4 weeks x £9.16 per hour gives holiday pay of £769.23 (from the £10,000). That's £14.79 for every week you work and you don't take the time. This translates as 73p per hour owed in holiday pay over 20 hours per week. If you only worked for 4 weeks you'd be owed £59.17 in holiday pay. Therefore, the wage that includes rolled up holiday pay would be £9.89 per hour. At least, that's the way I see it, but I could be wrong.

The rolled up holiday pay calculation really isn't the issue. The issue is that they are not allowing an employee to take the actual holiday and that could land them in court when that employee later claims the unfairness of the contract. They might prefer to take the time. That is why the agency should offer that option, if not avoid rolled up holiday pay altogether and simply calculate and pay holiday pay at the end of the contract or allow you to take the time.

If this agency rings too many bells, just dump them and move on.

Miguel1975 wrote:If this agency rings too many bells, just dump them and move on.

Update: I have now done exactly that. I am sad to miss out on the job though