Umbrella company paying less than minimum wage

(11 Posts)
seimum Thu 14-Apr-16 21:55:24

My DD1 has been temping since December, and the recruitment agency is paying her via an umbrella company.
She was told when she took the job that she would get £8/hour, but that is what the recruitment agency is paying the umbrella company. Once holiday pay, employers NII and the umbrella company's fee is taken into account, she has been getting just under the minimum wage of £6.70 per hour.
With the recent increase in the minimum wage to £7.20, the shortfall has got larger. Her payslip shows her getting the new minimum wage, but then a figure labelled 'expenses' is deducted from it. This appears to be the shortfall between what the umbrella company gets, and the minimum wage + NII etc, and it is now over £30/week.
Who is responsible for getting this resolved? Is it the umbrella company? The contract between the recruitment company and the umbrella company is one for services, not a contract of employment.
I have suggested my DD1 contacts both companies, but she is concerned that the recruitment company will terminate her contract if she asks for higher pay

MaryThorne Thu 14-Apr-16 22:33:16

This HMRC guidance might be helpful:
https://www.gov.uk/national-minimum-wage/worker-disputes-over-minimum-wage

Good luck with sorting it out!

mmmminx Thu 14-Apr-16 22:38:22

Message withdrawn at poster's request.

seimum Thu 14-Apr-16 23:03:05

Thanks for the advice

APotterWithAHappyAtmosphere Thu 14-Apr-16 23:04:40

How old is she?

Thisismyalias Thu 14-Apr-16 23:10:21

Hopefully this will help.

www.gov.uk/understanding-your-pay/deductions-from-your-pay

seimum Fri 15-Apr-16 10:03:04

She is 25

seimum Fri 15-Apr-16 20:14:46

The recruitment agency have said that they will chase the payroll company (i.e the umbrella co.) Hopefully the umbrella co will tell them that the root of the problem is that the rate the recruitment agency are paying is not high enough.

Apparently the client is paying £11/hr, so the recruitment agency is creaming off £3/hr for hardly any work - is that standard?

TomTomKitten Fri 15-Apr-16 22:04:20

Yes, I was earning about £18.50 per hour (including holiday) and the agency were charging £25 per hour. Nice money if you can get it...

Gwenhwyfar Fri 22-Apr-16 21:25:13

"Apparently the client is paying £11/hr, so the recruitment agency is creaming off £3/hr for hardly any work - is that standard?"

Yes, the agency has to make a profit otherwise they wouldn't bother would they?

seimum Tue 26-Apr-16 08:37:06

Gwen - not denying that recruitment agencies need to make a profit, just that £3 for agency vs £6.70 for worker seemed an unfair split.
My DD1 has since spoken to the agency and they have increased her pay.
We also had to point out to the agency that the 'umbrella company' option they advised my DD to use had no advantages (in fact higher costs) for low paid workers
If the agency is charging the client a hefty markup for their expertise, you would expect them to know that and not need it pointing out

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