Things to check for on an Umbrella Payslip

This is a guest blog by REC business partner Rocket Paye

In today’s market, it is crucial that as a contractor you understand what should be on your Umbrella payslip, to ensure you are being paid correctly each week and that you are being paid through a compliant umbrella company. We do not expect you to be payroll experts so we have come up with 7 key things that you should look for, to be certain you are paid what you are owed.  

Employer’s Name – This is probably the biggest red flag of them all. On your payslip by law, your employer’s name must be shown exactly as it is registered with Companies House. You should be checking that the company name on the payslip, is the same company that was mentioned in the contract you agreed to and also the same company that you call and speak to if you have any queries. If it is not, you are likely being paid through a tax avoidance scheme. 

Employer’s PAYE reference number – Similar to the Employer’s name, the employer’s PAYE tax reference number must also be displayed somewhere on your payslip. To be certain that any Tax and National insurance that’s being deducted on your payslip is being paid to HMRC, you can call HMRC and check your tax affairs by quoting the PAYE tax reference number. This will give you a good indication as to whether your tax is being paid. If you don’t feel that the amounts that have been paid are correct or they are too low, you can report the employer to HMRC there and then. 

Holiday Pay – We all know about the treacherous past the Umbrella industry has with holiday pay. From withholding holiday pay or not offering holiday pay at all, these problems still exist today. So, one of the biggest things to look out for on your payslip is holiday pay. As a PAYE Umbrella contractor, you are classed as an employee, thus meaning you qualify for all statutory rights. Holiday pay is of course a statutory right that you should receive from day 1 of your first assignment. Regardless of how you opt to receive holiday pay, it should still be stated on your payslip. It’s also worth noting that it’s fairly common in the sector for an employer to be paying rolled up holiday pay, in which case there is a requirement to ensure that rolled-up holiday pay is clearly marked as a separate item on each payslip.

Pension – Whilst you may ultimately wish to opt out of pension and will probably not begin contributing to a pension for the first 3 months of your assignment, as a PAYE Umbrella contractor, you will still be auto-enrolled. Pretty soon after you begin working on assignment, you will receive a letter from the pension provider the Umbrella company use, to let you know you have been enrolled and that you will either begin to contribute to your pot now or that you have been deferred for 3 months. If you do not receive any correspondence in the first month of employment, we would suggest you question why. 

Minimum Wage – As an employee, everyone in the UK should be paid at least minimum wage to remain compliant with the National Minimum Wage Act 1998. On your Umbrella payslip, best practice would be to split out your salary into two parts. The first part would be the amount of hours you have worked multiplied by minimum wage, to show you are as a minimum being paid minimum wage. The second element would be an additional taxable wage or something similar, which would make up the rest of your pay/ day rate. If you only have one payment element showing, absolutely calculate the gross figure by the hours you have worked to make sure the payment method complies with National Minimum Wage. 

Employer’s Costs – A large part of your payslip will be the employer’s costs section. Be very careful with how these are displayed as this is the place where bad Umbrella companies promote payslip skimming or hidden costs. The employer's costs should be itemised, line by line, so you can transparently see what costs are included and how much is accounted for each cost. If you simply have one line on your payslip that reads something like “employer's costs” and a total figure, you have every right to question what’s included in these and the breakdown of them. 

Accreditations – Does the Umbrella company you are employed by, have any accreditations? A great way for you to understand if you are being paid by a compliant payroll company is to check if they have any accreditations. If they have, it means they have been through some form of stringent audit, where any non-compliance would have been found. Accreditations to look out for include Saferec and Professional Passport. Always be sure to go on the Accreditations website and check the umbrella company is displayed on there. 

NOTE:

REC advises that a payslip must include:

• particulars of the gross amount of wages or salary;
• the amounts of any deductions;
• the amount of any fixed or variable deductions, and the purposes of the deductions;
• the net amount; and
• where different parts of the net amount are paid in different ways, the amount and method of each part-payment; and
• where pay varies by reference to time worked, the total number of hours worked. It doesn’t need to contain separate particulars of fixed deductions if the employer provides a standing statement of fixed deductions.

In relation to this last point, the payslip must set out the hours worked (if variable by the time worked) to allow the employee to calculate their pay across all of the pay they receive, not just National Minimum Wage.