When your temps are employed and paid by an Umbrella company like Exceed Contracting, the umbrella Assignment Rate is used to calculate how much a recruitment agency pays the company – both for the services of the contractor AND for the services of the Umbrella too. It’s not the same as their Gross Pay.
We explain the difference in this article, but if there’s anything you’re unsure about, please Get in Touch.
What’s an umbrella Assignment Rate?
In the umbrella/contracting world, an Assignment Rate is an uplifted hourly rate paid by a recruitment agency to Exceed Contracting Limited (Exceed).
It is used to calculate the funds owed to Exceed to cover the salary, holiday pay, all of the employment costs and our margin for a particular assignment and pay period (and is therefore higher than the Gross Rate your candidate would receive if they were employed directly by the end client).
In the Umbrella world, the Assignment Rate x Hours is often known as the Company Income. This is shown in the reconciliation statement at the top of Exceed’s payslip documents.
From the Company Income received, Exceed Contracting pays the Employment Costs (including Holiday Pay if it is being accrued), and deducts our small margin. What remains is the contractor’s Gross Pay.
Employment Costs are deducted from the Company Income BEFORE the Gross Rate of Pay is calculated. Employment Costs are NOT deducted from Gross Pay.
What are the Employment Costs?
The Employment Costs that Exceed is obliged to pay as the employer of our Umbrella contractors are:
- Employer’s National Insurance Contributions
- Employer’s Pension (after 12 weeks, if the worker doesn’ opt out)
- Holiday Pay
- Apprenticeship Levy*
* NOTE: The Apprenticeship Levy is a tax on any business with a payroll figure of over £3 million. It’s nothing to do with a worker’s status as an apprentice or not.
These amounts are all shown in the reconciliation statement at the top of each Umbrella payslip document from Exceed.
What’s the Gross Pay?
The contractor’s Gross Pay is the total money (weekly wages or monthly salary) that is payable to them AFTER the Employment Costs and Exceed’s margin have been deducted from the Company Income, and BEFORE the individual’s statutory tax deductions.
Many Umbrella companies (including Exceed Contracting), pay the National Minimum Wage rate for the hours worked (the ‘Basic Rate’), with the rest of the gross amount due paid as an additional taxable wage and holiday pay which will be clearly listed and taxed on the payslip.
What’s the Take Home Pay?
The Gross Pay less all statutory deductions results in the Take Home Pay (Net Pay), which is then paid into the worker’s bank account.
The following are deducted from the total Gross Pay and distributed by Exceed Contracting on behalf of the worker:
- PAYE (Income tax based on their Tax Code)
- Employee’s National Insurance
- Employee’s Pension (after 12 weeks, if you do not opt out)
- Student Loan and/or Postgraduate Loan repayments (if applicable)
- Any other deductions that you have agreed to or are legally required to pay, such as a court order for child maintenance
The amount left is the Net Pay, which will be paid into the worker’s bank account.
This is the amount that the contractor should make sure they are happy with when agreeing to an assignment.
Please Refer to Exceed to find out what your candidate would earn on an assignment through Exceed Contracting.
Exceed Contracting also offers an employee discount scheme – Exceed Perks at Work – which our contractors can use to make their income go further.
Assignment Rate Summary
An Assignment Rate generates the Company Income of Exceed Contracting.
Company Income less Employment Costs (including Holiday Pay) and Exceed’s Margin = Gross Pay
Gross Pay (Standard Rate plus Taxable Bonus) less statutory deductions = Take Home Pay (Net Pay)
If there’s anything you’re still unsure about, please contact our friendly team on 0800 612 8787 or Refer to Exceed and we can explain how it works to you in person, based on your own circumstances.
