Understanding Umbrella Pay

2 May 2023

When working through an Umbrella company, there are certain payment terms and deductions you should be aware of. Here’s our guide.

Assignment fee

This is the rate you see in the advert for a role. It’s the fee paid by the employment agency to the Umbrella company for supplying its employee (i.e. you).

Gross rate of pay

As an employee of our Umbrella, your Gross Rate of Pay will typically be the assignment fee less the Umbrella margin and employment costs.

Umbrella margin

All Umbrella companies will take a margin from the assignment fee they receive from the agency.

Income tax

Your salary is subject to Income Tax. There are different tax bands – basic rate, higher rate, and additional rate – applied according to how much you earn.

Employment costs

These are the costs your employer would need to account for, such as Employers’ National Insurance, on the salary that it pays you.

Employee National Insurance

As you are an employee of the Umbrella company, you have to pay National Insurance.

How Umbrella pay is calculated

Each time you’re paid by Workwell, you will receive a two-page statement explaining how we’ve calculated the funds we’re sending. Page 1 is a reconciliation which shows what we’ve billed the agency for our services, together with any deductions we make (illustrative sample shown below).

Page 2 is the employee (PAYE) payslip.

We ensure your take-home pay and tax deductions are calculated and paid correctly for every payslip and assignment. You can even keep an eye on this via our online portal, and our team will advise you on any tax elements you don’t understand. This will give you peace of mind, knowing you’re compliant with HMRC.

If you have any questions or need help, please don’t hesitate to contact our team on 01923 257257 or email [email protected]

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