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Is this a legal deduction from wages?


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My son has started work through an agency and he's noted this in his paperwork for payroll -

 

• A flat rate of £12 will be charged for every time we put your pay into your bank account.

 

Is this a legal deduction? I would think not but he hasn't signed it yet so need to find out asap.

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What reason did they give. They cant just deduct it simply for putting money in account

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If he hasn't signed I'd take it up with the agency and depending on what they say, then report it.

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It gets more bizarre, this is the form he was sent ... I'll let you read it and decide for yourself what you think this is.

 

https://www.dropbox.com/s/n1yb9bzhg4eti0d/Gain%20Application%20Pack%202013-14.pdf?dl=0

 

This is the body of the email the attachment was sent with:

 

Please can you complete the GAIN form – page 3 in order for you to be put onto payroll. You will need to print it off and sign it for it to be authorised.

 

I wish you the best of luck in your new placement.

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He needs to query that £12. For someone who is self employed through them, and has to pay taxes/submit records to Companies house/HMRC, he needs to have every last deduction and expense accounted for.

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If you read at bottom of page 3 he's agreeing to become the Director of a Company? Not what I would expect to see for someone getting a job in manufacturing, especially as he will having nothing to do with being a Director.

 

Just sounds like tax avoidance to me!

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Like i said. It looks like theyre setting him up to be self employed. That way, if there are any issues, then its all on him, and they can deny liability and just say they were processing payments.

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something sounds very wrong here .

 

It's a clear attempt to reduce the overall tax liability, however is likely to have more benefit for the employer.

 

Making a member of staff a director just to enable expenses to be paid seems like a convoluted way of going about

something that should be simple.

 

Work as employee - pay tax at source.

Work as self employed - pay your own tax.

 

Seems like this agency wants to have it's cake and eat it. Nothing that employee expenses can be used to reduce corporation tax and it's a perfect model if you can charge your staff for the privilege.

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Doesnt matter. IF its in the contract, the contract needs to be either reformed, or the redacted part notarised by both parties.

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Unless you both agree to the changes, yes. Why not query it with the agency first before any consideration is given to signing.

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The agency claim he doesn't become a director, I called them. If he doesn't sign he'll lose his job (which has nothing at all to being a director).

 

I'm highly suspicious of all of this but it's his job and I don't want him jobless.

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That paperwork envisages that there will be a contract involving the company which he will be appointed as a director of, not a contract involving him personally. He will effectively be self-employed and hence will not have any real employment protection - so can be dismissed at any time.

 

 

The £12 processing fee is outrageous but I think it is probably legal, as this will fall outside the scope of employment and consumer protection legislation.

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It isnt legal if he is employed, you cant be charged for receiving your pay. They will have to find other ways of paying such as cash if he doesnt agree but I suspect they will claim that they are offering a self employed person an administrative service.

If I were him i would be speaking to the employer, Ie the factory where he is working and let them know about this outrageous behaviour by the agency.

It reads to me like an out and out con, by being a deirector of a one man company the agency dont have to pay him, offer him holiday or sickness pay etc. They are trying to avoid all of their responsibilites as an employment agency. He might as well go and offer himself that way directly to the company who use him and when they turn the offer down flat as unlawful he will undersatnd that he is being abused by this agency.

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When I spoke to the agency I was asked if I wanted to speak to the Director so he could explain it(!) I think I don't need it explaining, more profit for the agency, screw over the employee and laugh in the face of the tax man.

 

Should be outlawed.

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Its a standard self employed umbrella company arrangement. He can probably find a cheaper adminstration service to do this for him. But he will indeed be self employed.

Never assume anyone on the internet is who they say they are. Only rely on advice from insured professionals you have paid for!

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Umbrella company - be VERY careful. Your son could be tied into all sorts of costly obligations which it may be difficult to walk away from, and has virtually NO employment rights or protection. Umbrella companies often skirt around on the very edge of what is lawful - including the matter of everyday expenses which are claimed as 'business' expenses (they are only allowable in certain circumstances, for example where a worker is involved in a series of assignments at different locations, not just for buying lunch or commuting to a 'normal' place of work). HMRC are highly suspicious of such arrangements and could well come after an unsuspecting worker for underpaid tax!

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Avoid - as a director he will be responsible for the conduct of the company.

 

As Side states, no employment protection.

 

http://www.osborneclarke.com/connected-insights/publications/hmrc-win-158m-case-against-reed-umbrella-schemes-what-do-staffing-companies-need-do-minimise-problems/

 

A well known case.

 

The expenses claimable are disallowed, so the benefit of being in such a scheme is pointless.

 

The agency will make a profit on selling you to the client and pocket 12.00 everytime it operates as a payroll company.

 

What about stamp ?

 

C

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Now they're refusing to pay him, claiming he hasn't provided sufficient evidence of identity, despite the fact they accepted it at the time and placed him at a job! Just writing a letter on his behalf threatening legal action and will also be passing their info to HMRC for potential tax evasion.

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