What you need to consider when comparing pay options.

There are some important differences between contracting and being employed. With the most important difference being pay.

If you are full-time employment, it’s simple. You’re on full PAYE and get the usual deductions like National Insurance with statutory rights like holiday pay and, if you’re lucky, maybe a nice little benefits package. But contracting’s different. There’s more than one way to get paid.

Typically, temporary workers are given several options when they work through a recruitment agency?

Why Contractors choose PAYE

Old dated options

The most popular way to pay temporary workers used to be via an Umbrella Company. There are hundreds, if not thousands of different Umbrellas. Each offering their own different terms and conditions.

But since the introduction of IR35 and the travel and subsistence rules. The advantages of being paid via an Umbrella company has essentially been removed for temporary workers as they can no longer benefit from any tax-advantages by offsetting expenses.

Contractors have therefore found they have slowly become more and more frustrated with having to pay an Umbrella company to administer their wages on behalf of their agency.

Feedback from contractors and reinforced in our latest Contractor survey, has shown that workers begrudge seeing Employers costs (Employers NI, Employers Pension Contribution, Holiday Pay and Apprentice Levy) all deducted from their gross pay on their payslips.

(5 facts contractors still using an umbrella company need to be aware of)

Contractors prefer PAYE

The alternative is to go Pay As You Earn (PAYE). So, just like full-time employees, you get all the usual deductions and statutory benefits like holiday and sickness pay. It’s simple, easy and completely transparent.

Which is why more and more contractors have turned to an agency’s in-house PAYE as an alternative.

Why Choose PEO over IN-house PAYE

A PEO (Professional Employment Organisation)

A PEO works with a Recruitment Agency to deliver it’s in-house PAYE, but typically with a much better candidate experience and offers individual workers a comprehensive benefits package.

A better service

Payroll is our speciality. We devote our time, energy and resources into creating a market leading payroll service for contractors. Whereas for recruitment agencies in-house PAYE is at times a necessary function which distracts them from their core-function, which should be finding you great assignments.

You work hard and deserve to be rewarded.

It is now becoming more and more common for permanent employees to receive a full benefits package as part of their employment contract. Many companies are investing heavily in their employees and we believe the same should apply to temporary workers.

Due to our scale here at People as a PEO we are able to source and offer temporary workers a comprehensive package that’s tailored to your suit your professional lifestyle. This in itself sets us apart from an in-house agency PAYE.

Many of the agencies we work with have already received great feedback from their candidates, now they are able to offer People’s great benefit package to their workers.

NO FEE to workers

 Just as with in-house PAYE we offer our services at no-cost to the individual temporary workers.

The core- difference is our service levels and the added extras we offer workers. Our agency partners work with us for that very reason. They know we deliver a superior service that is best for their contractors and allows them to concentrate on the bits they are best add, seeking and placing their contractors in the best opportunities

PEO offers you flexibility

If you work through multiple agencies, working via a PEO such as People can give you a massive reduction in administration. You’ll have just one main employer allowing you to retain your tax code in one place. Removing all the unnecessary complications and avoiding potential times where you may be over paying the required tax.

Your wages on demand

We also know for many contractors one of the downsides of flexible working is the unpredictable pay patterns. Part of our service here at People as a Professional Employment Organisation is to give our workers the option when they want to take the wages they have earnt on individual assignments.

Our Anytime Wages Service allows workers to access their wages on demand for hours worked, either as they finish an assignment or before the next scheduled pay day.

So there you have it, contracting can be hugely rewarding. But there are some big differences, especially around pay.

Download our People guide or speak to one of our advisors in our client care team, who will happily explain further.