Who Pays You

When working for a Recruitment Agency on a Temporary or a Contract Basis it’s the Recruitment Agency that’s normally responsible for making sure you get paid.

In most cases you’ll be offered a choice about HOW you will be paid. You may be asked if you want to be paid PAYE or Limited Company.

The best option on how to be paid will depend on your own circumstances and the type of contract you’re working on.

I’ll cover the options for you as best I can but as always before making a decision you should consult your financial advisor or local tax office. (I am NOT giving financial or Tax advice here)

The Options

PAYE

This is fairly straightforward and will be familiar to you if you’ve ever been an employee of a UK company and been paid PAYE.

The net amount of wages agreed is paid to you MINUS deductions such as tax, and national insurance

Holiday is also accrued on your behalf, in line with the working time directive.

Umbrella Companies

Umbrella Companies are a commercial organisation that will provide a payment service to you.

There will be a small fee for their service which will be agreed with you at the outset.

This isn’t an uncommon way to be paid; hundreds of thousands of contractors use the services of these companies every day.

You can find out more about them at this Wiki page about Umbrella Companies.

Limited Companies

This is normally the option used for individuals that are intending to freelance on a long-term basis and build a serious business.

You would establish a limited company that would be registered at Companies House and you would become a Director of it.

Money would be paid to your company in exchange for the work you do and you would then pay yourself wages from any of the profits.

If you intend to establish a Limited Company it’s important you speak to an Accountant and your local tax office.

The Next Step

You need to check with the Employment Business what options they can offer to pay you and then decide which method is best for you.

If you have any further questions about any of these methods of payment please leave a comment and I’ll do my best to help.