Employment costs on your payslips, what this covers, and how this works.
When you join Nasa you become an employee with an overarching contract of employment. This means that your employment continues through multiple assignments, which could be via multiple different agencies, and doesn’t automatically end when your first assignment concludes.Nasa retain our Employment Costs and a small processing margin from the Contract Income, which is the amount we receive from your agency each pay period. The remainder is your taxable gross pay.
If you have not previously been paid via an umbrella, or have only ever received direct PAYE payments, you may not have seen ‘Employment Costs’ on a payslip before.
When you are employed by an umbrella company, it means neither your client nor agency are paying the Employment Costs directly to HMRC. The Contract Rate we agree with your agency covers all costs - your basic pay, holiday pay, and our employment costs.
You can read more about this on the HMRC website here, and also via FCSA here.
‘Employment Costs’ covers everything outlined below. These will be shown as separate lines on the payslip, shown as deductions from our Contract Income. Your PAYE and NI contributions are deducted from the remainder - your gross pay. Employment costs will never be retained from your own income.
- Employers National Insurance Contributions (Employer's NI) - 13.8% on income over £175 per week
- Apprenticeship Levy - 0.5%, calculated on value of gross pay. The apprenticeship levy was introduced by the UK government as a compulsory tax to help fund the development and delivery of apprenticeships, with the aim of improving those available. This forms part of the employment costs included within your rate of pay, and does not relate to you as an individual.
- Employer Auto Enrolment pension contribution - 3% of qualifying earnings (between £120 and £967 per week). The Auto-enrolment pension scheme is required by law, but you do have the option to opt out after your enrolment if you would prefer. You can find more information on how to opt out from the workplace pension here. Accrued pension funds are sent to Now Pensions (not HMRC).
You can also find more information via the payslip explained guide, which is linked with each payslip.