The fees and expenses received by CUL for the work that you undertake on assignment are kept in a ring-fenced ‘fund’ that is personal to you and devoted entirely to supporting you as one of our ‘employees’.
Certain costs of employing you will be deducted from the fund and paid to the relevant authority, as follows:
- Employer’s National Insurance (to HMRC)
- Employer’s ‘automatic enrolment’ pension contribution (to NEST). See below.
Certain expenses relating to you will be deducted from the fund and either paid out on your behalf or itemised separately on your payslip:
- Personal pension contributions – allowable by HMRC under a salary sacrifice scheme and paid out on your behalf.
- Childcare vouchers – allowable by HMRC under a salary sacrifice scheme and paid out on your behalf.
- Travel and subsistence expenses – if appropriate and if allowable free of tax.
Method of payment
- Basic pay. This is calculated on the basis of a standard 7 hour day paid at a rate equivalent to the national minimum wage (2017/18 – £7.50 per hour).
- Holiday pay. This is based on the number of days worked (calculated at national minimum wage rate), as explained above.
- Bonus. This is the balance of the amount available from the monies generated by you from your assignment and paid by the client to us. The amount will fluctuate depending upon what, if any expenses are paid out by CUL on your behalf by way of salary sacrifice;
- Expenses. The payment of expenses free of tax depends on the nature of your work (see Legislation: Need to know).
Although calculated as described above, the basic pay and bonus are brought together as a single figure on your payslip and referred to as ‘pay’. Holiday pay and expenses are itemised separately.
This is calculated as 13.8% of monthly gross salary above £157.
Automatic enrolment pension contributions
CUL will be enrolled with the National Employment Savings Trust (NEST) for Auto Enrolment purposes. For 2017/18 the minimum total contribution is 2% of qualifying earnings, rising to 5% in 2018/19 and 8% thereafter.
Having been enrolled into the scheme, you do have the opportunity to opt out of the scheme during the first month of enrolment, in which case your first contribution will be refunded. NEST will write to you and tell you the deadline by which they have to be notified if you wish to opt out. You may cease membership of the scheme at any time after the first month, but NEST will not refund your contributions.
It is therefore vital that you decide whether you wish to be enrolled with NEST or make different arrangements, and make any decision to opt out within the required time frame.
Personal pension premiums
Contributions to a personal pension scheme may be paid by CUL directly to your chosen pension provider by way of salary sacrifice, which means that you will not pay tax or NI on these contributions. This is entirely at your discretion and by individual arrangement with CUL.
Holiday pay provision
Holiday pay will paid out of your fund and will appear as a separate item on your payslip. The calculation is based on the number of days worked and calculated as 12.07% of your basic salary.
For the record, there are two different ways of treating holiday pay. This may either be withheld and paid when the employee is on holiday, or it may be rolled up and paid on each pay day on account of holiday yet to be taken. CUL has adopted the latter option in order to pay out maximum monies to employees at the earliest opportunity.
Maternity/paternity pay provision
As an employee, you have a statutory right to maternity/paternity pay if the circumstances arise. This is mainly funded by the state, but it requires some advance planning, and if appropriate you should contact us as early as possible. Any employer liability would be paid out of your fund.