Blowing the whistle on umbrella companies and what they mean for supply educators

With the UK’s Employer National Insurance Contributions (NICs) going up from 13.8% to 15% in April 2025, it’s time to have a proper chat about National Insurance and umbrella schemes.

And bring you some education recruitment transparency while we’re at it.

The most common path for supply educators to find work is joining a supply agency (or joining the most downloaded supply app and community in the UK). And the most common way to do that is applying to ads on job boards like Indeed.

There, you’ll look for roles that match your skillset and pay rates that match your worth (though you might look at the pay rates first).

And that’s the problem with job ads.

Because job ads don’t state in big, bold letters that because of umbrella companies, and their hidden fees, higher pay rates equal lower take-home pay

But that’s OK (well, not really). 

Because we’re going to walk you through it all.

PAYE vs. umbrellas

The two primary ways your taxes and contributions are taken from what you earn are through PAYE or an umbrella company.

Over 2.72 million UK companies use PAYE or Pay as You Earn for their employees or contractors, engaging over 30.3 million workers.

Here’s how PAYE works:

👉 You’re directly employed by your company

👉 Your company deducts your Income Tax and NIC’s

👉 Your company pays the employer NIC’s

Here’s how an umbrella works:

👉 You can be technically employed by the umbrella

…Or sometimes jointly employed with an agency

👉 They deduct your Income Tax and NIC’s

👉 But they also charge you a fee

👉 And you pay the employer NIC

There are roughly 500 umbrella companies operating in the UK, engaging at least 700k workers as of 2023.

Just how much do all of these fees add up to? The UK government cites that umbrella companies earned upwards of £500 million between 2022-2023.

Full Disclosure 📣

We believe in education recruitment transparency. And we’re not impartial. Humly is about empowering educators, giving supply teachers and nursery nurses complete career control, and the ability to find, choose, and book the roles you want on your terms. 

So, naturally, we avoid supply teacher pay issues by using PAYE.

Now that you understand PAYE vs umbrella companies, let’s talk about those higher rates you see in job ads – known as assignment rates – and how they lead to supply teacher pay issues.

PAYE = SAVE

When supply teachers and nursery nurses look at job board ads, you see what a company offers to pay.

And it’s only natural to assume the money they offer is going to you. 

But with the hidden fees in umbrella companies, it’s not.

Agencies using umbrella companies in education show you what’s called an assignment rate in their job ads. But the assignment rate includes what ultimately gets paid to the umbrella company.

After the umbrella company takes its share, the supply teacher or nursery nurse is left with up to 10% less than a supply teacher or nursery nurse under PAYE.

This is true across all roles.

Basis for the data: gov.uk

That’s almost like missing one whole paycheque a year – that you’ve worked for.

So, if supply educators make less with umbrella companies in education, why do up to half of all supply agencies use them? 

You should ask them

Agencies know there are hidden fees associated with umbrella companies.

But they also save money using umbrellas. 

They avoid employer costs (you’re footing the employer NICs, remember). They also avoid paying pension schemes, statutory benefits, etc.

But hey, they get to stand out on job boards, offering you those higher rates.

So, what can you do?

The best way to avoid these supply teacher pay issues? Ask the agency.

Before joining them, ask if they use PAYE or an umbrella scheme. Many agencies clearly state on job board ads that they do not use umbrella companies in education.

But for job ads offering much higher rates without such claims – ask the agency. 

Because you have all the power.

If an agency using an umbrella wants to hire you, so will one that uses PAYE. And if you’re already working for an agency that uses an umbrella, have a conversation. They may have teaching agency payment options.

Just remember, it’s not the rain the umbrellas are keeping off of you. It’s money.

Your money.