Progressive People Strategies Need Outsourced Payroll
The right outsourced payroll provider can revolutionise a business’ people strategy as well as boost cost savings, productivity, and the employer brand, says David McCormack CEO of HIVE360.
The commercial landscape is full of challenges around people, cost pressures, digitisation, compliance and risk, auto-enrolment, changing tax and employment legislation, the admin burden, cost of living, employee engagement, health and wellbeing, and changing working patterns, which can drain productivity, and be onerous for businesses.
Payroll is a priority for good employment experience and operational efficiency. Accuracy, compliance, agility, and flexibility are key, because the costs of getting it wrong are huge – it can damage an employee relationship, and a business’ reputation.
Traditional outsourced payroll models involve only the processing, but new and progressive models build-in risk and responsibility-sharing that focuses on commercial impacts, address the increasing pressure on costs, and factor-in a richer and beneficial employee experience.
Essentials
Adding payroll to an outsourcing strategy really can reduce costs, boost productivity, improve employer brand, and support recruitment and retention. A legitimate outsourced payroll provider guarantees delivery of accurate, on time, and compliant worker pay, so look for one that:
- Provides and demonstrates transparent PAYE payroll support.
- Is HMRC and GLAA compliant.
- Has a future-proof solution that meets IR35 and the Good Work Plan.
- Includes auto enrolment pension administration and a high performing workplace pension provider.
- Delivers significant cost savings and operational efficiency gains.
- Offers HR legal advisory support to enable continued compliance and protection.
Ones To Avoid
There have been several tax avoidance and unscrupulous models of payroll that have left temporary workers financially penalised.
New guidelines evidence the government’s drive to encourage businesses to examine the supply chain with comprehensive, regular due diligence to ensure they work with only fully compliant and ethical payroll providers.
Inside Stories
Full outsourcing of payroll has been commonplace in the recruitment sector for many years, with the reduction in downtime and streamlining of business processes cited as benefits.
Unscrupulous payroll providers are not uncommon. Known as Mini Umbrella Companies (MUC), these put a business at risk.
Look for red flags a company is a MUC, such as:
- A MUC model of payroll payments is via randomly named companies – that frequently change – with no transparency of pay deductions provided. There are few or no employers’ NI paid on workers’ pay, which HMRC classifies as tax fraud.
- Workers paid through multiple limited companies with unusual names because the MUC model needs payroll companies to have limited payroll payments that allow the use of employers’ NI allowance and very little else.
- Operates from serviced offices, bulk mailboxes, or offshore locations. The individual business type registered with Companies House frequently doesn’t match the Trading Group name.
- Directors/Shareholders are non-UK nationals, non-resident in the UK, and non-tax resident.
- Utilises flat rate VAT accounting, which gains them additional income without the need for accounting records.
- Are structured to achieve multiple employment allowance opportunities because MUC use multiple Limited companies.
People At The Heart
Premiere Recruitment specialises in GLAA-regulated sectors including food processing and agriculture, with an average 250 workers on its weekly payroll, and has outsourced payroll since it launched in 2021.
“Payroll has to be run on time, accurately and compliantly, or it’s catastrophic,” says the company’s Director, Leon Vickers. “Handing payroll over to another organisation is terrifying, but ideal for busy businesses. For us, working with a legitimate, reputable provider has improved efficiency, saves money, gives peace of mind, and frees-up time and headspace to focus on the business.
“There are loads of payroll providers out there, and investing in comprehensive due diligence up front is vital to get the right one. Ask for references, evidence of HMRC compliance, and the latest audit. Talk to other businesses about who they use for payroll, check-out online reviews, and ask for proof the provider understands your sector and relevant legislation. Meet their team to establish the business is reliable, has robust systems and processes, the knowledge and resource to act and respond, and that payroll is in the right format for you.”
“It’s reassuring knowing we have payroll professionals on board,” says Patricia Hay, founder of First Base Employment, who has outsourced payroll for over 20 years. “Trust comes over time, but before selecting a payroll provider, get evidence they have excellent communication tools, secure technology, satisfied customers, and value openness and transparency.
“Take time to understand how each provider adds value,” she says. “Employee support is so important, and if this is part of the outsourced payroll provider’s solution, it’s one to embrace - it’s rewarding to be able to give our whole team access to counsellors and GPs, and tools that help with the cost of living.”
About the author:
David McCormack is CEO of HIVE360, which provides expert, compliant and reliable PAYE payroll support and comprehensive employment administration, and its customisable Engage Employee Benefits app as standard. He has over 20 years’ experience as a director within the recruitment sector and over 15 years running payroll businesses.
Visit HIVE360 for more information.
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