Then you’ll know that framework providers are tightening up on compliance. Some are now insisting on RTI submissions to prove that the necessary payments are going where they should. To HMRC.
Why are frameworks insisting on these new rules?
We’ve seen a market shake-up over the past few months. IR35 has pushed more workers into the sector and created an environment fraught with potential employment risks. Particularly for recruiters. We’ve seen mini umbrellas hit the headlines back in May. More recently the TUC have questioned the very existence of Umbrella providers. In fact, there’s a string of negative Umbrella headlines dating back to public sector Off Payroll (IR35) in 2017.
Maintaining compliance standards
It’s still fair to say that Umbrella is a viable option for employing and paying contracting professionals. You need to work closely with your Umbrella partners to ensure they are working within the rules. Are they happy to provide RTI submissions as further proof of compliance. If they don’t want to provide the RTI information, the alarm bells should be ringing! However, there are a couple of alternatives worth considering.
Looking at alternatives
You could bring contractors in-house on your own PAYE payroll and take on all employment responsibilities. You may need to employ more staff to cope with the additional work. Your costs and responsibilities will certainly increase. The third option would be to look at a PEO provider. Here you’d outsource much of the employment responsibilities and the time-consuming administration. Plus there are plenty of efficiency savings when using a genuine PEO supplier.
What is PEO?
PEO generally describes a payroll product or service (rather than a business). It is one of a handful of payroll options available to recruitment agencies to outsource their payroll function. It’s based on PAYE, and provides a partnership approach to employing workers, which ultimately benefits all parties.
Why consider PEO for your agency?
PEO payroll offers a fully transparent and safe alternative to Umbrella payroll with distinct advantages for contractors and agencies. Contractors are on full PAYE; they don’t pay a fee and there are no employer deductions on their pay slips. Given the choice contractors say they’d rather work with a recruitment agency that offers PEO.
Look for a genuine PEO provider
We’ve seen plenty of intermediaries start to offer a PEO option over the past year. However, in many cases it appears that it’s just a re-badging of an existing product. Summed up nicely by People Group CEO Terry Hillier: