Why recruitment companies need to outsource payroll

Sep20

Posted in Outsourcing

No other industry works with a greater turnover of staff or a greater range of contract types. If your business is recruitment, ask us for help in keeping track of the payroll.

The recruitment industry is responsible for placing around 1 million agency workers into work every day, and around 1.1 million permanent workers into new posts each year. According to the latest Recruitment & Employment Confederation’s Recruitment Industry Trends report, the industry grew by 11% in 2017/18 (the last year for which figures are available).

All of which puts a growing strain on recruitment agency payroll, and for a wide range of reasons.

A growing industry

Recruitment now employs around 115,000 people. To be clear, that’s just the people working in recruitment, not the people they recruit. With a 10% increase in the number of recruitment companies in a single year, there’s a clear and growing burden on in-house payroll to cope with a ballooning workforce.

That in itself might be all the reason your recruitment company needs to outsource payroll, but it’s just the tip of the iceberg.

A million ways to work

The world of work is a fragmented and complex one. 85% of contract placements are for 12+ weeks. 45% are for 6 months or longer. Yet for temporary assignments, 36% of appointments are for less than 12 weeks, whilst only 20% are for 6 months or more.

For recruiters, it’s all too common to find that virtually every worker on the books has a different contract and keeping track of all of them can be extremely challenging. Small wonder, then, that more recruitment companies are outsourcing payroll, handing over the complexities of payroll management so they can focus on finding the next placement.

Keeping track of every worker’s status

It’s not simply the number of workers that increases the payroll challenge – it’s the growing variety in worker status or contract type. When your pool includes employed, zero hours, self-employed, umbrella workers and more, it’s all too easy to lose track and running payroll becomes bewilderingly complex.

Without dedicated payroll expertise, it can simply be too much to process.

Foreign workers

The tax and national insurance arrangements for foreign workers will vary depending on the country they are from and the duration of their stay in the UK. Given the nature of recruitment, a relatively high proportion of foreign workers make their way onto recruiters’ books, which further adds to the payroll complexity.

And with the final outcome of Brexit yet to be resolved (at time of writing) there’s every chance those rules could change again. Far better to entrust such matters to a payroll professional.

Compliance

Most industries have plenty of red tape to contend with. But few can match recruitment for touching on so many areas of tax, NI and employment legislation. Handing payroll over to a dedicated payroll provider means compliance becomes their problem, not yours. As rules change, your payroll provider should be on top of it, and you’ll have recourse against them if they’re not.

Keep payroll in-house, and all that burden falls squarely on your shoulders.

Cutting costs

It’s not simply the cost of employing staff to process payroll. It’s the cost of errors and rework. It’s the perpetual risk of fines for non-compliance, and the cost of paying them when the worst happens.

There is, of course, a cost to outsourcing your recruitment payroll. But for the clients who work with us, the many benefits of outsourcing make it the simplest of decisions.

Discover the benefits of outsourcing payroll for your recruitment business. Talk to us now.