Why Outsourcing Is Vital For Recruitment Agency Payroll

March 8, 2024

First published November 2022 and updated March 2024.

The recruitment sector plays an undeniable role in ensuring the smooth functioning of the job market. For recruitment agencies, efficiency and compliance are pivotal in all aspects of their business operations.

Given the fundamental role payroll plays in any company’s day-to-day operations, effective management of payroll administration is crucial for recruitment agencies. Here’s why payroll outsourcing is the best solution for your recruitment agency payroll.

Why Should Recruitment Agency Payroll Be Outsourced?

The need to improve efficiency and streamline the cost of administration is universal to virtually every industry, not just recruitment. But there are plenty of other reasons why you should outsource to a recruitment agency payroll service, including:

Amplifying Recruitment Sector Competitiveness

The sector has always been highly competitive — with research from the REC indicating that despite economic uncertainty, there are still high levels of hiring activity and healthy demand for new workers.

As the number of vacancies remains at record-high levels, there has been an influx of new recruitment businesses entering the market — increasing competition between them. With more rival agencies and the potential increase in employees under your management, in-house payroll is becoming an ever-greater burden.

Coupled with this is the competition for talent and the challenge of retaining candidates — the efficiency and accuracy of pay are paramount to success. When efficient and accurate payment is combined with additional employee benefits and more streamlined communication, the impacts on temporary worker retention are impressive.

Outsourcing to a recruitment agency payroll services provider is an excellent option to streamline your payroll processes and stay competitive in an ever-growing industry.

Addressing Workforce Management Challenges

Another factor that can make in-house payroll more difficult for recruitment agencies is the many management challenges of overseeing huge volumes of weekly temporary worker pay.

Calculating hourly rates, holiday and sick pay allowances, processing auto-enrolment pension and ensuring correct employment document processing mean that managing agency worker payroll accurately is a very time-consuming and challenging task.

In addition, with an increasing variety of contract types in the sector and the high level of temporary and foreign workers being employed through recruitment agencies, payroll management and administration can quickly become overwhelming. Outsourcing to a recruitment agency payroll service removes all of these complexities, offering a seamless solution tailored to your business needs.

Navigating Legal Challenges For Recruitment Agencies

A key benefit of outsourcing is that it can significantly help with continuous and assured compliance. But not all outsourced options are safe and compliant, so do your research first. By outsourcing your recruitment agency’s payroll to a reputable and fully compliant specialist, you’ll have peace of mind that you’re complying with all the current regulations and up-to-date legislation, as well as not risking tax avoidance or being part of potentially fraudulent models in your supply chain.

HIVE360 can help provide fully transparent PAYE payroll outsourcing for all types of agencies (including those governed by the GLAA), ensuring full compliance with all tax and employment legislation and additional regulations such as IR35 and the Conduct of Employment Agencies and Employment Businesses Regulations (with its focus on detailed KID documentation to help protect temporary workers and their pay).

Reducing Costs

Whilst businesses in a wide range of sectors can save money through payroll outsourcing, reducing the cost of payroll for a recruitment agency is particularly imperative, where there is increasing internal pressure on operational costs and continuing client pressure to lower margins.

Not only will outsourcing your payroll save you money in staff and training expenses, but you’ll also save money by reducing the risk of costly mistakes or non-compliance fines.

The Benefits Of Outsourcing Recruitment Agency Payroll To HIVE360

Whether you operate in the recruitment sector or another industry, there are numerous advantages to entrusting HIVE360 with your payroll management, including: