3 Recruitment Agency Payroll Mistakes & How They Can Be Avoided

Categorised in: Payroll, Recruitment

With the complexity of a recruitment agency’s payroll, it’s natural that some errors will occur now and again.

However, three mistakes are commonly made by recruitment agencies and by taking steps to avoid them, you can minimise errors and ensure that your agency payroll runs smoothly.

Mistake #1: Inaccurately tracking employee hours

Incorrectly logging the number of employee hours worked can not only lead to your business overpaying employees, it can also lead to tax mistakes for both you and your employee, causing headaches for everyone involved.

At the opposite end, agency payroll incorrectly logging employee hours can also lead to your employees being underpaid, causing major issues for them in terms of paying bills and their cost of living. Making this agency payroll error just once can lead to lower staff morale and trust in the company.

Things to be aware of when logging employee hours are: 

If the agency payroll service makes an overpayment or underpayment error, ensuring it is corrected as soon as possible is essential. If an employee is owed money, it is vital to reimburse them as quickly as possible and be transparent with communication.

Rectifying any HMRC contribution issues as soon as possible is also essential, as continued problems can lead to penalties. Employing agency payroll services means you will have a fresh set of expert eyes to look at your processes, identify the weak points and rectify them to ensure maximum efficiency.

Mistake #2: Gaps in records  

Agency payroll requires a lot of paperwork, and finding gaps in records can be a common problem that is easily avoided. The finer details really are important, and it is the responsibility of the recruitment agency payroll team to ensure that all documentation and files are organised and completely up to date. 

You must also store past documents for three years, commencing from the end of the tax year that they’re from.

Don’t forget – HMRC can audit you at any time, which is why agency payroll services must be on the ball regarding records. Fines of up to £3,000 for poorly kept records can be easily avoided if your records are thorough and efficiently maintained. 

Records that HMRC expects recruitment payroll to keep include:

If you find a gap within your records, you must tell HMRC immediately. An ideal solution to ensure businesses avoid fines is by outsourcing their recruitment agency payroll to specialists such as HIVE360. Specialists have technology and software that keeps on top of everything semi-automatically, as well as a fully dedicated expert team, meaning your business is assured of being 100% compliant with all existing or new PAYE legislation.

Mistake #3: HMRC underpayments

Failure to pay HMRC correctly can result in hefty fines that your business will not have accounted for.

Fixing underpayments is quite simple, but when you have a million other jobs to run within your business, it can become another task that gets filed on the ‘I’ll do it soon’ pile. 

A straightforward way to stay on top of HMRC payments and deadlines is to have a physical and digital calendar marked with all the necessary dates. 

As referenced earlier, Outsourcing to agency payroll experts ensures that all HMRC payments are completed before deadlines and your business remains fully compliant. Each PAYE bill must be correctly analysed to ensure that all of the information is correct — when you outsource your agency payroll to HIVE360, our expert team will ensure information is accurate and you stay compliant.

HIVE360 – The perfect agency payroll partner

At HIVE360, we support all of your recruitment agency payroll requirements. Find further information on how recruitment agencies can benefit from outsourcing their payroll, or get in in touch with us here to learn how we can save you time, money, and to discuss your company requirements with one of our expert team.