A Recruiter’s Guide to Explaining the Payroll Process

A Recruiter’s Guide to Explaining the Payroll Process

One of the most frequent pieces of feedback we receive from recruiters is how to explain the payroll process to the contractors they deal with on a daily basis. Here we’ve put together a simple guide for recruiters to describe the process and how they fit into it.


What is the payroll process?

It’s important that contractors fully understand the payroll process so they recognise the role that all parties play in it. And as a recruitment specialist it’s probably not in your remit to deal with the actual mechanics of the payroll process, but a good understanding will enable you to explain how it works to contractors, especially ones that are working through an umbrella company. Let’s take a look at what it involves.

The payroll process is a method of paying salaries to employees and making the appropriate deductions, whether they are working directly for an employer or are using an umbrella company and employed as a contractor. In times gone by it was considered to be a complex process, involving many different departments working together to ensure the correct outcome, but these days sophisticated software has simplified the process and results in fewer errors and faster processing.


What happens during the payroll process?

The payroll process, when it involves an umbrella company, is a three-stage process. 

Firstly the contractor: they work for the end-client but are employed by an umbrella company. At the end of the week or month, they will collate their timesheets and send them to their umbrella company, the recruitment agency, or the end-client itself – here at i4 we have a dedicated secure contractor portal to ensure that their timesheets can be submitted and processed without delay and with the maximum of efficiency.

The contractor’s umbrella company will then invoice either their end-client directly or the recruitment agency for the hours that they have worked.

When the umbrella receives payment from the end-client or the agency it then pays the contractor, having first deducted all the necessary tax and National Insurance contributions that HMRC require. These deductions may also include the Apprenticeship Levy, a workplace pension (unless the contractor has opted-out), and any student loan repayments that they are required to make – in our case, all deductions and costs are detailed on a contractor’s e-payslip, which they can easily access through our online portal.  


The advantages of using an umbrella company in the payroll process

Because the contractor is an employee of the umbrella company the payroll process is simplified and speeded up. Our unique tracking system enables contractors to receive up-to-the-minute updates so they can track their payments and know exactly when their wages or salary will be deposited into their bank account – vital for busy workers who need to keep a detailed record of outgoing and incoming amounts of money. 

Not only that but here at i4 we guarantee that, if everything is in place, contractors will get paid the same day as they submit their timesheet, and we’ll send both a text and an email informing them that the payment has been made.  

For recruitment agents having contractors working via an umbrella company can vastly reduce your workload, leaving you free to concentrate on generating more business, and save money too. Our automated invoicing process speeds up contractor payments and takes the pressure off your own payroll functions, as well as providing you with additional features to help your professional life run more smoothly. 

We also offer:

  • Tailored Key Information Documents (KIDs) for every contractor
  • Payments that are reported via RTI
  • Quarterly Employment Intermediary Reporting

An umbrella company can be the simplest and easiest way for contractors to get paid, and to make the life of a recruitment consultant so much more straightforward. If you’d like to know more about how i4 contributes to a simple and efficient payroll process, you can call us on 0203 603 1290, email us at hello@i4services.uk, or drop us a message on the contact form here.