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Eight questions to ask your contract or temporary labour suppliers

28 December 2022

In today's fast-paced world, businesses are increasingly relying on temporary labour because it allows them to scale their workforce up or down as needed. A temporary workforce can offer you unrivalled flexibility at great value for money if it is well managed and compliant; however, if it is not properly managed, your temporary labour can become more of a hindrance, resulting in poor visibility, lack of control, unnecessary costs, and potential compliance risks. It pays to have control over your agencies, and a successful supply chain can be the key to unlocking your potential. But, before you decide which agencies to add to your supply list, you should ask a few key questions:

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1. How are holiday pay and national insurance calculated?

To ensure that you are not being overcharged and that the worker is not being underpaid, it is critical to consider how agencies calculate things like holiday pay and national insurance.

2. What is the margin used?

You should always check the margin being applied to ensure you are not being overcharged. Is the quote margin or markup expressed as a percentage or as a set rate in pounds per hour? Margin is the greater of the two and may cause you to spend more money than necessary. Fixed hourly rates are typically applied to lower-paying positions.

3. How much does the worker get paid?

This is necessary to ensure that the minimum wage or living wage is applied, as well as that pay parity can be applied after the worker has worked for the qualifying period under the Agency Workers Regulations (AWR).

4. Does any of your labour come from a subcontractor or 3rd party supplier?

Another important question as there might be some risks transferred back to your company if the 3rd party is not doing all the necessary compliance checks or making payments directly to workers.

5. How do you ensure compliance with current legislation, workers' rights, and AWR?

Although it is a simple question, it is extremely important. After all, the last thing you want to do is end up in court or in the news for employing an illegal workforce.

6. What is the current employment status of the workers you provide?

Are they limited company contractors, PAYE, umbrella companies, or sole proprietors? It is critical to avoid unnecessary employment risks, and understanding how employees are engaged is the first step.

7. When do you pay your workers?

By determining the time it takes from time sheet submission to money reaching workers' bank accounts, you can ensure that your temporary labour is paid quickly and on time, avoiding unpleasant surprises or walkouts on payday.

8. Can you offer any value-added solutions?

To ensure that you are getting the most out of your agency, find out what else they can do for you. They may have some innovative solutions that you haven't considered that could provide real benefit, resulting in a stronger and better working partnership.

If you use temporary labour as part of your recruitment strategy, it may be worthwhile to enlist the assistance of an RPO provider to ensure you maintain complete control at all times, allowing you to cut costs without sacrificing quality. RPO can transform your recruiting and provide direct cost savings of 6-12%, from real-time reporting and compliance checks to agency auditing.

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