How to onboard your contractor workforce compliantly
Onboarding is a crucial part of the process for recruiter compliance. There are several pieces of key legislation that recruiters, end clients and contractors need to follow to ensure a compliant contractor/end client relationship is established. As the recruiter, it’s on you to make sure that the legal aspects are covered and get the contractor into the role compliantly and quickly.
Contractor compliance starts with a solid onboarding process. Recruiters should have a set process that is followed for each engagement. This ensures that nothing is missed or overlooked.
In this article, we take a look at the key steps that recruiters need to go through to onboard contractors compliantly. Your onboarding process should ask and evidence all of the following questions.
Has the contractor got a PSC set up?
The first step is to ensure that the contractor has a limited company incorporated in the UK. If not, they will need to set one up.
Ask the contractor to confirm the key details of the PSC. Ask to see proof of:
- Name and address of company
- Incorporation certificate
- VAT certificate (if applicable)
- Bank account details
- NI number of contractor
Use this information to check that the company meets the definition of a PSC: a Limited Company where the sole or main shareholder is also its director and employee. It’s sensible to double-check the information supplied against the official register at Companies House.
Does the contractor have the legal right to work in the UK?
Recruiters should undertake due diligence around the contractor’s right-to-work in the UK. Although the rules on right-to-work checks were amended slightly during the coronavirus pandemic, these exceptions have now been withdrawn. From 1st October 2022, recruiters should undertake one of the following checks before a contractor starts work for an end client:
- A manual right to work check: obtain and check original documents, in the presence of the contractor (either in person or via video call). You should take copies and keep them on file for the duration of the contract and two years afterwards.
- A right to work check using Identity Document Validation Technology through the services of an identity service provider: choose a certified third-party provider to conduct digital identity checks for citizens who hold a valid British or Irish passport. Check that the photograph matches the identity of the contractor and retain evidence that you did the online check.
- A Home Office online right to work check: information comes directly from the Home Office through their systems so there’s no need for you to see original documents, but you will need to retain evidence that you did the online check and confirm that the photograph is a likeness of the contractor.
Does the contractor want to opt out of the Conduct Regulations?
Contractors have a right to opt in or out of the Conduct Regulations. Recruiters should have a form informing contractors of their rights and get a written declaration of their decision on file.
What is the IR35 status of the engagement?
- If the client is a small business, the contractor is responsible for determining their IR35 status.
- If the client is a medium-large business or in the public sector, the end client is responsible for determining IR35 status.
IR35 compliance needs to be a joint responsibility between the contractor, recruiter, and end client. Although recruiters will not be responsible for producing a Status Determination Statement, it is your responsibility to pass this information up and down the chain. If you are the fee-payer, you are also financially liable for incorrect determinations. Recruiters should therefore carry out their own checks in order to advise and evidence status determinations. A tool like the Kingsbridge Status Tool can help recruiters confidently support with status determinations, with experts on hand to help work through more complex cases.
Has the contract been prepared and signed?
Recruiters should agree the assignment with the end client in writing, then pass this onto the contractor. This should include a clear brief, any deadlines or deliverables, other terms of business including the off-payroll status determination and the reasons for this decision.
Make sure the contract is fully signed-off by the end client before forwarding it onto the contractor’s PSC.
Is the contractor insured?
End clients will want confirmation that the contractor holds the appropriate levels of business insurance as specified in the contract. Brief the contractor about the importance of insurance and the risks it covers and ask to see proof of their cover and policy limits. Good recruiter communications here can ensure compliance and protection for everyone.
Benefits of a Kingsbridge policy:
- Includes five essential business insurance products in one package: professional indemnity; public liability; employers’ liability; directors’ and officers’ liability and occupational accident insurance
- Instant access to policy documents to speed up onboarding process
- Cover for previous work (up to 6 years)
- Price match guarantee and flexible payment options
- Tax deductible business expense and IR35 indicator
- Optional tax liability insurance that covers the whole supply chain
Recruiters can partner with Kingsbridge to offer our easy-to-manage package of insurance tailored to the needs of contractors and designed to fulfil the contractual obligations of end clients. Our affiliates earn rewards for each contractor that signs up to Kingsbridge’s one-package, full-cover contractor insurance cover. To find out more visit our partnerships page.
Recruiter onboarding checklist: tasks to be completed before start of contract:
- Have both parties signed the contract?
- Has the contractor opted out of the Conduct Regs?
- Have you seen and retained copies of PSC documents?
- Have you recorded the IR35 status determination and reasons?
- Have you carried out a right to work check and retained evidence?
- Have you seen the contractor’s insurance documentation?
- Is all documentation filed appropriately and securely in line with GDPR but accessible should you need to refer back to it?
By following the steps in this guide, you should be able to create an onboarding process that is compliant, quick, and easy, allowing your contractors to get to work quickly and keeping end clients reassured that you’ve covered all the bases. Find out more about how Kingsbridge can support recruiters by emailing firstname.lastname@example.org.