Payroll software for recruitment agencies UK: timesheet tools

What to take away

Why recruitment payroll is not standard payroll

A recruitment agency pays people who are not its permanent staff. Workers move between assignments, rates change mid-week, and one run can include PAYE workers, umbrella workers and CIS subcontractors. General payroll software assumes a fixed salary and a stable headcount.

UK recruitment-specific payroll and timesheet products include ETZ and InTime, which link timesheet capture to assignment rates. General payroll platforms used by agencies include Sage 50 Payroll, BrightPay, Moneysoft Payroll Manager and The Payroll Site. Access Recruitment also supplies payroll and timesheet modules alongside its agency software.

Volume arrives in spikes. A branch might process 40 timesheets in a quiet week and 900 before a bank holiday. Software that rejects a whole file over one bad row will fail at the wrong moment.

The National Minimum Wage Act 1998 covers agency workers, so each hour on a timesheet carries a minimum rate. Without an automatic comparison, someone checks it by hand every period and eventually misses one.

Construction agencies also need CIS deductions, which change the net pay figure for the whole assignment. Our notes on payroll software for CIS subcontractors set out what changes in a weekly run.

Timesheet-to-payroll workflow, step by step

Agency worker rules, umbrella payroll and the paperwork

The Employment Rights Act 1996 requires an itemised pay statement showing gross pay and every deduction. For an agency worker on variable hours, that statement is the document most likely to trigger a query, so holiday pay and umbrella margin should appear as separate lines.

Umbrella payroll adds a party. The agency pays an umbrella company, which employs the worker and takes its margin and employer National Insurance from the assignment rate. Your software must hold the umbrella's details without generating a payslip for someone it does not employ.

Data handling sits alongside this. You store right to work documents, bank details and assignment histories for people who are not employees in the ordinary sense. The ICO's UK GDPR guidance is the reference for retention and access requests.

Agencies paying workers directly also carry auto-enrolment duties, including frequent joiners and short assignments. payroll software with auto enrolment needs to cope with postponement and opt-outs without a spreadsheet.

What to test before you buy

Ask for a sandbox and load your own data. A file with 200 timesheet rows, three mid-week rate changes and one deliberately rejected line tells you more than a scripted demo.

Check three things in particular:

Budget one full parallel pay cycle as well. Matching net figures against the old process is the cheapest assurance you will buy.

Common questions

Does payroll software handle umbrella companies?

Yes, within limits. It records the umbrella company, the assignment rate and the payment output, but the worker's own payslip stays with the umbrella. Check the tool does not count employer costs twice.

Can one system pay PAYE, umbrella and CIS workers?

The better recruitment payroll tools can, but test the deduction logic for each group separately. CIS deductions and umbrella margin are often the weakest parts of a general payroll product.

Do agency workers count for auto-enrolment?

Yes, if you pay them directly through PAYE, the duties in the Pensions Act 2008 apply. Short assignments make postponement and re-enrolment the parts worth testing.

How long does switching take?

For a single-site agency, allow a fortnight of setup plus one full parallel pay cycle. Multi-branch agencies with separate client portals should plan a phased roll-out by branch.