Flexible Workforce Options & Compliance
Protecting Your Business When Engaging Flexible Workers
Engaging temporary or contract workers in today’s construction market is no longer just about filling roles — it is about protecting your business from financial and regulatory risk.
With increasing scrutiny from HMRC and the introduction of Joint & Several Liability (JSL) legislation (effective April 2026), the way workers are engaged and paid has never been more important.
At P.I.E.R, we don’t just supply labour — we operate a structured supply chain governance framework designed to provide transparency, oversight and risk mitigation across all workforce models
We provide a range of compliant engagement models depending on the role and assignment. Ensure Your Supply Chain Meets JSL Standards.
We work with clients to review and strengthen their workforce supply chain, ensuring the correct controls, oversight and processes are in place.
If you would like to understand how your current arrangements compare, our team is here to help.
Taking the Complexity Out of Workforce Compliance
With increasing legislation and HMRC focus on labour supply chains, engaging flexible workers can expose businesses to risk if not managed correctly. We act as your compliance partner — guiding you through your options and ensuring your workforce is structured in a way that protects your business.
Engaging Flexible Workers – What You Need to Know
As an end-hirer, you have a responsibility to understand how workers supplied to your business are engaged and paid. Under increasing HMRC scrutiny and the introduction of Joint & Several Liability (JSL), using a non-compliant supply chain can expose your business to financial and reputational risk.
Working with a professional recruitment partner ensures that each engagement is structured correctly, payroll is properly managed, and your business is protected through clear oversight and compliant processes.
Ensuring Transparency and Compliance Across Your Workforce
We provide full transparency on every worker supplied. For each assignment, clients receive confirmation documentation clearly outlining how the worker is engaged and how they are paid.
Our team is on hand to provide guidance at every stage, helping you remain compliant and confident in your workforce supply chain.
Below, we set out the available workforce options, along with the key considerations and responsibilities for end hirers.
Workers engaged under PAYE have income tax and National Insurance contributions (NIC) deducted at source, ensuring full compliance with HMRC requirements.
At P.I.E.R, a large proportion of our workforce is engaged under PAYE. This is often the most appropriate model, particularly where workers fall under Supervision, Direction and Control (SDC). In the construction sector, this typically includes roles such as labourers, trade mates and skilled operatives working under site supervision.
All PAYE workers are covered by the Agency Workers Regulations (AWR), which provide:
- Day one rights (e.g. access to facilities and job vacancies)
- Equal treatment in pay and working conditions after 12 weeks
We work closely with our clients to ensure AWR obligations are understood and applied correctly.
To provide full transparency and protect our clients under the Joint & Several Liability (JSL) framework, we have produced a detailed compliance document outlining:
- Ongoing monitoring and escalation processes
- How PAYE is operated and reported (RTI submissions)
- Evidence of HMRC payroll compliance
- Our restricted PSL and supply chain controls
- Independent payroll verification via SafeRec
View our full JSL Compliance & Supply Chain Assurance Framework here.
This document provides clear, auditable evidence of how PAYE is managed across our business and supply chain
PAYE Worker Cost Breakdown
The total charge rate for a PAYE worker is made up of:
Pay Rate + Holiday Pay + Employer’s National Insurance + Pension Contributions + Statutory Costs (including SSP) + Agency Margin = Client Charge Rate
Self-employed contractors within the construction industry are typically registered under the Construction Industry Scheme (CIS) and hold a valid Unique Taxpayer Reference (UTR). These workers operate as sole traders and are responsible for their own tax affairs.
In many cases, self-employed workers are engaged for specific trades or specialist work where they operate independently and provide their services on a project basis.
Ensuring Genuine Self-Employment
Before engaging any worker on a self-employed basis, it is essential to establish that the working arrangement supports genuine self-employment.
A key factor in this assessment is whether Supervision, Direction or Control (SDC) applies.
Where SDC exists, the worker may not be suitable to be engaged as self-employed. Where SDC does not apply, the worker has greater autonomy over how they carry out their work, which is a key indicator of self-employment.
At P.I.E.R, we take a structured approach to assessing this before any engagement is agreed. The primary factor in determining whether a worker can be engaged under CIS is confirmation from the client that the worker is not subject to Supervision, Direction or Control (SDC). CIS applicability is assessed based on the nature of the work being carried out, rather than the worker’s trade alone.
P.I.E.R relies on documented confirmation from the client for this assessment, as this forms the key evidential requirement under the agency tax rules.
Our Assessment Process
Prior to engaging any worker under CIS, we complete a series of checks, including:
- Confirmation from the client as to whether SDC will apply
- Completion of a self-employment questionnaire by the worker
- Additional checks completed as part of the payroll provider registration process
- Review of the worker’s trade and role against HMRC guidance
- Issuing a clear job description aligned to the nature of the engagement
This process ensures that the engagement is reviewed and documented prior to supply.
Important Consideration
Self-employment must be assessed on a case-by-case basis. Not all roles within construction are suitable to be engaged under CIS, and the working practices must support the engagement model.
CIS Worker Cost Breakdown
The total charge rate for a self-employed worker is typically made up of:
Pay Rate + Agency Margin = Client Charge Rat
We only engage workers under CIS where the role and working practices support the appropriate use of self-employment
Workers engaged via an umbrella or payroll provider are employed under PAYE, with tax and National Insurance deducted at source. This model is commonly used where workers fall under Supervision, Direction and Control (SDC) and cannot be engaged as self-employed.
In the construction sector, it is essential that both the client and the worker understand how this engagement model operates, particularly where a worker transitions from CIS to PAYE. Without the correct adjustments to rates and clear communication, this can lead to confusion around take-home pay. All payroll providers within our PSL are subject to contractual terms that require compliance with defined standards, including payroll accuracy, reporting obligations and ongoing monitoring requirements.
Understanding Your Risk Under JSL
With the introduction of Joint & Several Liability (JSL), effective April 2026, how workers are paid within your supply chain is critical.
If PAYE is not correctly operated by a payroll provider, HMRC may pursue other parties within the supply chain, including agencies and, in certain circumstances, end clients.
This means that:
- The choice of payroll provider matters
- The level of oversight applied matters
- The structure of the supply chain matters
Why Independent Oversight Is Critical
Clients should be aware that not all agency models offer the same level of protection.
Where an agency:
- Uses a single payroll provider for all workers
- Has a financial relationship with that provider
- Receives incentives or commission linked to worker placement
This may reduce independence and increase supply chain risk under the JSL framework
Our Approach – Independent & Controlled
At P.I.E.R, we operate a restricted and independently managed PSL (Preferred Supplier List):
- Workers choose from approved providers only
- No off-PSL providers are permitted
- No financial links or incentives exist between P.I.E.R and any payroll provider
- All providers are vetted and continuously monitored
When engaging workers through P.I.E.R, clients do not contract directly with payroll providers, and P.I.E.R operates a fully independent supply chain with no financial connection to any umbrella provider.
This structure is designed to reduce potential exposure under the JSL framework.
This ensures:
✔ Independent oversight
✔ Transparent worker engagement
✔ Reduced supply chain risk
Ongoing Payroll Monitoring
We apply structured oversight across all payroll providers, including:
- Independent payslip audits
- Verification of PAYE and statutory deductions
- Ongoing compliance monitoring
- Escalation and removal protocols where required
This provides an additional layer of protection for both clients and workers
Important Consideration
Where a worker is subject to SDC, they must be engaged under PAYE.
It is essential that the correct engagement model is applied from the outset to avoid compliance risk.
Umbrella Worker Cost Breakdown
The total charge rate for an umbrella / payroll provider worker is made up of:
Pay Rate + Holiday Pay + Employer’s National Insurance + Pension Contributions + Apprenticeship Levy + Umbrella Margin + Agency Margin = Client Charge Rate
Since the introduction of the IR35 reforms in April 2021, determining employment status has become a key responsibility for many end clients. This has led some businesses to adopt a risk-averse approach when engaging limited company contractors.
However, limited company engagements remain a valid option where the correct process is followed. Establishing the correct IR35 position at the outset, supported by clear documentation and assessment, ensures the engagement is structured appropriately and in line with current legislation
Limited Company Worker Cost Breakdown
The total charge rate for a limited company contractor (outside IR35) is typically made up of:
Contractor Day Rate + Agency Margin = Client Charge Rate
Where a contractor is operating outside IR35, they are responsible for managing their own tax and National Insurance through their limited company.
IR35 – End User – IR35 Small Company Exemption
Where a business qualifies as a small company, it may be exempt from the off-payroll working rules (IR35) when engaging contractors operating through a limited company (PSC).
A company is generally considered “small” under the Companies Act 2006 (sections 382 and 383) if it meets at least two of the following criteria:
- Annual turnover of £15 million or less
- Balance sheet total of £7.5 million or less
- 50 employees or fewer
Where the small company exemption applies:
- Responsibility for determining IR35 status remains with the contractor
- The end client is not required to issue a Status Determination Statement (SDS)
Clients should confirm their small company status to the agency they are engaging through, so that the correct IR35 process and engagement model can be applied.
INSIDE IR35 – IR35 Engagements
Following the public sector reforms in 2017 and the extension to the private sector in April 2021, responsibility for determining IR35 status typically sits with the end client (where the client does not qualify as a small company).
Where a role is assessed as inside IR35, the contractor is treated similarly to a PAYE worker for tax purposes. This means they are no longer able to benefit from the tax efficiencies of operating through a limited company.
Client Responsibilities (Inside IR35)
Where an assignment falls inside IR35, the fee payer (the party paying the contractor’s limited company) is responsible for:
- Making PAYE Real Time Information (RTI) submissions to HMRC
- Deducting income tax at source
- Deducting employee National Insurance contributions
- Paying employer’s National Insurance contributions
It is essential that the correct IR35 determination is made using reasonable care. Failure to do so may result in tax liability sitting within the supply chain, including potential financial exposure for the client.
Important Consideration
Engaging contractors inside IR35 carries similar tax obligations to PAYE engagements. Ensuring the correct determination and process is followed from the outset is critical to managing compliance risk.
Inside IR35 Cost Breakdown
Where a contractor is engaged inside IR35, the cost structure is typically made up of:
Contractor Day Rate + Employer’s National Insurance + Pension Contributions + Apprenticeship Levy + Agency Margin = Client Charge Rate
The contractor’s take-home pay will reflect PAYE deductions, meaning it will differ from an equivalent outside IR35 engagement
Where a contractor is operating as a genuine independent business, the engagement may fall outside IR35. In these circumstances, the contractor is responsible for managing their own tax affairs through their limited company.
This typically means the contractor may choose how to extract income (e.g. salary and dividends), in line with their own company structure and obligations.
For an engagement to be considered outside IR35, it is important that:
- The contractual arrangement reflects a genuine business-to-business relationship
- The working practices support independence from the client
- The IR35 status has been assessed and documented appropriately
- Where applicable, a Status Determination Statement (SDS) has been issued to the supply chain
- Reasonable care has been taken in reaching the determination
Important Consideration
IR35 status must be assessed based on both the contract and the actual working practices. Each engagement should be reviewed on a case-by-case basis to ensure it reflects a genuine independent contractor relationship.
Key factors typically considered when assessing IR35 status include:
- Level of control and direction
- Right of substitution
- Mutuality of obligation
- Financial risk
- Provision of equipment
- Integration into the client’s business
- Nature of the working relationship
Outside IR35 Cost Breakdown
Where a contractor is operating outside IR35, the cost structure is typically made up of:
Contractor Day Rate + Agency Margin = Client Charge Rate
The contractor is responsible for managing their own tax and National Insurance through their limited company.
As part of our commitment to transparency and compliance, all workers supplied by P.I.E.R are issued with a Key Information Document (KID) prior to engagement. This document clearly sets out how the worker will be paid, including pay rates, statutory deductions, and any associated costs.
KIDs are a legal requirement under the Conduct Regulations and play an important role in ensuring workers fully understand their pay arrangements before starting an assignment. They also provide clients with confidence that workforce engagements are being handled transparently and in line with regulatory expectations.
Clients should ensure that any agency they work with can demonstrate that KIDs are both issued to workers and available for review. The absence of clear and consistent KID processes may indicate a lack of transparency within the supply chain
SAFEREC – Supply Chain Due Diligence & Independent Oversight
At P.I.E.R, we apply a structured and proactive approach to due diligence across our entire labour supply chain. This is built around strict onboarding controls, ongoing monitoring and independent verification to ensure compliance is not only implemented but evidenced.
A key part of this framework is our use of SafeRec, an independent payroll audit and compliance platform.
Through SafeRec, we:
- Audit payslips and payroll data on an ongoing basis
- Verify that PAYE, National Insurance and statutory deductions are correctly applied
- Cross-reference payroll data against HMRC RTI submissions
- Identify discrepancies or anomalies within the supply chain
- Maintain documented evidence of compliance checks
What This Means for Our Clients
- Independent verification of how workers are paid
- Reduced exposure to supply chain risk under the JSL framework
- Confidence that payroll providers are being actively monitored
What This Means for Our Workers
- Transparency over pay and deductions
- Protection from non-compliant payroll practices
- Consistent and fair treatment across the supply chain
What This Means for Our Supply Chain
- All payroll providers are subject to ongoing oversight
- Any issues are identified, escalated and resolved through defined processes
- Providers that do not meet required standards are removed from our PSL
This layered approach ensures that our supply chain is not only compliant at the point of onboarding but continuously reviewed and independently verified — providing our clients with a clear, auditable and risk-managed workforce solution. P.I.E.R has a formal agreement in place with its due diligence provider, ensuring that all compliance checks, audit processes and verification steps are contractually defined and supported.
This ensures that due diligence is not simply relied upon in principle, but forms part of a structured and enforceable compliance framework
This independent verification forms a key part of our Joint & Several Liability (JSL) compliance frameworks.
ARC – ARC Membership & Professional Standards
P.I.E.R is a proud member of the Association of Recruitment Consultancies (ARC), a recognised industry body committed to promoting high standards across the recruitment sector.
ARC membership reflects our commitment to operating with integrity, professionalism and accountability, ensuring that both clients and candidates receive a consistently high standard of service.
As part of our membership, we adhere to ARC’s Code of Practice, which sets clear expectations around ethical conduct, transparency and best practice within recruitment.
Our Commitment
In line with ARC principles, we are committed to:
- Acting in good faith and with integrity in all client and candidate relationships
- Providing clear, responsive and informed guidance on workforce solutions
- Ensuring we have a strong understanding of our clients’ business and requirements
- Delivering suitable and appropriately vetted candidates
- Maintaining transparency and honouring all agreed terms and commitments
- Avoiding conflicts of interest that could impact our clients or workers
- Keeping up to date with industry developments, legislation and best practice
- Ensuring our processes align with current legal and regulatory requirements
- Supporting high standards across the recruitment industry
Supporting Compliance & Best Practice
Our ARC membership forms part of our wider commitment to:
- Structured compliance processes
- Supply chain due diligence
- Ongoing staff training and development
- Maintaining high standards across all workforce engagement models
This ensures we not only meet industry expectations but consistently operate at a level that protects our clients, supports our workers and upholds the integrity of the recruitment industry.
LAWSPEED – Recruitment Law & Legal Compliance
P.I.E.R works in partnership with Lawspeed, a specialist UK law firm dedicated exclusively to the recruitment sector. Their expertise ensures that our business remains aligned with the latest legislation while maintaining a practical, commercially focused approach.
Through this partnership, we are provided with up-to-date and fully compliant contractual documentation covering:
- Clients
- Workers
- Payroll providers
This ensures that all engagements are structured correctly and that contractual arrangements accurately reflect current legal requirements.
Supporting Compliance Across the Supply Chain
Operating within the construction sector requires strict adherence to a wide range of employment and recruitment regulations. Our use of Lawspeed supports our commitment to:
- Maintaining legally compliant terms of business and contracts
- Keeping pace with legislative changes
- Ensuring clarity and protection for all parties involved
- Supporting best practice across all workforce engagement models
By combining specialist legal support with our internal compliance framework, we ensure that our processes remain robust, up to date and aligned with current regulatory expectations.
ORBIO Insurance – Tax Liability Insurance
P.I.E.R also works in partnership with ORBIO Insurance to cover our own Tax liability. You can see our policy with ORBIO here.
Orbio insurance offers tax liability insurance for agencies and MSPs working with umbrella companies.
This policy is designed specifically for recruiters working with SafeRec Certified and WTT vetted umbrella companies – acknowledging the due diligence we have already done, while still shielding us from risk ourselves.
The policy covers:
- HMRC Pay As You Earn (PAYE) Control Visits
- HMRC PAYE Disputes
- Insolvency
- Taxes & Interest
- Penalties
Ultimately, having this policy enables P.I.E.R to protect ourselves and the companies we work with. This policy is only available to fully vetted recruiters working with certified umbrella companies.
Our Compliance Statement
Download P.I.E.R’s Statutory Compliance and JSL Due Diligence Statement.
