PAYROLL-FAQ
Below are the 20 most frequently asked payroll questions. Click on the question and you will automatically navigate to the answer. You can also quietly scroll or swipe down and you'll pass all the questions and answers.
Can I transfer employees employed by me to a payroll company?
With good payroll companies, this is possible. Even staff with an indefinite contract with the employer can be placed with a payroll company. There may be conditions attached and the possibilities differ per situation.
Therefore, ask the payroll company about the possibilities for the specific business situation. There are no consequences for the employee. The employee continues to work under at least the same conditions, only his legal employer changes.
Do I necessarily have to recruit my payroll employees myself?
The definition of the payroll agreement says, among other things, that it is payrolling when "the payroll company has not brought supply and demand together". In practice, it is the other way around that is really not possible: when the client itself recruits an employee, it is not allowed to work on the basis of an employment contract, it must work on the basis of a payroll agreement. Because the big advantage of payrolling is that the client may recruit the employee himself, this often happens. In some cases, however, the payroll company can play a role in recruiting the payroll employee. Ask about these options with the payroll provider.
Is a payroll contract detrimental to my employee?
No. The fringe benefits are often even better than with a contract directly employed by the client. The Balanced Labor Market Act (WAB) ensures that payroll employees have the same legal status as employees on the client's own payroll. This means that the payroll worker is entitled to the same contract forms and the same terms of employment (including bonuses, extra vacation days, you name it). Because the payroll company often offers additional fringe benefits, think of extensive training opportunities, a payroll employee has at least as good a deal as if he or she were given a contract in the client's employ.
Can I terminate a payroll partnership just like that?
As with the cooperation with an employee employed by the client itself, the cooperation with a payroll employee cannot be terminated "just like that" overnight. A payroll employee is subject to at least the same notice period as an employee on the payroll of the hirer. The exact notice period depends on the applicable collective bargaining agreement and the agreements between the client and the payroll company. How the risks for ending the cooperation earlier are shared depends on the mutual agreements.
Is payroll still suitable for employing employees flexibly?
Companies that want to use employees with optimal flexibility are better off using the temporary employment contract. This allows employees to be flexibly deployed for 4 years. Temporary employment contracts can also include the temporary employment clause, which means that the employment contract can be terminated at any time. The payroll agreement offers the same flexibility as a contract what the client can give themselves: three contracts in 3 years. Of course, outsourcing risks and administration does provide flexibility in other areas.
As the client, am I in full charge on the shop floor?
Absolutely. Only legal employment is outsourced through payrolling, which takes care of all administrative matters properly for the employees. The management and supervision on the work floor lie entirely with the client. Together with the payroll employee, the work agreements are made (think of work scope, salary and the activities), after which the hirer is in charge of the payroll employee. This also includes any performance and assessment interviews.
Can a payroll employee be placed with another client by the payroll company?
No, this is not allowed without permission. A payroll worker is made available exclusively to a client. The payroll company, as legal employer, cannot simply place the payroll employee elsewhere. It does sometimes happen that a payroll employee works for two companies. For example, if he works 20 hours for a client, that client often has no objection to the payroll employee also wanting to work part time elsewhere. Only with that client's permission is this possible.
How is the payroll employee's pension plan regulated?
Since Jan. 1, 2021, payroll workers are entitled to an "adequate" pension from their first day of work, if their collective bargaining agreement requires it. This is possible in two ways:
- Payroll employees join the client's pension plan. However, this is difficult in many cases because not all pension plans are open to payroll employees.
- The payroll company has its own pension plan. This is the most commonly used solution. The payroll company's pension plan must meet strict conditions that ensure that the payroll employee is guaranteed a good plan.
If a pension plan is not required by the collective bargaining agreement, but if the client would like to facilitate it, good payroll companies also make this possible. Discuss pension options with the payroll provider.
Has payrolling become more expensive because of the WAB?
Yes, but that applies to the cost of all flexible contracts. To make it more attractive for employers to hire permanent staff, employers must pay a lower WW premium for employees with a permanent contract since January 1, 2020. In contrast, the WW premium for employees with a flexible contract was increased. The 'flexible contract' category includes everything that is not a contract for an indefinite period of time and that does not include a fixed scope of work, including employees with annual contracts, temporary workers and payroll employees.
Is a payroll employee entitled to transition pay?
Yes. Since the introduction of the WAB, every employee is entitled to a transition allowance (severance pay) from the first day of employment. This therefore also applies to employees who are deployed (briefly) on a temporary or payroll basis or to employees whose cooperation is already terminated during the probationary period.
A transition compensation is due the moment the employment is terminated or not continued at the initiative of the employer. The transition fee counts over the entire contract duration.
Good payroll providers have a tool that allows you to see an indication of the amount of the transition compensation at any time. Whether and how the transition compensation is settled (in the monthly invoice amount or after termination) depends on the agreements you make with the payroll company about this.
Is payrolling being used less since the WAB went into effect?
Yes, but it is difficult to measure whether this is because of the WAB or because of the corona crisis. Initial signs in 2020 indicated that for many clients it was unclear when they could use payroll and/or agency contracts.
In doing so, the early 2020s also showed that clients who used payrolling primarily for flexibility were switching to payroll on an agency basis. On the other hand, companies that want to control the hiring of staff did start payrolling.
Due to the corona crisis, however, many jobs have been lost since March 2020. Also payroll and temp jobs. The economic situation also meant that companies needed fewer new (flex) staff in 2020. This makes the effect of the WAB on payroll and agency contracts difficult to measure.
Is payrolling suitable for retaining employees at my company?
The very best way to retain employees is to hire them yourself. But an employer is not always able or willing to do this. Employing staff on a payroll basis is then the best alternative. A payroll employee works exclusively for the hirer, which provides security. Moreover, the payroll employee works according to exactly the same terms of employment as if the entrepreneur were to employ the employee himself. He may even get something extra, as good payroll companies often offer additional fringe benefits.
My company is not subject to a collective bargaining agreement. On what basis is the payroll worker then paid?
Under the WAB, every payroll worker has the same legal status as employees who are employed by the client in a similar position. Among other things, this entitles them to at least the same terms of employment, including vacations and bonuses.
Here, the collective bargaining agreement applicable to the client is initially adhered to. If a payroll employee starts working for a company that does not have a collective bargaining agreement, the client's remuneration scheme is applied.
Does the payroll company provide training and development for my payroll employee?
Good payroll companies address this responsibility as a legal employer and provide (online) education and training opportunities. Good payroll companies also have a training budget, which payroll employees can use (often in consultation with their client) for training of their choice.
How does payroll work for freelancers?
What is colloquially called payrolling for freelancers is actually a method in which a payroll/remuneration agency acts as a fictitious employer for the freelancer based on a contract of assignment. This works as follows:
- The freelancer finds his own clients.
- The freelancer tells the payroll company how many hours he has worked and for what rate.
- Upon the client's approval, the payroll company transfers the money to the freelancer.
- The payroll company sends the invoice to the client on behalf of the freelancer.
- Through this method, the freelancer is automatically insured for WW, ZW and WIA, may work for one client and does not have to worry about administration.
As a client, am I at risk of fines and surcharges from the IRS and/or UWV?
This responsibility lies primarily with the payroll company; as client, you do not run the risk of additional taxes and fines. As client, make sure you are dealing with a reliable and financially sound payroll company; only in case of bankruptcy of the payroll company is there a possibility of additional taxes and fines being charged to the client. Reliable payroll companies have, among other things, a NEN 4400-1 certificate (hallmark of Stichting Normering Arbeid, abbreviated to SNA) and a declaration of good payment behavior.
How do I get started with payrolling?
This is very quick and easy with good payroll companies. The client recruits staff and makes the working arrangements (salary, work scope and activities) and discusses with the employee that he will start working on the basis of a payroll contract. He provides the employee's data (digitally) to the payroll company.
The payroll company prepares the contract and takes care of all necessary administrative matters, so that the cooperation can start immediately. When employees are transferred from another payroll company or from the payroll of the client, the current contracts must first be converted correctly. Then these employees can also start working immediately.
What happens when my payroll employee is sick?
The employee reports sick to the client and the payroll company. The payroll company processes the sick report and continues to pay the employee as long as he/she is sick. In case of long-term illness, the payroll company is also responsible for the reintegration of the payroll employee. The exact implementation of the sickness policy and the amount of continued pay also depends on the client's collective bargaining agreement or remuneration scheme. As soon as the employee is better, he reports this to the payroll company and the client.
What is the difference between payroll and staffing?
Payrolling is ideal when the client keeps control of the recruitment and selection, staffing when optimal flexibility is needed. You can read more about the legal difference between payrolling and staffing on this page in this whitepaper.
How much does payrolling cost?
A logical question, but this cannot be answered unequivocally. Each payroll company uses a different rate. Most payroll companies work with a conversion factor. If you multiply this factor by the gross salary of the payroll employee, you have the payroll cost price.
When comparing prices, keep a close eye on what you get for the conversion factor you pay. With good payroll providers, the items below are included in the factor:
- Remittance of social security contributions (including WW, WAO, ZW and WIA).
- Remittance sector-specific regulations.
- Vacation pay.
- Vacations.
- Other leaves of absence (including short-term absences).
- Pension contribution.
- Continued sick pay.
- Take care of payroll.
- Provide paychecks and annual statements.
- Paying salaries.
- Prefinancing wages.
- Contract Management.
- Additional insurance such as for sick leave and disability.
- Occupational health service/ absenteeism costs (including reintegration and reinstatement).
- Support in complex matter of labor legislation.
- A service desk that answers employee questions.
- Educational and training opportunities for the employee.
- Commission for payroll company.
- Are there other specific costs in the collective bargaining agreement? Then a good payroll company will take those as well.
Tip: Ask about different payment options. With good payroll companies, the client can choose between a fixed monthly fee or an invoice upon completion based on the actual hours worked.
