Many practices want to offer payroll without running a payroll department of their own. White-label payroll is one way to do that: a specialist bureau processes the payroll behind the scenes, while your client carries on dealing with you. This article covers how it works day to day, who is responsible for what, and what to agree before the first pay run.
What “white-label” means in payroll
In a white-label arrangement the client relationship stays with your practice. Your client engages you for payroll, you set the fee, and the bureau works for you rather than for your client. The bureau invoices the practice, not the end client.
Outputs such as payslips and payroll reports can be produced in your practice’s branding or in a neutral format, depending on what you agree. Some clients never need to know a bureau is involved; others deal with the processing team directly on routine queries. Agree which at the outset.
How the workflow typically runs
1. Taking on the client
The client signs your engagement letter covering payroll, and you carry out your usual client take-on. You then pass the bureau the information needed to set up the payroll: the employer’s PAYE and Accounts Office references, employee details, pay frequencies and pension scheme information. GOV.UK is clear that the employer is responsible for collecting and keeping records of its employees’ details, so the client needs to know what it must supply and when.
2. Each pay period
Before each payday, hours, overtime, starters, leavers and other changes are sent either to the practice, which forwards them, or straight to the bureau. Sending data direct is usually quicker; routing it through the practice keeps you closer to the client. The bureau processes the payroll and returns draft reports for approval, either to you or to the client.
3. Outputs
Once approved, the bureau issues payslips, a payroll summary, the amounts due to employees and HMRC, and pension contribution information, in whichever branding has been agreed.
4. RTI submissions
Under Real Time Information, a Full Payment Submission (FPS) must reach HMRC on or before payday each time employees are paid. The bureau makes these submissions, along with any Employer Payment Summary (EPS) needed, as an agent.
Who is the agent with HMRC?
This is the question to settle first. An employer can authorise an agent to deal with HMRC on its behalf for PAYE, and HMRC’s guidance notes that once authorised, the agent will have access to the employees’ personal and financial information. In a white-label set-up, agree up front which firm will hold the agent authorisation for each client’s PAYE scheme, and make sure it is in place before the first submission is due.
Whoever holds the authorisation, the legal position does not move. GOV.UK states that, as an employer, the client is legally responsible for completing all PAYE tasks, even if it pays someone else to do them. HMRC’s guidance on authorising agents makes the same point: the taxpayer remains legally responsible for their own tax.
Data protection: controller, processor and sub-processor
Under UK GDPR, the roles depend on the facts. The ICO’s key question is who determines the purposes and means of the processing, and labels in a contract do not override that. In a typical white-label payroll arrangement:
- The employer (your client) is the controller of its employees’ payroll data.
- Your practice usually acts as a processor for the payroll service, processing data on the client’s instructions.
- The bureau acts as a sub-processor, engaged by your practice.
Your practice may be a controller for other work it does for the same client, so the ICO recommends assessing and documenting each organisation’s status for each processing activity. Three points from Article 28 of UK GDPR matter here:
- A processor must not engage another processor without the controller’s prior specific or general written authorisation. Your engagement letter or data processing terms with the client should therefore authorise the use of a payroll sub-processor.
- Your contract with the bureau must impose the same data protection obligations that you have accepted from your client, and the original processor remains fully liable to the controller for the sub-processor’s performance.
- These contracts must be in writing, which includes electronic form.
The contract must also require the processor, at the controller’s choice, to delete or return the personal data at the end of the contract.
Anti-money laundering stays with the practice
In a white-label arrangement the bureau has no contract with your client, so customer due diligence on the end client is part of your own client take-on. If your practice is a relevant person under the Money Laundering Regulations 2017, regulation 27 already requires you to apply customer due diligence measures when you establish a business relationship. Adding payroll to the services you provide to a client does not pass that duty to the bureau.
What your practice gains
- Capacity. Payroll processing, RTI submissions and routine employee queries move off your team’s desks.
- No payroll software or payroll staff to maintain. There are no payroll licences to renew and no specialist hires to recruit, train or cover for.
- The client relationship. The client stays your client, and payroll becomes another reason they deal with you.
- Your margin. You set the price to your client.
What to agree in writing before you start
- Who the client sends payroll data to, and the cut-off before each payday.
- Who approves the payroll before it is finalised.
- Which firm holds the PAYE agent authorisation.
- Whether outputs carry your branding or are neutral.
- Who handles each automatic enrolment duty.
- The sub-processor terms, and what happens to the data if the arrangement ends.
- How client and employee queries are routed and escalated.
Talk to us about white-label payroll
Payroll Service (UK) Ltd is a Cardiff payroll bureau, established in 2011, that provides white-label payroll for accountancy practices. If you’d like to discuss how it could work for your clients, get in touch through our contact page or call 0800 092 6505.