Too many UK employers are in danger of missing out on the benefits of hiring highly skilled, short-term contracting professionals and other freelancers from the gig economy because their payroll systems are not sufficiently agile to pay these workers on time, a new study by global consultancy ROC Consulting has revealed.

More than half (56 per cent) of the UK private sector decision makers polled and over a third (39 per cent) of their public sector counterparts believe that their payroll systems can meet the challenges of paying short-term contractors and freelancers. However, 74 per cent agreed that changing staffing models driven by the rise of contracting and the gig economy more generally will require new methods of paying this flexible talent pool.

According to ONS figures, self-employment, a category that includes contractors, soared by 22 per cent between 2008 and 2015. It makes up 15 per cent of the UK workforce. The ROC survey, however, suggests that conventional payroll systems are struggling to secure top short-term talent.

Sunny Patel, Cloud Practice Head at ROC, commented: “Contractors and freelancers and millennials who are all forcing new working practices allow organisations to access rapid, short-term expertise and support, but it’s only one way the world of work is changing. What’s clear is that traditional IT approaches lack the speed, flexibility and intelligence to support these new approaches – if they don’t change, employers will find themselves missing out on top talent.”

The study found that 56 per cent of IT and finance decision makers concur that they must find improved methods of paying more rapidly for contracting talent. However, existing cut-offs and systems that prevent them from paying new workers until a fresh payroll cycle has begun are a problem. The majority (78 per cent) continue to pay monthly, and 60 per cent would decline the possibility of paying daily. This could result in new short-term workers waiting for up to six weeks before receiving any payment.

The agility offered by cloud technology is the choice favoured by 61 per cent of respondents, while 41 per cent believe that it would help reduce payroll reconciliation cycles, a significant factor in slowing payments.

ROC CEO Jerry Chilvers agreed that cloud technology could help payroll evolve to become fast and flexible enough to properly support new working methods such as contracting, thereby increasing the number of contracting professionals whom companies are able to access.

A possibility not mentioned in the study, however, is the Umbrella Company model of engagement. Compliant, well-regulated Umbrella Companies, which consider independent contractors as their own employees, take full responsibility for payroll, paying income tax and NICs for contractors on a reliable PAYE basis.


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