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  • Crawford Temple

The Four Key Steps to Due Diligence Part 3 - Ongoing Management and Due Diligence

Updated: Mar 23, 2022

In this, the third of our four-part series on due diligence for recruitment agencies, we examine how recruiters can maintain the highest possible levels of compliance and minimise ongoing risk.

Once you have confirmed your approved supplier list, you should ensure that you carry out ongoing management and due diligence checks.

There are several areas which to focus on. These include:

Key Information Documents

Ask your umbrella partners to provide you with generic template versions of KIDs so you can pass them to your contractors when they first register with you.

Umbrella companies should also provide you with tailored versions for your contractors, when engaging with you on specific assignments. It is also important to ask umbrella companies how they intend to keep you updated on material changes to contracts, such as pension auto-enrolment. Overall, effective communication between you and a compliant, trustworthy partner is essential.

Conduct Regulations

Conduct Regulations provide protection for contractors. If a contractor wishes to opt-out of these regulations, establish what actions the umbrella company will take. It’s important to know how they will provide you with a timescale-sensitive written notice confirming both their and the workers acceptance to opt out. You must ensure you pass this information on to the relevant party before the assignment starts.

Working Time Regulations

Contractors are able to opt out of Working Time Regulations arrangement if they wish. As such, find out how umbrella companies handle WTR in respect of those who have constraints on the amount of hours they can work, and look to understand how you are notified of individuals who voluntarily opt out.

Agency Worker Regulations

You should continue to assess how you are communicating the rights of contractors under AWR, to ensure that they’re aware that they are entitled to comparable pay and leave after their initial 12-week period.

Additional Best Practice

In addition, you may also agree expected standards with umbrella companies, in respect of operational processes and procedures, such as:

  • Operating under a Master Terms Agreement – this will result in a simpler notification process of assignment information.

  • Developing Service Level Agreements – by bringing the umbrella companies’ customer service levels in line with your own standards, you will be ensuring the very highest levels of service are provided. You may choose to include standards around holiday pay, margins and costs.

  • Agreeing Operating Principles and Standards – consider your stance on areas such as umbrella providers visiting your office to promote their services, and what incentives they offer to your consultants (financial or otherwise).


Another topic to consider is how you use the information you have and what information the umbrella company needs to provide in order for you to ensure your due diligence obligations are met. Agreement should be reached on such information at the outset, so that you can both be sure of meeting legal GDPR requirements. This will include:

  • Copies of payslips and pay reports

  • Real Time Information (RTI) checks

  • Copies of PAYE and VAT account status

It is a legal requirement that contractors receive their payslips on the day of payment or before. We frequently see occasions where contractors state that they do not receive payslips at all, which is a concern to be investigated further.

We also see situations where non-compliant providers wish to control the information they send to recruitment agencies, either directly or through contractors, and, therefore, only produce payslips on demand. This may not accurately represent the transfers that took place. You can validate the information by comparing the contractor’s bank account to their payslip to ensure that the correct amount of money was sent to their account.

Due diligence is an ongoing process that needs to be nurtured in order to maintain the highest possible standards of compliance. If you are looking to work with an Umbrella company, visit the Approved Providers list from Professional Passport, the UK’s largest independent assessor of payment intermediary compliance. If you are an agency or organisation using or looking to engage with an umbrella company and need advice, please contact

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