PAYE65010 - Employment maintenance: employment agencies: agency schemes - general

The operational problems involving agency schemes are caused by erratic employee working patterns. The main difficulties for the operation of PAYE and the Employment Maintenance procedures are

• Workers registering with several agencies simultaneously
• Large numbers of workers changing jobs, often in quick succession

• Employers confusion about when to submit forms P45 and P46
• Poor compliance in supplying National Insurance numbers

NINOs

Helpbook E13 explains to employers the importance of supplying NINOs. However agencies often fail to enter the individual’s NINO on Employment Maintenance forms or enter a temporary number instead. This practice should be discouraged wherever possible and the employer's attention drawn to Helpbook E13 ‘Day to Day Payroll’ in the Employer Annual Pack.

Where the opportunity arises, you should explain the importance of using the correct NINO and the benefits of doing so

• Starter and leaver forms (P45(1), P45(3) and P46) will be processed quicker and lead to fewer enquiries, for example telephone calls and forms being issued to the employer from the Processing Office
• The National Insurance payments can be allocated to the employee’s NIC account quicker. This is important if the employee wants to claim Jobseekers Allowance (JSA) or other State Benefits

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Agency database cleansing

The PAYE Service contains a largenumber of live records where the individual has not had paid employment with an agency for some time and may not do so in the future. Unless the employee tells the agency that a P45 is needed, the agency considers the employee available for work and keeps the employee on ‘the books’. In these circumstances a P45 is not produced.

PAYE Regulations state that an agency ceases to employ the agency worker either

• At the end of the relationship between the agency and the agency worker

• At the end of a period of three months during which the agency makes no relevant payments to the agency worker

If either of these circumstances applies, the agency must provide a form P45 part 1.

Note: If an agency is persistently neglecting its PAYE responsibilities, a report should be made to your Manager to consider referring the matter to your Employer Compliance Team.