Contractor payroll lessons learned from the Rubicor collapse

Not all collapses in the recruitment space are as newsworthy as Rubicor’s.

The Australian recruitment industry has lots of other stories of payroll providers and agencies who just get themselves into cashflow-related or other financial problems.

However, what really caught the eye for the Rubicor’s case was the large number of Australian contractors who were directly affected. As one example, it was reported that $11m of superannuation payments were not paid into their contractors’ superannuation funds. That is enormous.

Outsourcing the running of a contractor payroll, whether as a stand-alone service or as part of a larger MSP solution, is typically a high-volume and low-margin business.

So, what are some of the lessons that can be learned from this, and some questions you should consider when evaluating who to appoint to manage your contractor payroll or MSP:

• You’d think it was obvious, but have they done this before? Does your prospective payroll provider have lots of experience in running a reliable and accurate outsourced payroll service for high volumes of contract workers?
• Can they quickly scale up if you need them to take on extra workers, and if you need them to suddenly scale down, will they be resilient?
• Do they have reputable reference clients who can vouch for this?
• Does the provider pay weekly? If something starts to go wrong, you’ll know quicker if there is a weekly pay run.
• Are they an established and stable company, recognised for being financially responsible? 

Another thing to look out for is whether the staff who will implement the new payroll or MSP service are long-term permanent employees of the provider. If they are going to be just hired in as contractors to manage the payroll or MSP implementation project, alarm bells should ring.

If you are responsible for making the decision on who to appoint as your organisation’s payroll provider, you have a serious obligation to your contractors and their families, as well as to your business’s own brand as an employer-of-choice for contract workers.

A good reputation is hard-won and easily lost so it is imperative to perform your utmost due diligence before appointing any supplier.

Cover image: Shutterstock

This article is contributed by Hays Talent Solutions.

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