How to correctly pay your contractors their allowances.

As the title suggests – there really is no such thing as a meal ticket, we all work hard on getting clients and keeping them! I’ll start with a story to frame this for you all. Recently, I had a client that called me about a pressing issue for which they needed guidance. The issue was so serious that if I didn’t help them work it out it could have lead to potential legal issues. Our product could potentially ensure that this issue could be resolved and stop future errors from occurring. Hence, the client wanted to take it for a test drive, but specifically they had to resolve their issue first!

The business had received a call from a client advising them that they were underpaying their temps, and had been so for over 12 months. Now not only is this concerning for the client, but will undoubtedly lead to a difficult conversation with the client in terms of repatriation of the unpaid wages and costs associated with the engagement of not just one of their workers, but a workforce of around the high 30’s!

This scenario was related to the Mining Industry and encompassed a flat rate calculation; of which for those of you who have an understanding of this industry or can imagine – the supply of workers over a long shifts on an ongoing roster swing can incur multiple shift allowances every day. This is a highly complex operation to run from a manual process (mostly excel spreadsheets.)

Anyone in the temporary and contract recruitment space will tell you that the correct interpretation of each award is highly critical. Any slight misinterpretation can cause mishaps like the issue mentioned above, causing hidden costs within your business. It also goes without saying that recruitment business owners need to ensure that their terms of business, contracts and other legals cover your business for any other outstanding things that may happen. It is also of utmost importance that the legals identify how allowances are paid, their frequency of payment, this is all dependant on the hours worked. was created as we felt it was time to create a platform that helps recruitment businesses to strip recruiters of their work manual quoting and payroll processes (often complex and time consuming.) intends to help with the creation of good practices and processes that we encourage for all agencies and suppliers of ancillary labour. We worked with the client and added the hours spread into the flat rate calculator. produced a pay rate that the agency owner did not agree with. He stated the client can’t be wrong and your calculator must be broken!

Mmmhhh well of course we beg to differ on that! We followed the process which is our recommendation for all agencies.’ Which looks a little bit like the one listed below:

  1. Ensure the hours breakdown is correct
  2. Refer to the award, specifically overtime pay elements and of course allowances
  3. Apply your margins

After following the process for the client we soon discovered that the issue was that the over the shift and roster swings many allowances were payable specifically meal allowances which were not catered for by the recruitment business in the quote.
The client was bemused as to how not only they got this so wrong but also many other on-hire agencies tend to get this wrong also!

“Lesson number One! Do your due diligence”

Due diligence

We asked the client to investigate how they came across the opportunity and how they determined the rates and what to charge?
The answer of course was- “The client told us what to do.”
Lesson number 1: Do your due diligence. Never take what you are told by ANYONE for granted, check your work and ensure of course the tools that you use in the business are accurate. Having a client dictate terms to you particularly when it comes to rates is dangerous and can lead to errors that may even cause your business to close. Obviously, the conversation I have had with the client is confidential and the details contained in this blog have been delivered in a way that provides anonymity. Luckily for our client,  the issue is being sorted and relationships salvaged. We are interested in the longevity and sustainability of the industry, and hence the blog to warn all of you out there in the On-Hire industry. Check out our product. I guarantee you it will save you these kinds of circumstances happening to you! offers recruiters, Apprenticeship, Training and other On-Hire businesses a tool to help them:

  1.  Automation of quotes & digital signatures = speed to market!
  2. Accuracy of quotes and payroll = happy candidates, clients and payroll!
  3. Cloud based technology = access anywhere!
  4. Due diligence = no more errors and reduction of liability