So what are the options when engaging on-site staff?
‘Engaging’ on-site staff can mean a variety of things and there are a number of options available to a property manager and his/her client.
First and foremost, this is not a decision you (as the property manager) need to make alone. Naturally, you will be guided by your company’s policy, the client’s requirements, the on-site role itself, and how other existing on-site staff are engaged.
However, there may be conflicting opinions as to the right way of engaging the staff so being appropriately armed with the choices and having the ability to explain these to your clients is invaluable. Let’s try to set you on the right path here.
Option 1: Total outsource
For the permanent placement of a concierge, building manager, caretaker, or cleaner, one popular option with landlords and their managing agents is the outsource everything to a company like Cledor. The company sources the member of staff, takes responsibility for their employment, pays them, trains them and manages them. In theory, all you have to do is pass the invoices for payment through the service charge. You can expect VAT on the total costs of the staff on your site.
This hassle-free option keeps you and your client somewhat at arm’s length, allowing you to focus on other property management duties.
Option 2: Partial outsource
This option outsources the early work to a company like Cledor, i.e. finding the staff and helping to ensure they are settled into their new role. You as the property manager then take up the reins in arranging employment of the staff (contract, company induction etc), training them, managing and paying them. At the start the process, you or your client have the choice whether or not to join in with the interview process. A permanent placement fee would apply.
Option 2 breaks down into two main sub-options:
(i) Your client (a landlord, such as an RMC, RTM or freeholder) becomes the employer. The landlord then asks you to manage the member of staff and their payroll. Whilst the landlord is the employer, the day-to-day responsibilities of managing them lies with you as the property manager. In this scenario, you may or may not charge a separate fee for this service. And the likelihood is that VAT on the salary would not apply as the landlord is the employer of the staff. Read our guide to VAT here.
(ii) Alternatively, you can agree with your client that the member of on-site staff is employed by your company. So the managing agent you work for employs the staff on-site and manages them too. VAT on the staff salaries is likely to be applicable in this scenario so it’s a more expensive service charge option than (i) above. See our VAT guide for more details.
Option 3: Temporary placement
This is a fast and easy option. A company like Cledor can source the member of on-site staff for you and you agree for how long they will be engaged. It could be that you need this member of staff to cover annual or sickness leave, or you are trialling a newly created role and you wish to see how this could work out. If you need a quick option to fill unexpected absence – and someone who has been trained on the systems you use (e.g. Qube, Dwellant, etc) – this might be ideal for you and the residents for maintain continuity. You would likely pay weekly or monthly invoices for as long as the arrangement continues.
With option 3, the company you chose to source the staff will retain responsibility for their training, management, pay and performance. VAT is likely to apply to the entire cost of engaging that member of staff.
This option may provide an opportunity for you to permanently engage the member of staff after the temporary placement is over.
Option 4: Tailored
This could be looked at as a combination of options 1 and 2. Here, a company like Cledor can source the member of staff, train them, place them at the building/scheme in question and manage them going forwards. You pay the staff from service charge funds. The company providing the sourcing/training/managing will charge a fee for this service and that will be subject to VAT.
This option then breaks down into two choices:
(i) Your client is the employer, so that is likely to mean no VAT is applicable on the cost of the salary. See our VAT guide for help on this.
(ii) Your company (the managing agent) becomes the employer, meaning VAT is likely to apply to the salary.
Commentary
The choices you have are likely to be driven by one or more of the following:
How sensitive the client or leaseholders are about the level of service charge. VAT adds a fifth onto the salary salaries if the client is not the employer.
The perception of responsibility and liability when it comes to employing staff. Some clients refuse to be the employer of the staff on their site, preferring to outsource that responsibility to the managing agent or to company like Cledor. Some managing agents would prefer not to have that responsibility either.
The anticipated longevity of the role. A temp role needs a temp.
Time and hassle. Outsourcing to the right firm can take a huge headache away for the landlord and the managing agent. Time allocated for interviewing, site inductions and training… And the hassle of appraisals, complaints, grievances, annual leave, disciplinaries…
Nick Regnier is managing director of Cledor. To discuss YOUR on-site engagement options, drop Nick a line at nick@cledor.co.uk or call the office.