Payroll agreement: what should it contain?

You want to work with a payroll company. But what exactly are you signing? And what should you check before your signature lands at the bottom of that contract?

A payroll agreement sets out the cooperation between you (the client) and the payroll company. It is not an employment contract. The payroll company signs that one with the employee. This is the business arrangement covering how you work together, what it costs and who is responsible for what.

We explain what such an agreement contains and what you, as an employer, should watch out for.

The three parties

With payroll, there are always three players at the table. Want to know more about how payroll actually works? Read our article on payroll as an intermediary.

The payroll company The legal employer. They sign the employment contract with the employee, pay the salary, handle the NSSO (National Social Security Office) declarations and carry the employer risks.

The client (you) The company where the employee works. You provide day-to-day supervision, decide on the tasks and are operationally responsible.

The employee Legally employed by the payroll company, but works exclusively for you on the shop floor.

Important: the payroll agreement only governs the relationship between you and the payroll company. The employee is not a party to it. They have a separate employment contract with the payroll company.

What's in a payroll agreement?

A solid agreement contains at least these elements:

1. Party details

Full details of both parties: name, address, company number, contact persons.

2. Subject of the agreement

What exactly does the payroll company do? Usually something like:

• Signing employment contracts with the employees you designate
• Payroll administration and salary payments
• NSSO and tax declarations
• Dimona (immediate employment declaration) notifications
• Social documents (payslips, C4 forms, you name it)

3. Obligations of the payroll company

What must the payroll company do?

• Correct and timely payment of wages
• Compliance with Belgian labour law
• Applying the correct Joint Committee
• Arranging insurance (occupational accidents, liability)
• Confidential handling of data
• Making sure everything is right

4. Obligations of the client

And what must you do?

• Submitting time registration on time
• Reporting absences, changes and incidents
• Providing safe working conditions
• Complying with work regulations
• Paying the invoices (naturally)

5. Rates and invoicing

How is the price set? Usually a factor (for example 1.75) times the gross salary. What does that include?

• The employee's gross salary
• Employer NSSO contributions
• Holiday pay and end-of-year bonus (pro rata)
• Administration costs
• Any margin

And of course: the invoicing term and payment conditions.

6. Duration and termination

How long does the agreement run? Is there a notice period if you want to stop? And, very importantly: what happens to employees' ongoing contracts? You can read more about notice periods with payroll in our article on calculating a notice period.

7. Liability

Who is liable for what? The payroll company generally carries the employer risks. But mistakes caused by incorrect information from you?

That is your responsibility.

8. Confidentiality and GDPR

Arrangements on the handling of personal data. The payroll company processes sensitive data (salaries, private details, and more). That calls for clear agreements.

What to watch out for

Not all payroll agreements are the same. Keep an eye on these points:

A clear pricing structure

Ask explicitly what the factor includes. Are there extra costs for specific documents, certificates or advice? You don't want surprises on the invoice.

Correct application of the Joint Committee

The payroll company must apply your JC correctly. Check whether they have experience in your sector. A payroll company that has never worked in hospitality may not know how JC 302 fits together. You can find more about Joint Committees in our article on the Joint Committee in Belgium.

Flexibility

Can you easily add or remove employees? What are the timeframes? If your business is seasonal, you'll want flexibility there.

Exit procedure

What if you want to stop? Can you take the employee over? Under what conditions? This can turn into an expensive story if you don't sort it out in advance.

Quality guarantees

What if mistakes are made? Who covers the damage? Is there an error procedure? And how quickly do they respond when something goes wrong?

Insurance

Does the payroll company have the right insurance? Occupational accidents, professional liability. Ask to see the policies.

How it differs from temp agency work

A payroll agreement resembles a temp agency contract, but there are differences:

Recruitment With payroll: you find the employee. With temp work: the temp agency does that. You can read more about this difference in our article on payroll vs temp agency.

Exclusivity With payroll: the employee works only for you. With temp work: they can work for several clients.

Reason required With payroll: no. With temp work: yes (replacement, peak, and so on).

Maximum duration With payroll: none. With temp work: depends on the reason.

In short: with payroll, you are responsible for finding the employee. The payroll company only takes over the administration.

The employment contract: a separate document

The employee signs an employment contract with the payroll company, not with you. That contract stands apart from your payroll agreement and contains:

• Role and tasks
• Salary according to the applicable JC
• Working arrangement and work schedule
• Place of employment (your address)
• Duration (fixed-term or open-ended)

The payroll company draws up this contract based on the information you provide. Check that everything is correct before the employee starts. Because if there are mistakes in it, you may find them tricky to fix later.

Before you sign: a checklist

Before your signature lands at the bottom of that contract, run through this:

Administrative:

• Are all party details correct?
• Is the pricing structure clear and complete?
• Do I understand the invoicing terms?
• Is the notice period acceptable?

Substantive:

• Does the payroll company know my Joint Committee?
• Which services are included, and which are not?
• What is the procedure in case of mistakes?
• How does communication work?

Legal:

• Are the liabilities clearly divided?
• Is there a GDPR clause?
• Which insurance policies does the payroll company have?
• Can I take over employees if the agreement ends?

In doubt? Ask for clarification. Or have the agreement reviewed by a legal adviser. It may cost a little, but it can save you a lot of hassle later.

Example clauses

By way of illustration, here is how clauses might look (simplified).

Rate: "The client pays the payroll company a fee equal to the employee's gross hourly wage multiplied by a factor of 1.78. This rate includes gross salary, employer contributions, pro rata holiday pay and administration costs."

Time submission: "The client provides an overview of the hours worked no later than the 5th working day after the end of the pay period. Late submission may result in delayed payment of wages."

Termination: "Either party may terminate the agreement with a notice period of one month, running from the first day of the following month. Ongoing employment contracts remain the responsibility of the payroll company until they end."

In summary

A payroll agreement is the business arrangement between you and the payroll company. It sets out who does what, what it costs and what happens when things go wrong.

Read the agreement thoroughly before you sign. Pay particular attention to the pricing structure, liabilities and exit procedure.

A good agreement prevents disputes later on.

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With Recruit:

• Contracts in under 60 seconds: create trial and temp contracts without the hassle
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• No fixed monthly costs: pay only for what you use

Try Recruit or get in touch with our HR experts for tailored advice.

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Frequently asked questions

Is a payroll agreement the same as an employment contract?

No. The payroll agreement governs the cooperation between you and the payroll company. The employment contract is between the payroll company and the employee.

Can I terminate the agreement at any time?

That depends on the arrangements. Usually a notice period of one to three months applies. Check this upfront, because some companies use longer terms.

What if the payroll company makes mistakes?

Mistakes due to negligence by the payroll company are generally their responsibility. Mistakes caused by incorrect information from you? That is your risk. The agreement should specify this.

Do I have to sign a standard agreement?

No. You can negotiate the terms, especially for larger volumes. Ask for adjustments if something doesn't fit. Most payroll companies are fairly flexible on this.

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The information in this article is purely informative and does not replace professional legal or accounting advice. Labour law changes regularly. Always consult current legislation or contact an HR expert for advice tailored to your situation.