Terms and conditions for a payroll bureau

Payroll is run to a calendar the client does not always keep, with penalties for lateness that fall on the employer whoever caused them. The terms have to fix cut-off dates and what happens when the client misses them, make clear that the bureau submits as the client's agent and that the employer's duties stay with the employer, put the data processing on a proper footing, and cap a liability that a single wrong submission could otherwise inflate. I draft those terms for a fixed fee of £995, delivered in five working days.

Who this is for

Payroll bureaux, outsourced payroll providers and bookkeepers running payroll for business clients in England and Wales, monthly or weekly, for a handful of employees or several hundred. These are business-client terms.

What matters in payroll bureau terms

Cut-off dates and the client's information

The terms should set the dates by which the client must provide starters, leavers, hours, changes and approvals for each pay period, say that information received after the cut-off is processed in the next period or as a chargeable rerun, and that the client is responsible for the accuracy of what it sends and for approving the payroll before submission. A starter notified on payday is the client's responsibility, not the bureau's.

Submissions as agent and the employer's duties

The bureau makes Real Time Information submissions under the Income Tax (Pay As You Earn) Regulations 2003 and calculations as the client's agent on the client's information, and the terms should say so, along with the statement that the client remains the employer with the legal duties of an employer, including the automatic enrolment duties under the Pensions Act 2008, statutory payments and record keeping, which the bureau assists with but does not assume. The terms should say what the bureau does and does not do about pensions and about payments to employees and to authorities.

Penalties, errors and corrections

Penalties and interest that arise from the client's late or wrong information, or from the client's failure to pay what is due, are the client's, and the terms should say so. Where an error is the bureau's, the terms should say that the bureau corrects it promptly and that its liability is limited as the terms provide. The client should be required to check payslips and reports and to report errors within a stated period.

Data protection and confidentiality

Payroll data is personal data of the most sensitive commercial kind. The terms should record that the bureau processes it as a processor under the UK GDPR and the Data Protection Act 2018 on the client's instructions with the mandatory processor provisions, how it is transmitted, stored and retained, who at the client may give instructions, and that pay information is confidential. Where the bureau handles funds for payment of wages, the terms should describe that arrangement separately.

Fees, liability, termination and handover

Fees are per period or per employee, invoiced monthly with interest and fixed compensation on late payment under the Late Payment of Commercial Debts (Interest) Act 1998. Liability should be capped at a figure matching your insurance, with consequential loss and penalties caused by the client's information excluded, tested for reasonableness under the Unfair Contract Terms Act 1977. On termination, the bureau completes the current period, provides the records the client needs to move payroll, and is paid for the handover; the terms should say what is retained and for how long.

What it costs

Customer or supplier terms and conditions, £995. One set of terms, customer-facing or supplier-facing, drafted for your business. Five working days.

Review of your existing terms, £495. You already have terms and want them checked and brought up to date. Returned marked up with my amendments and an explanation of the changes. Three working days.

Email me at geoffrey@caesar.co.uk with what you need and any documents, and I will confirm the scope and the fee in writing, usually the same working day.

What you get

• A full set of bespoke terms drafted for your business, reflecting the legal requirements that apply to your business and sector
• A note in plain English explaining the terms I have drafted for you
• Liability, payment, termination and IP provisions that protect your position and are drafted to withstand scrutiny from the other side
• Guidance on how to incorporate the terms properly
• Your questions and comments answered by email or phone
• One round of amendments to finalise the terms ready for use

What is not included

• Negotiating your terms with individual customers (I am happy to quote for this as an additional service if required)
• Sector-specific regulatory compliance beyond the contract terms themselves
• Website privacy notice and cookie compliance, which I quote separately
• Terms governed by the law of another country
• Tax advice

Questions I am often asked

The client sent a new starter's details after the cut-off and the starter was paid late. Whose fault is that?

The client's, if the terms set the cut-off and say that late information is processed in the next period or as a chargeable rerun. Offer the rerun at the stated fee.

A submission was wrong because the client gave us the wrong figures. Are we liable for the penalty?

If the terms make the client responsible for the accuracy of its information and place penalties caused by it on the client, no. Where the bureau's own processing was wrong, the bureau corrects it and its liability is capped as the terms provide.

Do we take on the client's pension duties?

The terms should say that the employer's duties remain the employer's and describe exactly what the bureau does to assist, such as calculating contributions and submitting data to the provider. Silence should not be allowed to imply more.

Related guidance and services

• Terms and conditions drafting, £995, the service this page describes
• Contract review, £495
• Terms and conditions for a bookkeeping business

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.