If you are using TutorCruncher in the UK, and are working alongside self-employed Tutors who act as contractors, then there are certain operational requirements that your business has to follow in order to remain compliant with UK regulations. We’ve built in a specific workflow with this in mind, and getting your TutorCruncher platform set up for this is straightforward and easy.
You can run TutorCruncher as an employment agency, an employment business, or a hybrid of both. Read about what it means to be an employment agency or an employment business as per HMRC guidelines here. For more detailed information on how these regulations specifically apply to tutoring companies, see the Tutors’ Association’s article on Achieving Compliance with the Law.
What is an 'Employment Agency'?
As per HMRC guidelines:
“Employment agencies find work for work-seekers who are employed and paid by employers. This is often called ‘permanent employment’ because once the worker has been taken on, they’re an employee of the company they’re working for. However, different rules apply to entertainment and modelling.”
For tutoring companies, this means that you cannot collect payment on your Tutor’s behalf; the payment has to go directly from the Client to the Tutor and the Client will be aware of the amount you get as your commission and the amount that the Tutor gets.
Note: Two Invoices would need to be sent to the Client in this model - we have built functionality into TutorCruncher specifically addressing this - see our article on Split Payments.
What is an 'employment business'?
As per HMRC guidelines:
“Employment businesses (also sometimes known as agencies) engage a work-seeker under a contract who then works under the supervision of someone else. This is normally called ‘temporary agency work’ or ‘temping’. Workers under these arrangements are paid by the business instead of the company they’re supplied to.”
For tutoring companies, this means that your company works with employed (or subcontracted self-employed) Tutors who provide services on behalf of your company to your Clients. This is the more traditional method that most companies will be familiar with, and the default workflows on TutorCruncher assume this is your model. Nonetheless, it is important to note that, in order to operate in this way and remain compliant, you are required to charge VAT on the entire fee - both your commission rate and the Tutor's pay rate.
I'm acting as an employment agency, what difference will this make to how my business uses TutorCruncher?
The key difference, as per the requirements stipulated by HMRC, is that Tutors are in control of the flow of funds. Within TutorCruncher, this means that only the Tutor can raise Invoices and Payment Orders to facilitate payment - Administrators viewing Jobs with Clients where the company is acting as an employment agency will not be able to raise Invoices for Lessons within that Job. Tutors are given the option to raise an Invoice at the point at which they go to mark a Lesson as ‘Complete’.
Another key difference is that invoicing via the employment agency workflow is done on a per-Lesson basis. The usual workflow in TutorCruncher allows for batch invoicing, wherein multiple Lessons are included in a single Invoice. With employment agencies, Invoices are raised at the point that the Lesson is marked as ‘Complete’, and the payment request email is then sent immediately after with an Invoice for that specific Lesson.
Some of the benefits of per-Lesson invoicing:
Quicker cash flow: The Client is automatically charged after receiving each Lesson, meaning you will receive your money much sooner.
Happier Tutors: Your Tutors will be able to see when a Lesson they have given has been Invoiced, and whether that has been paid and when they will receive the funds.
Less bad debt: Both Administrators and Tutors will be able to see when a Client hasn’t paid an Invoice immediately, instead of weeks or months potentially passing by before a debt is noticed.
No payroll/invoicing: Split Payments are all automatic - a huge time saver!
Less refunds/invoice queries: Your Clients won’t have to review a potentially lengthy Invoice before confirming payment - the payment request will contain only one Lesson.
How do I enable employment agency functionality on TutorCruncher?
Follow these steps::
If you haven’t already, you will need to sign up for Card Payments with Stripe (New) - to do that, follow the steps here.
If you’re set up with card payments with Stripe, you can navigate to System > Settings > Accounting Settings > General where there should be a checkbox for ‘Operate as an Employment Agency’ - enabling this will further prompt you to specify whether you are acting as an employment agency with each Client or not. This setting is a default, meaning that it can be overridden on a per-Client basis when editing their Client profile.
Enabling the employment agency workflow.
This will enable Split Payments - your Tutors will need to sign up to payouts accounts with Stripe in order for their Invoice payments to be split. You can also navigate to System > Settings > Card Integrations > Card Payments with Stripe (New) and open the ‘Settings’ tab to specify whether you’d like to use split payments for all payments, or only for Clients where you are acting as an employment agency.
How does invoicing work for employment agencies?
When operating as an employment agency, your Tutors will decide when to Invoice Lessons they have been assigned to - this is not done by Administrators acting on behalf of the company, the process is triggered and controlled by the Tutors.
An example of a Lesson status panel where the company is acting as an employment agency from the Tutor’s perspective.
When they select the Complete button to mark the Lesson as ‘Complete’, a pop-up will appear asking them to confirm that they wish to mark the Lesson as ‘Complete’ and be redirected to fill in a Lesson Report (Note: This page will include a long textbox field for the report itself, and below it will be a checkbox for ‘Raise Invoice(s)’ - enabling this will raise an Invoice that will be sent via a payment request email to the Client, and an associated Payment Order for the Tutor that will be automatically paid once the Client has paid the Invoice.
Raising an Invoice when marking a Lesson ‘Complete’.
If the Tutor opts to send the Invoice at this point, then the Invoice will be sent via the payment request email for employment agencies.
If the Client already has card details saved and you have auto charge enabled for them, then the Invoice will be automatically charged after a two day deferral period. From now on, the Client will not have an option to pay without saving their card. The Client will be required to save their card details first, only then they can proceed to complete payment. Post that, you can decide if you wish to auto charge the Client or not.
If the Tutor chooses not to raise an Invoice here, they will be able to navigate to the Lesson’s page at a later stage and raise the Invoice retrospectively - they can do this by navigating to the Lesson’s summary page and selecting Actions > Raise Invoice(s).
Retroactively raising an Invoice.
Tutors can also view and raise Invoices for any outstanding Lessons that haven’t been marked as ‘Complete’ or had Invoices raised for them in the ‘Actions Required’ panel on their Tutor Dashboard. They can also view the outstanding Payment Orders for previously Invoiced Lessons from the ‘Recent Payment Orders’ tab here too.
An example of a Tutor dashboard.
Once the Invoice has been paid, the Payment Order corresponding to that Invoice will be marked as ‘Paid’ and the funds will appear in the Tutor’s balance on Stripe after around seven days. Once it’s there, it can be manually withdrawn, or it will otherwise be automatically paid out to their bank account on their assigned automatic payout date - read more about that here.
What if my Clients would prefer not to be automatically charged?
This is now possible. We have recently changed how automatic charging works for UK-based companies operating as Employment Agencies.
Going forward, you as a company get to decide who is automatically charged using the "Auto Charge" setting, which was previously outside of your control.
All you need to do is navigate to System > Settings > Accounting Settings > General > Auto Charge. Here, you can check whether Auto Charge is currently enabled or disabled for your company account as a whole.
Note: This setting is now relevant for the first time to any and all EA work you do.
After completing the previous step, you must also review the per-client toggle for any clients for whom you wish to apply specific considerations. To do this, go to the client's profile, then click on Actions > Edit > Accounting Settings > Auto Charge Override.
The delay before taking payments will always be two days after the invoice has been sent.
You can also accept bank transfers as payment of Employment Agency charges, which allows manual payments.
Can I void/refund Invoices as an employment agency?
Yes - Administrators are able to refund Invoices while operating as an employment agency. However, it’s important to note that while operating as an employment agency you will not be able to void, cancel or delete any Invoice without also refunding it. Refunds will otherwise work much in the same way - read more about processing refunds here.
Can I edit the payment request email that gets sent by my Tutors when they raise an Invoice?
The Email Definition that is used for payment request emails is called ‘Payment Request (Operating as EA)’ and it is not possible to edit this. This payment request email will follow a generic template that will not include any of the styling you might have included in your Email Styles, they will however be sent from your company’s email address (provided your email domain has been approved).
An example of a payment request email using the ‘Payment Request (Operate as EA)’ Email Definition. In this example, the recipient has card details saved.
An example of a payment request email using the ‘Payment Request (Operate as EA)’ Email Definition. In this example, the recipient has card details saved.
How do my Clients access a detailed breakdown of their Invoice’s charges?
When operating as an employment agency, companies are required to provide a way for Clients to access a full breakdown of their charges; this breakdown must include a record of the charges from both the company and the Tutor, which means that if a Client accesses the Invoice PDF, they will see both the amount being charged for the Tutor and for the company.
There are three ways you can provide access to this PDF:
Attach the PDF to the payment request email: Simply navigate to System > Settings > Accounting Settings > General and enable the ‘Attach Invoice and Credit Request PDFs to payment request emails’ checkbox - leave this unchecked if you do not want PDFs to be accessible via email.
Via the Client dashboard: If you have the ‘Clients can login’ checkbox enabled in System > Settings > Company Details > Branch Details, then a login link will be included in the payment request email. Clients can follow this link to log into their Client accounts and view the Invoice PDF from there.
A link to view the PDF in the payment request email: If the above two options have been disabled, then TutorCruncher will include a link to the PDF in the payment request email. This is to remain compliant with UK law.
Note: The Invoice PDF does not include your company’s logo.
Can I act as both an employment agency and an employment business?
Yes - the employment agency workflow works on a per-Client basis, meaning that you can act as an employment agency with some Clients while acting as an employment business for others.
To enable/disable the employment agency workflow for a Client, simply navigate to that Client’s page and select Actions > Edit Profile before expanding the ‘Accounting & Client Manager’ tab. There you will find the ‘“Operate as Employment Agency” Override’ dropdown menu, from which you can choose whether to follow the branch setting or override that setting and act as an employment agency/business with that Client.
Enabling an employment agency override for a Client.