PSL’s… What’s going on?

As a result of a formal petition against PSL’s recently being launched by an IT contractor, advocates for each side of the debate have been making their case. But the situation isn’t straightforward, and PSL’s are a useful tool in providing security for contractors and agencies.

But what is a PSL and how do you create one? Read on to find out more.

What is a PSL?

A Preferred Supplier List (PSL) is a list of pre-assessed, internally vetted suppliers that are prioritised when procuring goods and services. Companies will do their due diligence on all suppliers on the PSL, meaning that they can appoint them knowing that they are undertaking minimal risk and remaining compliant.

Why should agencies have an umbrella PSL?

Many recruitment agencies will develop a PSL list of umbrella companies, who have been vetted and pre-approved. 

Setting up a PSL can seem like a long and daunting process. Shortlisting and doing due diligence on suppliers might take some time but working with a PSL can save time in the long run.

And it’s not just a time saving exercise. Selecting suppliers from a PSL can mitigate risk by ensuring that everyone you work with is compliant and provides the service level you expect. 

PSL’s represent the highest standards of suppliers, giving both the agency and the contractor peace of mind that they are only working with the best.

Why are people questioning the use of PSL’s?

Some agency umbrella PSL’s represent a suggestion of approved umbrella suppliers for contractors, but for others, utilising suppliers on the list is non-negotiable. While the benefits of a PSL are clear, being too prescriptive can limit opportunities for both the agency and the contractor and can lead to agencies losing contractors who refuse to work with certain umbrellas. And in this candidate led market, that could be disastrous. 

In addition, when creating a PSL is it important to select suppliers that will offer the best deal to your contractors, to reduce staff turnover and retain the best performing workers.

The contractor, who launched the petition against PSL’s, has stated that agencies who insist that contractors only work via their PSL are in breach of Conduct Regulations. But while there is general support for limiting an agency’s power to insist that contractors work only through umbrellas on their PSL, the idea that agencies might be in breach of conduct regulations has been widely discredited.

Chief executive of compliance group Professional Passport, Crawford Temple, recognises the need for umbrella PSL’s, admitting that “agencies hold a lot of responsibilities, so it is reasonable for them to operate with a select panel of umbrella firms that pass their rigorous and robust compliance tests. [And] I don’t believe that breaches any regulations.”

How to determine which suppliers should be on your PSL

Narrowing down a list of suppliers can be difficult, but there are certain characteristics you should look for in any umbrellas which you shortlist.

Firstly, ensure that the umbrella is fully compliant. Most compliant umbrellas will belong to organisations such as Professional Passport or FCSA. These companies will also offer the best service, ensuring timely payments to contractors.

It is important that your preferred suppliers offer competitive margins or processing fees, but realistic, expectations of take-home pay. Non-compliant umbrella companies have a habit of offering inflated figures of take-home pay, but this could mean their model is part of a tax avoidance scheme. Rigorous checks of all companies on your PSL protect your contractors.

JMK are proud to have been selected as preferred suppliers for numerous agencies, and we know that it is because we offer complete compliance and the highest levels of service. If you’d like to find out more about how we can offer your contractors the very best deal, do get in touch!


Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions. 

We have evolved to provide a range of expert services; such as Back Office Support (BOS) or Funding, becoming a leading provider to the contracting industry.

We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.

With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.

Have a look at the wide range of services our Back Office Support (BOS) or Funding can provide to you and your business, it is far more than just payroll and finance.

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