When is an under 5 company actually a 5 and over?

There’s controversy around when a company you are employing are in fact an under 5 directly employed as per PAYE or 5 and over as per PAYE. The difference lies in the number that they are utilising as labour only individuals under their management system and paying them as individuals. Most subcontractors that you will employee will confirm that they are an under 5 company but will use labour-only subcontractors to carry out the work that you have employed Subcontractor A to carry out. Your internal policy may exclude under 5 companies from the stage 1 requirement but do you know how to identify a company that is actually an under 5?

SSIP (Safety Schemes in Procurement) has recently changed its rules and bylaws and for those subcontractors who claim to be an under 5 on PAYE and have labour-only subcontractors that equal over 5, are technically 5 and over. Below, Is a snippet taken from the official SSiP Rules and Bylaws document. This can be found at by clicking here.

How SMAS identifies the differences?

We simply ask at the application stage how many Directly employed on PAYE, how many labour-only subcontractors and how many labour-only subcontracting companies that they currently employ.

– A company that applies with 3 directly employed and 1 labour-only subcontractor will be classed as an under 5 and depending on your requirement may not require approval.

– A company that applies with 4 directly employed and 1 labour-only subcontractor will be classed as 5 and over and will be required to supply full documentation.

Want to know how these changes may impact your supply chain? We’re on hand for advice so please get in touch on 01752 697370