Employing agency staff

25 August 2005
Employing agency staff

Many employers are unsure of the differences in employee rights held by full-time and agency staff. Sara Khoja of law firm Bracher Rawlins sheds some light

The problem A restaurant instructs an agency to find it suitable candidates for the position of head chef. The restaurant owner holds first- and second-round interviews with selected candidates, and then decides to take on one candidate on a trial basis. After three months, the restaurant owner decides that the candidate is unsuitable and summarily dismisses him. However, the agency demands payment of a "temp-to-perm" fee.

The law This agency is regulated by the Conduct of Employment Agencies and Employment Businesses Regulations 2003.

Employment agencies find candidates who are to be permanently and directly employed by their instructing client, while employment businesses supply temporary workers to a variety of clients and apply the PAYE system to their wages, paying the workers holiday pay and statutory sick pay if applicable.

The clients in such a situation do not contract for the services of any one individual, but are free to request substitutes or replacements from the employment business as they wish.

Under the regulations, once an agency is instructed, it is obliged to set out its terms and conditions of business in writing to the client, stating whether it is acting as an employment business or an employment agency.

Under Regulation 13, an agency is obliged to inform its client of the worker's suitability for the role into which he or she is placed. Under Regulation 14, the agency is also obliged to inform the client if it obtains any subsequent information regarding the worker's suitability.

Under Regulation 10, a temp-to-perm fee can be charged if the client decides to employ a supplied temporary worker directly, so long as the worker is taken on either within 14 weeks of commencing the assignment or within eight weeks of the assignment ending. The agency is free to determine the fee.

In any case, the client must be given a choice of paying the fee or of continuing to engage the worker through the agency for a specific period.

Expert advice The restaurant owner in our example instructed the agency to find him a chef to be directly and permanently employed by him. The trial basis was therefore a probationary period and not a temporary supply.

Accordingly, he should have contracted on an employment agency's terms and conditions, which would provide for a sliding scale of placement charges depending on whether the candidate placed is retained for a specified period following the successful matching of the candidate and client.

The sliding scale will provide for a much lower fee than that chargeable as a temp-to-perm fee so long as the candidate has only worked for a period of two or three months.

Check list

  • Always obtain the correct set of written terms and conditions of business from an agency.
  • Always be clear whether you are instructing an agency to supply you a temporary worker or to field suitable candidates, one of whom you will choose to employ directly.
  • Always take up references for candidates you intend to employ directly; do not rely solely on the agency to check the candidates' suitability.

Beware! Even if a worker is a temporary worker, both the agency and the client are under an obligation to comply with all discrimination legislation, including legislation covering sex discrimination and pregnancy. If a pregnant temporary worker has been working through an employment business for 26 weeks by the 15th week before her expected week of childbirth, then she will qualify to receive statutory maternity pay from the employment business.

Where a temporary worker is supplied through an employment business, there will be two contracts: one between the employment business and its client, and the other between the employment business and the temporary worker.

The worker is free to accept or reject assignments offered by the employment business, and is not entitled to any period of notice to terminate the assignment. However, the longer a temporary worker is supplied through an agency to the same client, and is increasingly integrated into that client's workforce so that the client controls the way the worker carries out the assignment, then the more likely it is that an implied contract of employment has developed between the client and the worker.

Over a period of time, the worker becomes an employee and, depending on his length of service, will be entitled to claim unfair dismissal and redundancy payments.


Sara Khoja, Bracher Rawlins, , 020 7404 9400 www.bracherrawlins.co.uk
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