The key points about agency workers and tax can be summarised as follows: This legislation relating to agency workers, commonly known as the 'agency legislation' is contained in: If the worker is genuinely self-employed the agency legislation does not apply. The end user and the employment agencies should state in advance whether, in their opinion, the worker is an employee. Temporary employees cannot work for a company indefinitely: A temporary worker on assignment with the same company for two or more years can become a common-law employee. He wasn’t a 'contract worker' under the relevant discrimination legislation either. An agency often charges management and administrative fees for using its agency worker. The standard triangular arrangement (worker/agency/end user) must be genuine and accurately reflect the actual relationship between the parties. However the following case confirms a more generous interpretation. They apply to temporary agency workers, their agencies and their hirers (also known as the end-user). The use of such a company does not prevent employee status arising. The aim is to protect low-paid workers from exploitation. For further guidance on this issue especially the tax implications see the Q&A on supplying services through a one-man company in our Employee status Q&As. The CA guidance summarised the main features that would point away from employment status. EU Directive on Temporary Agency Work . whether an implied contract has arisen between the worker and the end user. The Agency Workers Regulations 2010 (SI 2010/93) came into force on 1 October 2011 and implement the Agency Workers Directive. A number of factors are used to determine if a hirer was engaged in an avoidance scheme, including: This means that if the most likely reason for the structure of an assignment is to prevent the agency worker from being entitled to, or from continuing to be entitled to, the equal treatment rights, then they will still be entitled to equal treatment. If the special provisions are breached, then the tribunal can make an additional award of up to £5,000 against the hirer. The Agency Workers Regulations 2010 provide certain rights but expressly exclude those in business on their own account. The taxation of some workers supplied through agencies has been a difficult issue for some time. By contrast, a lawyer in business providing services to the same company would usually not be working under its superviion or direction, but will be in a client or customer relationship. There is no possibility of the agency and the worker having an employment relationship. Workers supplied by an employment agency are introduced by the agency to the employer. An agency worker will be an employee if they work under a contract of employment with the temporary work agency. Ultimately, agency workers do not have an entitlement to a permanent employment status but this can happen based on the reality of each case using the ‘normal’ employment status tests of mutuality of obligations, control over the worker, integration into the client’s organisation (see Employment status Q&As). Tribunals can make an additional award of £5,000 against any employer attempting to circumvent the regulations (for example, by using a sequence of assignments for agency workers in order to avoid them building up the 12 weeks necessary in an assignment to qualify for protection). Agency workers will be regarded as employees of an employment agency for the purposes of the Job Support Scheme, when it comes in, provided they are also employees for income tax purposes. The Regulations do not apply if the hirer is genuinely a client or customer of a profession or business undertaking (that is, there is a genuine business to business relationship). If the contractual terms are clear using an analysis of the elements of control, personal performance and mutuality of obligation, there is no need to imply a contract of employment. Selected cases reported on disputed employment status. Reduced staff loyalty and engagement with big-picture projects and objectives that will continue beyond an assignment. If this does not resolve the issue and agency worker could consider raising a complaint or taking the matter further. Preparing to include information about the total number of agency workers employed, the areas of the business they are employed in and the type of work they do in future collective redundancy and TUPE consultations. Variations in the amount of hours available each week. What administrative arrangements need to be put in place to cope with the regulations. Reduced staff loyalty and engagement with big-picture projects and objectives that will continue beyond an assignment. compare the treatment of agency and comparable direct employees. Some workers with limited companies will meet the definition of being in business on their own account and some will not. In London Borough of Camden v Pegg (2012, EAT) the EAT decided that an agency worker could rely on the contract worker provisions in the Disability Discrimination Act (as replaced by the Equality Act 2010) to bring a disability discrimination claim against the end user. An agency worker alleged that the contract of employment with the agency was fictitious and that there should be an implied contract between him and the company. Some case law suggests that an employee could have more than one employer namely both the agency and the end user- but this would be very rare. From 6 April 2020, agency workers who are considered to be employees will be protected from unfair dismissal or from suffering a detriment if the reasons are related to asserting their rights under the Agency Worker Regulations 2010. Employees are employed under a contract of service (or contract of employment). More information on agency workers' protection and the legislation is available in the related Q&As. Other detailed rules govern other aspects such as fees, working hours, minimum wage. have completed any required period of continuous employment in order to qualify for the right, is supplied by a temporary work agency to work temporarily for, and under the supervision and direction of, a hirer. An agency worker can claim unfair dismissal only if they are an employee and meet the other qualifying requirements. A temporary agency worker placed by an agency may put their earnings through a limited company for tax reasons. LNRS Data Services Limited trading as XpertHR is an Appointed Representative of Markel International Insurance Company Limited trading as Markel Legal Expenses Insurance which is authorised and regulated by the Financial Conduct Authority. Please press Ctrl/Command + D to add a bookmark manually. The disadvantages of using agency workers can include. Most importantly temporary agency workers have the right to the same basic employment and working conditions, such as pay and holidays, as permanent staff once they have worked for 12 weeks in the same role for the same hirer. Here the Court of Appeal decided that it was not necessary to imply a contract for a blacklisted agency worker who had had management jobs in the construction industry. The claims failed against both the agency and the prison service because the cleaner was neither an employee of the prison service for unfair dismissal law, nor in the 'employment' of the prison service under the discrimination legislation. The things that count as basic terms and conditions are: basic pay. This case found that there was a contract of employment with the agency. a break of six weeks between assignments in the same job, or. Charge a fee to a work-seeker to find them work. The approach of looking to see if it is necessary to imply a contract has now been applied in many cases. Many temporary agency workers have their own limited company and supply their services through that company either through an agency or directly to the end user. Just because an agency worker is ’integrated’ into an employer's operations does not mean that the agency worker has automatically become an employee. This is within the law even if they are doing this deliberately. Visit our Brexit hub for a range of regular updates relevant and resources. If an agency worker is issued with a permanent contract of employment with an umbrella company or their own service company, this can avoid the Regulations. Autoclenz v Belcher and others (July 2011 SC). If they do not have employee status with either the agency or the hirer, they cannot claim unfair dismissal. 1079797, Organisational development and design roles, Getting, developing and keeping the right people, HR-inform: practical HR and employment law resources, Building the best HR teams around the world, Championing better work and working lives, Bray and others v Monarch Personnel Refuelling (UK) Ltd (2012, ET), The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018, The Agency Workers (Amendment) Regulations 2018, employees engaged directly for a short period, self-employed workers engaged for a short period. The expression ‘end-user’ denotes the organisation that engages the workers services by entering into a contract with an employment business. If an agency worker is genuinely self-employed they will work under a contract for service. This information is then given to the agency, which will then set the level of the worker's pay. If an employer really wishes to keep a temporary worker, it should consider employing them. whether or not the role really was new, as well as the duration of breaks between assignments. The Court of Appeal also followed the James decision in this case and confirmed the principle that an employment relationship should be implied only if it is necessary to do so.