UK: Temporary Workers – A Helping Hand?

Last Updated: 13 August 2010
Article by Clare Thomas

The issue

A recent survey by the Recruitment and Employment Confederation revealed that one third of employers plan to recruit more temporary workers. Providing flexibility or specific expertise, temporary workers are proving to be a viable cost solution to many companies under pressure to tighten their belts but also continue to grow. Small businesses also benefit from temporary workers meeting the need for cover and to manage short term projects.

Temporary workers can either be recruited directly by employers or through an agency. The informal relationship between the parties can lead an employer to assume that a 'hire and fire' approach is acceptable. However, the extent of the temporary worker's legal rights and employer's obligations are dependent on their employment status. This is of crucial importance for the employer not least because they will need to comply with legislation but particularly because of the changes due with the Agency Worker Regulations ("the Regulations") which are expected to come into force by 1 October 2011.

The law

A temporary worker is generally defined as one supplied by an agency on an ad hoc basis, usually without a defined period of employment. A temporary worker can fall into one of all three of the categories of employment status of employed, worker and self employed. Only employees have the full range of statutory employment rights (including the right to statutory minimum notice, the right not to be unfairly dismissed and the right to receive statutory redundancy pay and maternity leave and pay).

Whether an employment relationship exists is a question of fact and of law.

Personal service, mutuality of obligation, control over the worker and the extent to which a worker is integrated into a business are all important factors in determining whether a temporary worker is an employee. However the distinction is not always easy to make.

Alternatively, an individual could be a "worker", i.e. working under a contract to provide services personally. Workers, whilst not entitled to the full scale of statutory employment rights, do have the right to receive the statutory minimum holiday entitlement and for their working time not to exceed the limits set out in the Working Time Regulations 1998. A temporary worker could also be truly self employed.

If an individual is engaged either under an employment contract or a contract for services (i.e. self employed or worker), and regardless of who the actual "employer" is, a temporary worker will normally be protected from discrimination and harassment either by the agency or by the business using the temporary worker on all the usual grounds.

A business using temporary workers also continues to owe the same duties to these individuals in terms of their health and safety requirements.

When the Regulations come into force, even where the agency worker is an employee of

the agency and not the end user, the hirer business will have increased obligations towards agency workers in terms of their basic employment conditions such as pay, access to collective facilities and amenities, and advertising vacancies to agency workers.

The implications and pitfalls

Hiring a temporary worker is normally used to avoid taking on a permanent (or fixed term) employee who then acquires the most valuable statutory employment rights, i.e. protection from unfair dismissal subject to one year's continuity of service (as appropriate).

However, as employees have the greatest level of protection, temporary workers often try to claim they are employees of either the employment agency which provides them or the business within which they are working. The distinction is not always easy to make and can become blurred.

Businesses must be careful how they contract for temporary staff. There must be no doubt about the workers' status and this should be kept under review throughout to ensure that the relationship has not developed into one of employment, if that is not the intention. The employment status of the temporary worker will determine the tax treatment of any payments made to them.

Businesses often use expensive temporary workers when a permanent employment may be more appropriate.

Temporary workers should, similarly to permanent employees, be treated consistently and with care and respect in the workplace, to reduce the risk of discrimination claims.

To do checklist

  • Consider your working arrangements with temporary workers, which may affect their employment status.
  • If you hire agency workers, start considering now what is required of you to comply with the Regulations, and keep up to date with any further developments.


A recent tribunal decision demonstrates the serious consequences which can arise when an employer is mistaken as to the correct employment status of its workers. An employer is reportedly facing a tax bill of more than Ł23million following a finding that it had mistakenly treated a worker as self employed

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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