Staffing Agencies
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A staffing agency that supplies temporary workers is, in UK law, usually an employment business rather than an employment agency. GOV.UK defines an employment business as a business that supplies workers who are in its employment to act for, and be under the control of, other people, in any capacity. The worker is the agency's worker. You direct the work; the agency pays them.
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That single structural fact drives everything else: who runs payroll, who holds the contract, who gives notice, and which rights apply from which day. It also explains the Agency Workers Regulations 2010, which give temporary agency workers equal treatment with directly recruited staff after a qualifying period, and the Key Information Document that an employment business must give a temporary work-seeker before terms are agreed.
For hirers, the useful questions are narrow and answerable. Is this supplier acting as an employment business for this booking? Who employs and pays the worker? Is an umbrella company in the chain, and if so what is being deducted? When does the twelve-week clock start, and who is tracking it? Get those four in writing and most temporary staffing disputes never happen.
Temporary supply, temp-to-perm and contract staffing
- Straight temporary supply: short bookings to cover absence, seasonal peaks or a specific project.
- Temp-to-perm, where a hirer takes on a temporary worker permanently and a transfer fee or extended hire period applies.
- Contract staffing for longer professional assignments, often through a limited company or an umbrella company.
- Master vendor or neutral vendor arrangements, where one supplier coordinates a panel of others.
- On-site managed supply for high-volume sites such as warehousing, food production and logistics.
- Specialist supply into regulated settings, which carries its own vetting expectations on top of the general rules.
Employment business status under the Conduct Regulations
GOV.UK guidance on the Conduct of Employment Agencies and Employment Businesses Regulations 2003 explains that an employment business must agree written terms with a work-seeker before providing services, covering the type of employment, a description of the work, the rate of pay, notice periods and holiday entitlement.
The same guidance notes that employment agencies and businesses cannot charge workers for job-finding services, except in the entertainment and modelling sectors, and that transfer fees to hirers are permitted under Regulation 10 on specified conditions, provided the hirer is offered the alternative of an extended period of hire instead of paying a fee.
GOV.UK states the Fair Work Agency is the state regulator for employment businesses and agencies in England, Scotland and Wales, operating since 7 April 2026, and publishes its enforcement policy statement and complaints route.
Agency Workers Regulations and the 12-week qualifying period
GOV.UK explains that from the day an agency worker starts, they have a worker's employment rights and access to shared facilities and services provided by the employer, giving canteens and food and drinks machines as examples. Those are day one entitlements and do not depend on any qualifying period.
After 12 weeks in the job, GOV.UK states that an agency worker qualifies for the same rights as someone employed directly, and that this is known as equal treatment. The entitlements it identifies include equal pay matching that of permanent colleagues in the same role, automatic pension enrolment and paid annual leave.
In practice, the clock is the thing people get wrong. Agree in writing who tracks weeks accrued, what happens when an assignment is broken and resumed, and how a change in the role is treated. The hirer usually has to supply the comparator information the agency needs to price equal treatment correctly.
Key information documents and umbrella company deductions
GOV.UK guidance states that since 6 April 2020, Regulation 13A requires employment businesses to give a temporary work-seeker a Key Information Document before terms are agreed, setting out how they will be engaged and information about pay. GOV.UK also publishes separate key information document guidance for agency workers paid through umbrella companies.
Where an umbrella company is in the chain, GOV.UK describes it as a business often used by recruitment agencies to pay temporary workers, with the umbrella company employing the worker and paying wages through PAYE. The agency finds the work; the umbrella is the employer.
GOV.UK tells workers to check that the National Insurance and pension contributions taken off gross pay are always employee contributions and not employer contributions, and that the deduction amounts on the payslip match the amounts shown in their personal tax account. Hirers should ask their supplier to confirm the whole chain in writing, because a supply chain you cannot describe is one you cannot check.
Charge rates, margin and transfer fees
- Ask for the charge rate broken down: pay rate, employer National Insurance, pension, holiday accrual and agency margin.
- Agree how the charge rate changes at week twelve when equal treatment applies, before the booking starts.
- Check overtime, bank holiday and night rate multipliers, and whether the margin is applied to them too.
- Understand the transfer fee position: GOV.UK guidance notes an extended period of hire must be offered as an alternative to paying a fee.
- Clarify who pays for cancelled shifts and how much notice cancels a booking without charge.
- Confirm annually that statutory rate changes on 1 April are passed through transparently rather than absorbed into margin.
Booking, timesheets and ending an assignment
Set the booking out in writing each time: role, site, hours, rate, start date and expected duration. Verbal bookings are where week counting and rate disputes begin.
Timesheet approval is the hirer's control point. Decide who signs, how quickly, and what happens when a shift is disputed. Late approval delays a temporary worker's pay, which is the fastest way to lose reliable people.
Ending an assignment is a contractual matter between the agency and its worker, not a dismissal by you, but how it is handled still matters. Give the notice your terms require, tell the agency the reason honestly, and do not discuss performance directly with the worker as though they were your employee.
Where temporary supply goes wrong
- Nobody counts weeks, so equal treatment arrives as a surprise invoice rather than a planned rate change.
- The hirer starts managing the temp exactly like an employee, blurring a status line that matters if anything goes wrong.
- An umbrella company in the chain deducts employer costs from the worker's gross pay and the hirer never sees it.
- Temp-to-perm happens informally, then a transfer fee claim arrives and nobody can find the terms.
- Long assignments drift on for years, which is usually a sign the role should have been a permanent hire.
- Rates are negotiated down without touching margin, so the worker's pay falls and turnover rises.
- Right to work responsibilities are assumed to sit with the agency without anyone checking the contract.
Staffing Agencies: frequently asked questions
Who employs a temporary worker supplied by a staffing agency?
Usually the agency, not the hirer. GOV.UK defines an employment business as one that supplies workers who are in its employment to act for, and be under the control of, other people. Where an umbrella company is used, GOV.UK says the umbrella company employs the worker and pays wages through PAYE, while the agency finds the work.
What happens after 12 weeks in the same role?
GOV.UK states that after 12 weeks in the job an agency worker qualifies for the same rights as someone employed directly, known as equal treatment, and identifies equal pay for the same role, automatic pension enrolment and paid annual leave among those rights. Before that, from day one, agency workers have worker rights and access to shared facilities such as a canteen.
What is a Key Information Document?
GOV.UK guidance explains that since 6 April 2020, Regulation 13A requires an employment business to give a temporary work-seeker a Key Information Document before terms are agreed, covering how they will be engaged and information about pay. Separate GOV.UK guidance covers key information documents where the worker is paid through an umbrella company.
Can we take on a temporary worker permanently?
Yes, but check the terms first. GOV.UK guidance on the Conduct Regulations notes transfer fees to hirers are permitted under Regulation 10 on specified conditions, provided the hirer is offered the alternative of an extended period of hire. Deal with it openly before making an offer rather than after the worker has accepted.
Should a temporary worker be paying employer National Insurance?
No. GOV.UK tells workers paid through umbrella companies that the National Insurance and pension contributions taken off gross pay should always be employee contributions, not employer contributions, and that payslip deductions should match what appears in their personal tax account. If they do not, that is worth raising with the agency and, if unresolved, with the Fair Work Agency.
How long can someone stay on a temporary assignment?
There is no statutory maximum, but a long assignment changes the picture. Equal treatment applies after 12 weeks, and a role filled temporarily for years is usually a permanent role being funded from the wrong budget line. Review any assignment that passes a year against what it would cost to employ directly.
Sources
Written by the LokalMatch editorial team. Last reviewed 22 September 2026. How we write and check our guides
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What affects the fees staffing agencies charge
Fees depend on the work involved and how the professional bills. We only publish fee ranges when they’re backed by real LokalMatch data or reliable sources. Until then, here’s what usually changes the fee:
- Scope and complexity of the work
- How the firm bills: hourly, per project or on a monthly retainer
- Experience of the team
- Timeline and how urgent the work is
- Ongoing support after the work is delivered
How to compare staffing agencies before you hire
- Ask for examples of similar work for clients like you.
- Read reviews and ask for references you can contact.
- Make sure the scope, deliverables and timeline are written down before work starts.
- Ask who will do the work: an in-house team, freelancers or subcontractors.
- Compare two or three proposals before you decide.
Questions to ask staffing agencies before you hire
- Have you done work like this before, and can I see examples?
- Who will work on this, and who is my main contact?
- How do you charge: hourly, per project or monthly?
- What is included, and what costs extra?
- How long is the contract, and how can either side end it?
- How will you report on progress?
- Who owns the work, files and accounts you set up for me?
Licences and registration
This kind of work is often limited to licensed or registered professionals, and the rules depend on where you are. Ask which body they’re registered with, and check their status on that body’s public register before you hire.
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