Agency temps: Line manager briefing on agency temps (briefing)

This article first appeared on XpertHR

Overview

This line manager briefing looks at the law and best practice on managing agency temps. It aims to help managers understand their legal obligations when engaging agency temps and the possible employment law risks in such temporary arrangements. It also provides advice on liaising with employment agencies.

It should be noted that, under the proper terminology, an “employment agency” introduces workers to hiring employers for direct employment by the latter (ie acts as a “headhunter”), while an “employment business” engages or employs workers itself and supplies them on a temporary basis to hiring employers. An organisation can act both as an employment business and as an employment agency in relation to different contractual arrangements. Even though this line manager briefing refers to the commonly used term “employment agency” throughout, strictly speaking it is “employment businesses” that supply agency temps and to which this guidance applies.

The briefing includes information on:

Using agency temps
- common situations in which temps might be used
- selecting an employment agency
Liaising with employment agencies
Employment status of agency temps
Rights of agency temps in relation to basic employment and working conditions
Taking on agency temps as permanent members of staff
Test yourself

1. Using agency temps

Temporary agency workers offer great flexibility as an additional labour resource. They can fill in staffing gaps, often at very short notice, and can be engaged for anything from a few hours to weeks or months at a time.

Common situations in which temps might be used

There are numerous situations in which line managers might decide to use an agency temp. These include to:

cover a permanent member of staff’s period of annual leave;
cover long-term sickness absence;
cover maternity, adoption, paternity or parental leave;
cover an employee’s career break;
assist with staff shortages due to resignations or dismissals;
work on a particular project or particular task; and
assist during peak periods of demand.

Selecting an employment agency

When selecting an employment agency, it is likely to be beneficial for the line manager to make certain checks about the suitability of the agency:

The agency’s reputation with other clients: The manager should ask for references if appropriate, and use word-of-mouth recommendations where possible.

The type and levels of jobs with which the agency deals: Many employment agencies work in specialised areas of industry. Depending on the vacancy, a specialist agency may be preferable, as such agencies are likely to have a wider choice of appropriate temporary workers available.

The quality of the consultant who will work on the assignment: How long has the individual been working in the industry, has he or she been recommended, and what steps is he or she taking to understand the requirements of the particular vacancy and the needs of the business? If the consultant is going to be able to put forward suitable temporary workers, he or she needs to understand the nature of the business, where the job fits in, the duties of the role, the terms and conditions, and the person specification. If an employment agency puts forward unsuitable or inappropriately qualified temps, this will be a waste of time for all concerned.

2. Liaising with employment agencies

The law governs the conduct of the private recruitment industry and establishes a framework of minimum standards that hiring employers and agency temps can expect.

Agreement to terms that apply

Before an employment agency first supplies temps to a hiring employer it must agree with the hiring employer the terms that will apply.

These include:

a statement that the agency will operate as an “employment business”;
any fee payable by the hiring employer, how it will be calculated, and the terms relating to refunds or rebates, or, if no refunds or rebates are payable, a statement to that effect; and
the procedure to be followed by the hiring employer if the temp proves unsatisfactory.

These terms must be recorded in a single document and the agency must give a copy to the hiring employer.

If the parties subsequently agree a change to the terms of business, the agency must give the hiring employer a document containing details of the variation as soon as reasonably practicable. This must state the date on, or after which, it has been agreed that the varied terms will take effect.

Information to be provided by the hiring employer

An agency must not supply a temp to a hiring employer unless it has first obtained sufficient information from the hirer to enable it to select a suitable candidate for the assignment. The required information includes:

the name of the hiring employer and the nature of its business;
the date on which the temp is required to start work and the likely duration of the work;
the position, including the type of work, the location, the hours and any known health and safety risks (and the steps that the hirer has taken to control those risks);
the experience, training, qualifications and authorisation that the hirer considers necessary, or that are required by law or a professional body, for the position; and
any expenses payable by, or to, the temp.

Information to be provided by the agency

An employment agency cannot supply a temp to a hiring employer unless it has:

taken all reasonable steps to obtain confirmation as to the identity of the temp and that he or she has the experience, training and qualifications that the hirer considers necessary, or that are required by law or a professional body;
taken all reasonable steps to obtain confirmation that the temp is willing to work in the position that the hirer seeks to fill; and
made all reasonable enquiries to ensure that it would not be detrimental to the interests of the temp or the hirer for the temp to work for the hirer in the relevant job (this would cover matters such as a reasonable suspicion that the hirer was in severe financial difficulties or engaged in illegal activities).

This information in respect of the temp must be supplied to the hiring employer.

There are additional requirements where the work requires professional qualifications, or where the temp is to work with children under the age of 18, the elderly or other vulnerable adults.

Importantly, the agency must let the hiring employer know whether the temp is to be employed by it under a contract of employment or engaged under a contract for services (see 3. Employment status of agency temps).

Terms and conditions of business

Employment agencies will have their own standard terms and conditions of business. Line managers should read these carefully before agreeing to engage a temp. Particular provisions to consider include:

the fee payable for engagement of the temp, which is usually an hourly rate, plus VAT;
the employment status of the temp;
notice provisions from either party for termination of the temporary arrangement;
the transfer fee on temporary to permanent employment;
the extended hire period on temporary to permanent employment; and
repayment of the transfer fee if permanent employment is terminated.

An agency’s terms and conditions sometimes provide for a sliding scale for the repayment of transfer fees should the employee leave or be dismissed in the first 10 to 12 weeks of permanent employment. This means that if, for example, a temp is taken on as a permanent employee but proves unsuitable and the employment is terminated after a three-month probationary period, the employer will receive no refund of the transfer fee paid.

Managers should seek to negotiate a change to the terms and conditions of business where they are not acceptable. This should be done at the outset of the discussions with the agency, when the manager will be in a strong bargaining position, as the agency will be keen to receive the employer’s business.

It is sensible for employers to adopt a policy under which only named managers (or HR personnel) have authority to instruct employment agencies in relation to the supply of temporary personnel. By doing so, they can ensure that the terms and conditions of business are properly vetted and approved.

3. Employment status of agency temps

Employment agencies introduce individuals to a hirer for a temporary role. The agency may engage the temp under a contract of employment, whereby the individual is an employee of the agency and enjoys the protection of statutory rights available to employees, or under a contract for services, whereby the individual is a worker who undertakes to perform work personally and who does not have the protection of statutory rights available to employees.

To provide clarity for both the temp and the hiring employer, an employment agency must let the hiring employer know in advance whether it has engaged the temp as an employee under a contract of employment or under a contract for services.

If the employment agency accepts responsibility for the temp’s employment, there should be no real problem for the hiring employer in terms of determining the temp’s employment status. This is because, while it is possible for an agency temp to have parallel contracts of employment with both the agency and the hirer, this will be very rare. If there is an express contract of employment between the temp and the agency, the agency is likely to be held to be the employer, with that being the end of the matter.

The importance of determining employment status

An individual’s employment status is important in determining the availability to him or her of a number of key employment protection rights.

Only individuals working under a contract of employment (employees) have the right to claim unfair dismissal. In addition, only employees have the right to receive other benefits such as a statutory redundancy payment, maternity leave and parental leave. Workers working under a contract for services and independent contractors working on a self-employed basis do not have these rights (although for the purposes of statutory maternity pay, an individual is an employee of the organisation if it is responsible for paying her national insurance contributions).

It can therefore be beneficial for an agency temp to seek to claim that he or she is the employee of either the agency or the hiring employer. This often happens when the relationship breaks down or the assignment is terminated, and the temp wants to claim unfair dismissal.

Managers should be aware that some employment rights apply to agency temps who fall within the wider category of “worker”. These include rights to paid annual leave, rest breaks, rest periods and a limit on average weekly working time, the national minimum wage and, if they work part time, protection against less favourable treatment on account of working on a part-time basis. It will generally be the responsibility of the hiring employer to ensure that an agency worker does not exceed the weekly working time limits and receives appropriate rest periods and rest breaks. However, the agency will normally be responsible for payment of the national minimum wage and ensuring that the temp receives paid annual leave.

All workers, including agency temps, also have the right not to be subjected to any detriment for having “blown the whistle” about alleged wrongdoing or criminal activity by the organisation.

In addition, both hiring employers and employment agencies are prohibited from discriminating against temps because of sex, gender reassignment, pregnancy and maternity, marriage or civil partnership status, race, religion or belief, sexual orientation, age or disability.

From 1 October 2011, agency temps have the right to the same treatment as a comparable directly recruited employee in relation to collective facilities and receiving information about job vacancies and, if they have completed a 12-week qualifying period, to the same basic working and employment conditions as if they had been recruited directly by the hiring employer (see 4. Rights of agency temps in relation to basic employment and working conditions).

The practical definition

An employment tribunal will take into account a range of factors in deciding whether or not an agency temp is an employee and, if employed, by whom he or she is employed. In many cases, this will be a simple case of looking at the contractual documentation and ensuring that it reflects the reality of the relationships between the three parties.

Otherwise, the starting point is whether or not the “employer” is obliged to provide work for the “employee”, and whether or not the “employee” is then obliged personally to perform that work. The “employee” must also expressly or impliedly agree to be subject to the control of the “employer” to a sufficient degree to make it master. These two elements – mutuality of obligation and the exercise of day-to-day control – must be present if the relationship between the parties is one of employment.

Tribunals now appear to be more willing than in the past to find that an implied contract of employment exists. This can be between the temp and the agency, or, particularly if the temp has worked for the hiring employer for a substantial period of time, between the temp and the hiring employer. The length of time that the temp has worked for the hiring employer is not, however, of itself, determinative.

Avoiding an employment relationship

Line managers must forward plan if they wish to try to avoid an employment relationship arising between a temp and the organisation.

Before the temp starts work, the employment agency should have already confirmed in its terms of business the employment arrangements that apply between it and the temp (see Information to be provided by the agency). If the temp is employed by the employment agency under a contract of employment, there should be no real problem, as this should simply be a matter of interpreting the documentation.

If the temp is engaged by the employment agency under a self-employed contract, the line manager should ensure that the documentation contains an “entire agreement” clause (ie a clause stating that the contract represents the entire agreement between the parties) and a specific written statement to confirm that there is no employment relationship between the temp and the hiring employer.

If line managers ensure that they engage temps for less than one year this may assist the hiring employer in its argument that the relationship is not one of employment.

Other factors that will help to avoid an employment relationship being implied between the hiring employer and the temp include provision that:

all aspects relating to poor work performance or misconduct on the temp’s part will be passed to the agency for appropriate action;
all disciplinary and grievance issues will be dealt with by the agency, not by the hiring employer;
the agency will be responsible for paying the temp and for agreeing any pay increases;
the hiring employer may request an alternative temp from the agency at any time and it cannot insist on the supply of a particular worker; and
the temp has to make any annual leave arrangements and report sickness absence through the agency.

4. Rights of agency temps in relation to basic employment and working conditions

From 1 October 2011, agency temps have the same entitlement as a comparable directly recruited employee to use the hirer’s collective facilities and to receive information about the hirer’s job vacancies and, if they have been in an assignment for 12 weeks, the right to the same basic terms and conditions as if they had been recruited directly by the hiring employer. These rights are in addition to the rights temps possess as a result of worker status (see The importance of determining employment status).

Scope

The rights described in this section apply only when a temp has been introduced by an agency for a temporary role under the supervision of the hirer. The temp benefits from these rights even where several organisations are involved in the supply of the temp, for example where he or she works through an intermediary body such as an umbrella company and finds work through an agency.

Rights from day one of an assignment

From the first day of an assignment with a hiring employer, an agency temp has the same entitlement as a comparable directly recruited employee:

to use the hirer’s collective facilities; and
to be informed about relevant vacancies with the hirer.

A comparable employee is an individual employed directly by the hirer who performs the same, or a broadly similar, role as the temp, and who is based at the same establishment as the temp (or, for the purpose of the collective facilities right, if there is no comparable employee based at the same establishment, works at a different establishment).

Collective facilities are those that are accessible by the whole workforce or a group of employees, for example childcare facilities, car parking, the staff canteen, and transport services such as a coach from the train station to the work premises. Collective facilities do not include facilities not provided by the hirer, for example where a local gym provides a discount for the hirer’s employees. The temp does not have enhanced rights in respect of collective facilities. For example, if a waiting list for the hirer’s nursery applies to the hirer’s employees, this also applies to the temp.

Line managers should ensure that practical arrangements are in place for temps to have access to collective facilities and to receive information about job vacancies. For example, they should show temps where the staff canteen is. Line managers can use their usual communication tools to inform temps about relevant vacancies, for example by placing advertisements on a noticeboard. If the hirer posts its vacancies on the intranet, the manager should arrange access to the intranet for the temp unless the manager notifies the temp of vacancies in some other way.

To facilitate compliance with their duties, hirers should give information to temps on their day-one rights at the beginning of an assignment. For example, a hirer might give agency temps information about collective facilities and how they will be notified about vacancies during induction. Alternatively, line managers could give this information to the employment agency to give to the temp when the temp begins an assignment with the hirer.

Rights after 12 weeks in an assignment

After a 12-week qualifying period, agency temps have the same entitlement to basic working and employment conditions as if they had been recruited directly by the hirer into the same role. While employment agencies are primarily responsible for providing temps with their working and employment conditions, it is important for line managers to know about their temps’ rights.

The 12-week qualification period

Where a temp begins an assignment with a hirer, the 12-week qualification period starts to accrue. The following rules apply:

If a temp works for only part of a week, it counts as a full week.
In general, if there is a break of more than six weeks during or between assignments with the same hirer, the qualifying period starts again (but see the following points).
The 12-week qualification period is paused and continues to accrue when a temp returns to his or her role if there is a break between assignments or during an assignment and the break is:
- for any reason and lasts no more than six weeks;
- because the temp is incapable of work due to sickness or injury for up to 28 weeks;
- related to pregnancy, maternity or childbirth and occurs in the period between the start of the pregnancy and the end of the 26th week after the birth or, if earlier, when the agency worker returns to work;
- to take maternity, paternity or adoption leave;
- due to annual leave (or other statutory or contractual time off);
- to perform jury service for 28 weeks or less;
- due to an annual shutdown at the hirer’s organisation;
- due to industrial action at the hirer’s organisation; or
- due to a combination of the above reasons, excluding the first reason (a break for any reason that lasts no more than six weeks).
Where the assignment would have continued but for the temp taking a break related to pregnancy, maternity or childbirth in the protected period set out above, or taking maternity, paternity or adoption leave, his or her qualification period continues to accrue for the original intended length or likely length of the assignment, whichever is longer.

To qualify for equal treatment to basic working and employment conditions, an agency temp must have performed the “same role” with the “same hirer” during the 12-week period:

If the temp is moved to a new role with the same hirer, this will be treated as the “same role” unless the duties are substantively different and the employment agency has given written notice to the temp of the kind of work that he or she will be required to perform in the new role. This means that the line manager should notify the agency if the temp’s role has changed. A combination of factors should be taken into account to determine whether or not the new role is substantively different, including the skills used, the pay rate, the location, the identity of the line manager, the working hours, whether or not training is required, and the equipment.
Where the temp moves to a different site with an organisation this is likely to be treated as the “same hirer”. However, where the organisation is part of a larger group and each company has its own legal identity, this means that the hirer has changed.

Top tip

To find out whether or not an agency temp is entitled to equal basic working and employment conditions, the line manager should check with HR if the temp has recently performed another role in the organisation.

If a temp worked for the hirer on an assignment before 1 October 2011, this period would not count towards the 12-week qualification period.

Basic working and employment conditions

Where an agency temp has completed a 12-week qualifying period with a hirer, he or she is entitled to receive the same basic terms and conditions as if the hirer had recruited the temp directly into the role. Basic terms and conditions are those that are ordinarily included in the employment contracts of direct recruits.

If a temp receives the same terms and conditions as a comparable employee, and these terms and conditions are ordinarily included in the terms and conditions of comparable employees, this would satisfy the requirements of the law. A comparable employee is an individual employed directly by the hirer who performs the same, or a broadly similar, role as the temp, and who is based at the same establishment as the temp, or, if there is no comparable employee based at the same establishment as the temp, works at a different establishment.

Basic terms and conditions include:

pay;
working hours;
night work;
rest periods
rest breaks; and
annual leave.

Pay means salary and other entitlements linked directly to work performed by the temp, including overtime pay, holiday pay, shift allowances, risk payments, and commission pay and bonuses linked to the quality or quantity of work done by the temp. If the hirer awards an annual pay rise, the temp should receive a pay rise if he or she would have been entitled to it had he or she been directly recruited by the hirer for the same role.

The temp’s right in respect of bonuses is to have the same opportunity to achieve a bonus as if he or she had been recruited directly to the same role, rather than to receive the same amount as a directly recruited worker. If there is an eligibility period of service for all employees before receiving a bonus, this should be applied to the temp.

If the temp is eligible for a bonus or pay rise, the line manager may need to conduct an appraisal of his of her performance and share this with the employment agency. The line manager could include the temp in the organisation’s performance appraisal system, although this would have to be modified to take account of career progression, for example. Alternatively, the line manager could conduct a simpler appraisal based on the temp’s objectives.

Pay does not include occupational sick pay, occupational pensions, occupational maternity, paternity or adoption pay, expenses, health insurance, redundancy pay, notice pay, and bonuses that are not linked to the temp’s contribution, for example a bonus to encourage long service.

To facilitate compliance with their duties, hirers should liaise with employment agencies about the terms and conditions a temp would have received had he or she been recruited directly. For example, if an agency requests information on the terms and conditions of comparable employees, the line manager should respond promptly. Alternatively, the line manager could take the initiative and give agencies such information on the start of a temp’s assignment or after the 12-week qualification period. Line managers should liaise with HR about the organisation’s preferred process for giving agencies such information, as HR may prefer to collect the relevant information and send it to the agency, or the organisation may have an agreement with the agency about how and when such information should be provided.

Line managers should also inform agencies, directly or via HR depending on their organisation’s procedure, when their comparable employees receive a pay rise, bonus, or other amendment to their terms and conditions, so that the agency can assess the impact of this change.

Dos and don’ts

Do enable temps to use the organisation’s collective facilities in the same way as a comparable employee.

Do give temps the same information as a comparable employee about the organisation’s job vacancies.

Do check with HR if there is a preferred method of informing temps about collective facilities and job vacancies on the start of an assignment.

Do check with HR if there is a preferred method of informing employment agencies about basic working and employment conditions.

Do check with HR if there is a preferred process for updating employment agencies about changes to basic working and employment conditions, as HR may have agreed with the agency that it will ask for updates every now and again.

Don’t ignore requests for information from employment agencies about basic working and employment conditions.

Pregnancy rights

If an agency temp is pregnant, the line manager should allow her to take time off work to attend antenatal appointments. The line manager can ask the temp to provide written evidence of the pregnancy from a registered medical practitioner, midwife or nurse and written evidence of the appointment, unless it is her first appointment. The temp could bring a claim against the hirer if the manager unreasonably refused time off for antenatal appointments.

The hirer should conduct the same risk assessment in respect of temps who are pregnant and new mothers as it conducts for directly recruited employees. If a temp has informed the hirer in writing that she is pregnant or breastfeeding or has given birth in the last six months, the manager should make any necessary adjustments to her hours and working conditions to protect her (and her newborn baby) from risks that were identified in the risk assessment. If the line manager makes an adjustment to the temp’s role, it should inform the employment agency.

Where it is not reasonable for the hirer to make an adjustment, or an adjustment would not remove the risk, the manager should let the agency know, in which case the agency will have to stop supplying the temp for that position and offer her appropriate alternative work, or pay her at the same rate for the duration of the role.

Information requests

Agency temps have the right to make a request for information relating to their day-one rights and equal treatment rights enjoyed after 12 weeks. It is important for line managers to respond to temps’ requests fully and within the time limits set down by law, because if a temp brings a claim in connection with his or her rights, the tribunal can draw an adverse inference against the hirer if it failed to respond to a request or provided an inadequate response to the temp’s request.

Day-one rights

An agency temp who believes that a hirer has not provided him or her with the same treatment as a comparable employee in relation to collective facilities, or given him or her the same information about its job vacancies as a comparable employee, can make a written request to the hirer for a statement containing information relating to the treatment that he or she received. The line manager should respond to the temp within 28 days setting out:

the rights that its comparable employees enjoy in this respect; and
the reasons for the treatment of the agency temp in respect of these rights.

Rights on completing the 12-week qualification period

An agency temp who believes that his or her right to equal treatment in respect of basic working and employment conditions has been infringed can make a written request to the employment agency for a written statement about the treatment that he or she received, after completing the 12-week qualification period. Within 28 days of receiving such a request, the agency must provide a written response to the temp.

If the temp has not received a statement from the agency within 30 days, he or she can write to the hirer, requesting information relating to the relevant basic working and employment conditions of the hirer’s employees. The line manager should respond to the temp within 28 days of this request, as long as the temp waited 30 days after sending a written request to the agency and did not receive a response. The manager’s response could include a description of the relevant terms and conditions of a comparable employee.

Dos and don’ts

Do check with HR if there is a prescribed form and a dedicated person in HR for dealing with written requests from temps for information about their treatment in relation to collective facilities, information about job vacancies and basic working and employment conditions.

Do refer a temp to his or her employment agency if the temp has made a written request for information about basic working and employment conditions without first approaching the agency.

Don’t ignore requests for information from temps about collective facilities, job vacancies or basic working and employment conditions.

Don’t put temps at a disadvantage for asserting the right to equal treatment.

Liability

If an agency temp thinks that his or her day-one rights or equal treatment rights enjoyed after 12 weeks have been breached, the temp can bring a claim in an employment tribunal. If the temp’s claim succeeds, the tribunal can award compensation.

If the tribunal finds that the temp’s day-one rights have been breached, the hirer will be liable. With regard to breach of the equal treatment rights enjoyed after 12 weeks, either the employment agency or the hirer may be liable depending on their degree of responsibility for the breach. For example, if the hirer failed to comply with the agency’s request for information about basic working and employment conditions, the hirer could be solely liable if the agency failed to provide the temp with equal working and employment conditions.

Temps are protected from suffering a detriment for enforcing their day-one rights and the right to equal treatment on completion of a 12-week qualification period, so line managers should not disadvantage a temp for asserting his or her rights.

Avoidance techniques

The introduction of the right to parity of basic working and employment conditions, particularly in respect of pay, means that it might become more expensive for line managers to use agency temps. This is because agencies may need to pay their temps a higher wage after 12 weeks, and they are likely to pass these costs on to the hirer.

It is permissible for line managers to stop using agency temps before they have completed the 12-week qualification period. However, a line manager should take care if he or she is using the same temp on a regular basis. If the line manager structures assignments to avoid accrual of the 12-week period, or colludes with an employment agency for this purpose, the tribunal will be able to make an additional award of up to £5,000 against the hirer.

Tribunals will consider a number of factors to determine if a hirer was engaged in an avoidance scheme, including the length of assignments, the number of assignments with the hirer and connected hirers, the number of times the temp has worked in a new role with the hirer and connected hirers and whether or not the new role was the “same role”, and the duration of breaks between assignments.

For example, where a hirer moves the temp back and forth across a group where there is common ownership via a holding company, changes the temp’s assignments regularly, or often uses the same temp after he or she has had a break of more than six weeks between assignments, this could be deemed to be an anti-avoidance technique.

5. Taking on agency temps as permanent members of staff

If a temporary worker proves successful, the line manager may wish to consider offering him or her permanent employment with the organisation. There are a number of factors that managers must consider before an offer of permanent employment can be offered.

“Temp to perm” fees

It used to be common practice for an employment agency to charge a financial penalty to a hiring employer that wished to fill a permanent vacancy with a temp to whom it had been introduced by the agency. Such penalties are commonly known as “temp to perm” fees.

Although “temp to perm” fees can still be charged, there are now restrictions on this practice.

Extended hire periods: “Temp to perm” fees cannot now be enforced against a hiring employer unless the contract between the parties provides that, instead of paying a transfer fee, the employer may, by giving notice to the employment agency, choose to continue hiring the temp for a period of time specified in the contract. During that period the temp must be supplied to the hiring employer on terms no less favourable to it than those that applied immediately before the agency received the hirer’s notice. This prevents the agency from imposing punitive terms for the use of the temp during the extended hire period.

After the extended hire period, the temp may transfer to direct employment with the hiring employer without charge.

Quarantine periods: All transfer fees are also subject to a “quarantine period”. An agency can charge a fee on the transfer of the temp to permanent employment only if the hirer takes on the temp within:

eight weeks of the end of his or her assignment with it; or
14 weeks of the beginning of his or her assignment with it,

whichever ends later.

Where the temp works intermittently for the hiring employer, the 14-week period is continuous from the date of the first assignment, unless there is a period between assignments of more than 42 days (six weeks). In the latter case the 14-week period starts again.

Examples

Example 1: The employment agency supplies a temp, who works for the hiring employer for 10 weeks, after which the assignment ends. The hiring employer can employ the temp on a permanent basis after eight weeks without being subject to a transfer fee. This is because eight weeks from the end of the temp’s assignment is later than 14 weeks from the start of the assignment.

Example 2: The employment agency supplies a temp, who works for the hiring employer for four weeks. The hiring employer wishes to offer the temp a permanent position. It can choose to:

pay the transfer fee;
opt for an extended hire period of the duration specified in the contract; or
discontinue supply of the temp and wait a further 10 weeks before employing the temp on a permanent basis – 14 weeks from the start of the temp’s assignment is later than eight weeks from the end of the assignment.

Considering the options available

If considering offering a permanent position to an agency temp, a line manager should re-read the agency’s terms and conditions of business to check the transfer fee and the duration of the extended hire period.

It is not unusual for a transfer fee to be as much as 20 to 25% of the worker’s first year’s salary, plus VAT, particularly where the position is a professional one. For example, if the commission is 20% and the temp is offered a starting salary of £30,000 per annum in the permanent role, the transfer fee payable will be £6,000 plus VAT.

The options available to a manager who wishes to employ an agency worker on a permanent basis are as follows:

Pay the transfer fee: There may be some room for negotiation with the agency on the amount or percentage of transfer fee payable. However, it is better if negotiations take place before the temp is engaged in the first place, when the line manager has more bargaining power.

Agree to an extended hire period and, when that period has ended, take the temp on on a permanent basis: The line manager will need to compare the amount of the proposed transfer fee against the cost of agreeing to the extended hire period.

Permit the required period of time to pass between the end of the temp’s assignment and employing him or her on a permanent basis: The risk is that the temp will find alternative employment in the interim period, as the gap will be a minimum of eight weeks.

Period of continuous employment

An individual’s period of continuous employment is important because a minimum period is necessary to qualify for various employment rights. For example, an employee must have a minimum period of continuous service to qualify for the right to bring a claim of unfair dismissal.

If the agency has accepted responsibility for the temp’s employment during the period of temporary work, on conversion to permanent employment with the hiring employer, the temp’s continuous employment with the employer should start from the first day of permanent employment with it.

Difficulties may arise if the agency’s terms and conditions confirm that the temp is working for it under a contract for services and not a contract of employment, as the temp may try to claim that the period of temporary work with the hiring employer counts towards his or her continuous service with it.

If there has been a break in service of at least one calendar week (starting on a Sunday) between the last day of the temporary assignment and the first day of permanent employment, any continuity of employment that might otherwise have existed should be broken.

Even so, the temp might be able to argue that the break was a temporary cessation of work. The manager would therefore need to be able to show that there was work available for the temp to do during the break, but that he or she was not asked to do it. To err on the side of caution, managers should impose at least a two-week break in service between the end of the temporary employment and the start of permanent employment.

The contractual documentation with the new employee should clearly state that the employment commences from the start date of the permanent post, and that this is the start date for the purposes of continuity of service.

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The author: Claire Birkinshaw qualified as a solicitor in 1994. She worked at two of the top 10 London law firms and as legal adviser to the Ministry of Defence before joining Abbey Legal Protection Limited in October 1998. Claire specialises in employment law and currently works as a legal information manager.

Greg Chambers qualified as a solicitor specialising in employment law in 2004. He worked in the City before joining Osborne Clarke’s Bristol employment practice in 2008. He advises on all areas of employment law.

About XpertHR line manager briefings

XpertHR line manager briefings are general summaries of current employment law and good practice specially written for line managers.

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They are designed to be used by XpertHR subscribers who need to ensure that the line managers in their organisation deal with job applicants and manage workers in accordance with the law and good practice. They can be adapted for use in individual organisations and can be used either as a training resource or as an information resource, subject to the XpertHR terms and conditions of use.

Test yourself answers: 1. (c) 2. (d) 3. (c) 4. (a) 5. (d)

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