Agency Worker Contract (UK)

An Agency Worker Contract in the United Kingdom sets the job duties, pay, hours, leave, and notice terms that bind employer and employee, as regulated by the Employment Rights Act 1996.

The principal legislation governing agency workers in the UK is the Agency Workers Regulations 2010 (SI 2010/93), which implemented the EU Temporary Agency Work Directive 2008/104/EC. The Agency Workers Regulations 2010 entitle agency workers who have completed a 12-week qualifying period in the same role with the same hirer to the same basic working and employment conditions as comparable workers employed directly by the hirer. This includes equal pay, working time, rest periods, rest breaks, and annual leave. The qualifying period accumulates on a rolling basis and is broken by a gap of more than six weeks or a substantive change in role.

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (SI 2003/3319), made under the Employment Agencies Act 1973, impose detailed conduct obligations on employment agencies and employment businesses. An employment business (which is the correct classification for agencies that supply workers to hirers) must provide workers with a key information document before agreeing terms, must not charge workers fees for finding them work, and must give each worker the details of their assignment in writing before the assignment starts. The key information document must set out the minimum pay rate, how the worker will be paid, and any deductions that may be made.

The Employment Rights Act 1996 extends fundamental employment rights to workers as well as employees, including the right to written particulars, protection from unlawful deductions from wages under Part II of the Act, and the right to be paid at least the National Minimum Wage under the National Minimum Wage Act 1998. From 6 April 2020, all workers (not just employees) are entitled to a written statement of employment particulars from day one of their engagement.

Following the abolition of the Swedish Derogation model by the Employment (Miscellaneous Provisions) Act 2019 with effect from 6 April 2020, all agency workers who complete the 12-week qualifying period are entitled to equal pay with comparable direct employees, regardless of whether they hold a permanent contract with the agency. Any agency worker contract that attempts to deny this right is unenforceable.

A UK Agency Worker Contract is needed whenever a recruitment or staffing agency supplies a worker to a client business (hirer) on a temporary assignment basis. The contract is required from day one of the worker's engagement with the agency, before any assignment begins.

Staffing agencies in the hospitality, healthcare, construction, warehousing, logistics, and retail sectors routinely use agency worker contracts for temporary workers. The contract is the legal foundation of the relationship between the agency and the worker for all assignments, avoiding the need to negotiate new terms for each placement.

An agency worker contract is needed when a worker is provided to an NHS trust or other public sector body under a framework agreement. Public sector hirers must comply with NHS Employers or Crown Commercial Service guidelines on agency worker rates and rights, and the underlying agency worker contract must support compliance with the Agency Workers Regulations 2010.

The contract is required before the Conduct of Employment Agencies and Employment Businesses Regulations 2003 obligations can be met. The Regulations require a key information document to be provided before the worker agrees terms with the agency, and the agency worker contract must incorporate or be consistent with that document.

Where a hirer operates a supplier-managed staffing model — using a Master Vendor or Neutral Vendor arrangement — individual staffing agencies supplying workers through the model still need separate agency worker contracts with each worker they engage. The master agreement between the hirer and the vendor does not replace the individual worker's contract.

Agencies operating in the industrial staffing sector, where workers are supplied to manufacturing, packing, and processing facilities, need agency worker contracts that clearly address piece-rate pay, minimum guaranteed hours (if any), transport deductions, and accommodation deductions, to avoid liability under the National Minimum Wage Act 1998 and HMRC enforcement action.

A compliant UK Agency Worker Contract must address the following key provisions under the Agency Workers Regulations 2010, the Employment Agencies Act 1973, and the Employment Rights Act 1996.

Identification of parties confirms the agency's full name and registered address, the worker's name, and the capacity in which the agency is operating (as an employment business supplying workers to hirers). This distinction is important because different legal obligations apply to employment agencies (which place permanent workers) and employment businesses (which supply temporary workers).

Type of contract and engagement terms set out whether the worker is engaged as an employee of the agency or as a worker under a non-employment contract. Most temporary staffing arrangements involve the worker holding worker status (rather than full employee status) with the agency, meaning they have workers' rights but not employees' rights such as unfair dismissal protection.

Pay provisions must state the minimum rate of pay or the basis on which pay will be determined, how pay will be calculated (hourly, daily, or weekly), the frequency of payment, and whether a timesheet approval process applies. The pay rate must meet or exceed the National Minimum Wage or National Living Wage under the National Minimum Wage Act 1998 and the National Minimum Wage Regulations 2015. Any deductions from pay must be lawful under Part II of the Employment Rights Act 1996 and the Conduct Regulations 2003.

Assignment terms explain how assignments will be offered and accepted, the minimum information that will be provided for each assignment (hirer's name, location, nature of work, duration, pay rate, and health and safety risks under the Conduct Regulations 2003), and the fact that neither the agency nor the hirer is obliged to offer or accept any particular assignment (the absence of mutuality of obligation).

Statutory rights confirmation records the worker's entitlement to statutory annual leave (5.6 weeks under the Working Time Regulations 1998), statutory sick pay (SSP) after the qualifying period, rest breaks and rest periods under the Working Time Regulations 1998, and protection against unlawful discrimination under the Equality Act 2010.

Equal treatment rights under the Agency Workers Regulations 2010 must be addressed. After completing the 12-week qualifying period in the same role with the same hirer, the worker is entitled to equal pay, equal working time conditions, and equal access to collective facilities and job vacancies. The contract should explain how the qualifying period is calculated and how equal treatment will be applied.

Notice and termination provisions set out the notice the worker must give to be unavailable for assignments and the circumstances in which the agency may remove the worker from an assignment or the register. These provisions must not conflict with the worker's statutory rights. The forms-legal.com Agency Worker Contract (UK) template covers the mandatory elements under Employment Rights Act 1996.