Agency Worker Contracts for Agencies and Hirers
Agency worker contracts are the agreements that govern the three-way relationship between a recruitment agency (employment business), the worker it supplies and the hirer that uses the worker’s services.
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Adam Bernard Solicitors drafts agency worker contracts and client terms that comply with the Agency Workers Regulations 2010, the Conduct of Employment Agencies and Employment Businesses Regulations 2003 and current tax rules.
Temporary staffing is heavily regulated, and enforcement is increasing. Getting the documents right protects agencies from penalties and hirers from unexpected liability.
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The Three Contracts in an Agency Arrangement
A compliant agency arrangement normally needs three documents: terms between agency and worker, terms between agency and hirer, and an assignment confirmation for each placement.
Agency-worker terms – pay, deductions, holiday, assignments and whether the worker is an employee or a worker of the agency.
Agency-hirer (client) terms – charges, temp-to-perm transfer fees, liability, and the hirer’s obligations on equal treatment.
Assignment details – the specific role, location, hours and rate for each placement.
The Conduct Regulations: Rules for Agencies
The Conduct of Employment Agencies and Employment Businesses Regulations 2003 require agencies to agree written terms with workers and hirers before providing services and restrict how temp-to-perm fees can be charged. Key points under the Conduct Regulations 2003 include:
Written terms must be agreed with the worker before any work-finding service is provided.
Agency workers must be given a Key Information Document before agreeing terms.
Hirer terms must offer an alternative to a transfer fee, such as an extended hire period.
Agencies cannot withhold pay because they have not received payment from the hirer.
Agency Workers Regulations 2010: Equal Treatment
Agency workers have some rights from day one and, after 12 weeks in the same role with the same hirer, the right to the same basic pay and working conditions as comparable directly recruited staff. Under the Agency Workers Regulations 2010:
From day one, agency workers can use shared facilities such as canteens and childcare, and must be told about relevant vacancies with the hirer.
After 12 weeks, they are entitled to equal treatment on pay, working time, rest breaks and annual leave.
GOV.UK summarises these rights in its guide to agency workers’ rights. Hirer terms should require the hirer to provide the information the agency needs to comply.
Tax, IR35 and Umbrella Companies
Agency contracts must reflect how the worker is paid, because the off-payroll rules and agency legislation can shift tax liability to the agency or hirer. Where workers operate through personal service companies, the off-payroll working (IR35) rules may apply. The Employment Rights Act 2025 also brings umbrella companies within the scope of agency regulation, with changes expected in 2027, so supply chain contracts should include clear compliance warranties.
Employment Status of Agency Workers
Most agency workers are “workers” rather than employees of the hirer, but status depends on the facts, not the label. Workers are entitled to the National Minimum Wage, paid holiday and protection from discrimination. See GOV.UK guidance on employment status and current National Minimum Wage rates.
Enforcement
Agency compliance is now overseen by the Fair Work Agency, which was established in April 2026 under the Employment Rights Act 2025. It brings together employment agency standards, minimum wage and other enforcement functions, which makes up-to-date contracts and records more important than ever.
Key Clauses in Agency Worker Contracts
Status of the worker and the nature of the relationship.
Pay rates, payment intervals and any permitted deductions.
Holiday entitlement and holiday pay calculation.
Timesheet procedures and pay disputes.
Equal treatment information and the 12-week qualifying period.
Confidentiality and conduct while on assignment.
Ending an assignment and ending the overall terms.
Compliance Checklist for Recruitment Agencies
Agencies should audit their documents and processes at least annually against five areas.
Pre-engagement – written terms and a Key Information Document issued before any service is provided.
Hirer terms – agreed in writing, with compliant transfer fee and extended hire options.
Equal treatment – a system for tracking the 12-week qualifying period and obtaining comparator information from hirers.
Pay and holiday – accurate holiday pay calculations and records, now subject to a statutory record-keeping duty.
Supply chain – due diligence on umbrella companies and intermediaries.
Our contract review service can audit your agency documents against current rules.
How Adam Bernard Solicitors Can Help
We prepare agency-worker terms, client terms of business and Key Information Documents, and audit existing documents through our contract review service. For directly employed staff, see our admin employee contracts page. See all our commercial contract services.
Call 0207 100 2525 (24/7) or book a free consultation to discuss your contract.
This page is for information only and does not constitute legal advice.
Frequently Asked Questions
What rights do agency workers have after 12 weeks?
What is a Key Information Document?
Can an agency charge a hirer a temp-to-perm fee?
Is an agency worker an employee of the hirer?
Who enforces agency worker rules in the UK?
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