Using Agency Workers: What Your Business Is Responsible For

By Carmen Neagu, 5 May 2026

Using agency workers gives your business flexibility, but it does not reduce the legal responsibilities that come with having people working in your organisation. Some of those responsibilities sit clearly with the agency. Others sit clearly with you. And some of the most common commercial disputes between hirers and agencies come down to terms that were never properly agreed or understood at the outset. This newsletter covers the practical questions that every business using agency workers should have clear answers to.

What are you responsible for from day one?

When an agency worker arrives at your site or in your organisation for the first time, certain legal obligations fall on you as the hirer immediately. These do not sit with the agency — they are yours.

From the first day of any assignment, you are required to give agency workers the same access to your collective facilities as your directly employed staff. This includes canteens, rest areas, car parking, prayer rooms, childcare facilities, and staff common areas. You are also required to inform them of any relevant job vacancies within your organisation, usually through the same channels you use for permanent staff such as a notice board or intranet. You can only refuse access to facilities if you have a genuine objective business reason for doing so, and that bar is a high one.

These obligations apply regardless of how short the assignment is and regardless of what your contract with the agency says. They cannot be contracted out of. Responsibility for ensuring they are met sits with you as the hirer, and if a worker brings a claim for breach of these rights, it is your organisation that is liable, not the agency.

The practical implication is that the managers, supervisors and team leaders who are actually receiving and working alongside agency workers on the ground need to know what is expected of them. These rights are only met in practice if the people responsible for day to day management have been briefed. That briefing is your responsibility to deliver.

Your contract with the agency — what should it cover?

The commercial agreement between you and your agency is more important than many hirers realise, and it is worth taking time to understand what it contains before a worker is placed rather than when a dispute arises.

A well-drafted agency contract should set out the charge rate and what it includes, the payment terms, the notice period for ending assignments, and the process for raising concerns about a worker’s performance or conduct. It should also cover the rebate or refund position — that is, what happens if a worker leaves or is removed from the assignment very early on. Not all agencies offer rebates, and those that do will set time limits and conditions. If the contract is silent on this, you have no basis to claim one.

It should also clearly set out the agency’s transfer fee terms. This is an area where many hirers are caught out, and it is covered in detail in the next section. The key point for now is that transfer fee terms must be included in the written contract to be enforceable — an agency cannot simply present you with a transfer fee invoice based on terms you were never shown.

Other things worth checking in your contract include what happens if the agency worker has a workplace accident or raises a grievance, how timesheet disputes are handled, and what the process is if you want to end an assignment early. Agencies’ terms vary significantly on all of these points, and assuming a standard position can lead to expensive surprises.

If you have not signed the contract, are you still bound by it?

This is one of the most common questions that arises in commercial disputes between hirers and agencies, and the answer is more nuanced than many people expect.

In England and Wales, a contract does not need to be signed to be legally binding. What matters is whether both parties have agreed to the terms and have demonstrated an intention to be bound by them. If you have been using an agency, accepting workers on placement, and paying invoices without ever signing a formal contract, a court is very likely to find that you have accepted the agency’s terms through your conduct. The fact that you did not sign does not mean you are not bound.

The specific terms you are bound by in that situation are typically the agency’s standard terms and conditions — the document that was sent to you, included in the original proposal, or referenced on the agency’s invoices. If you have been paying those invoices without objecting to the terms on them, you have in effect accepted them. This includes any transfer fee provisions set out in those terms.

The practical lesson is straightforward. If you receive terms from an agency and you are not comfortable with any of them, challenge or negotiate them before you start placing workers — not after. Once the commercial relationship is up and running, the terms become much harder to dispute. And if you genuinely want to operate without a signed contract, you need to understand that you may still be bound by the agency’s standard terms regardless.

If an agency worker applies for a permanent role with you, do you have to pay a transfer fee?

This is an area where hirers regularly find themselves facing an unexpected invoice, and where the law is quite specific about what agencies can and cannot charge.

Under the Conduct of Employment Agencies and Employment Businesses Regulations 2003, an agency is entitled to charge a transfer fee — commonly called a temp-to-perm fee — when a worker they have supplied to you is subsequently taken on directly by your organisation. This applies whether the worker applies for the role themselves, whether you approach them, or whether the arrangement comes about informally. The agency’s introduction of that worker to your business is what triggers the potential fee, not the manner in which the permanent role comes about.

The fee is only chargeable within what the Regulations call the relevant period, and understanding exactly how that period works is important because it is more nuanced than simply waiting eight weeks. The relevant period ends at whichever is the later of two dates: eight weeks from the day after the worker last worked for you, or 14 weeks from the first day of their first assignment with you. Because you need both periods to have expired, the length of the assignment directly affects how long the window lasts. If a worker was only on assignment for one day, the 14-week period from that first day is what governs, meaning the quarantine period is almost 14 weeks. If the worker was with you for more than six weeks, the eight-week period from the end of the assignment will be the later of the two, and that is when the window closes. Only once the later of those two dates has passed is the agency unable to charge a transfer fee. If you take the worker on before that point, the fee applies — provided it was included in your original contract. If you take them on after that point, no fee is due regardless of what the contract says.

There is an important protection for hirers built into the regulations. The agency must give you the option of extending the hire period rather than paying the transfer fee. In other words, you should be offered the choice of keeping the worker on as a temporary worker for an agreed further period, at the end of which they can transfer to permanent employment without any fee being charged. If the agency does not offer you this option, the transfer fee term may not be enforceable against you.

There are two other scenarios worth being aware of. A temp-to-temp fee can be charged if you change agencies but want to keep the same worker, meaning they move to the new agency’s books. And a temp-to-third-party fee can arise if you introduce an agency worker to another organisation that then hires them. In both cases the same time window applies and the fee must be in the original contract. One further point on multiple assignments: if the same worker has been placed with you on more than one occasion, the 14-week period runs continuously from the first day of the first assignment, and short gaps between assignments do not reset the clock. However, if there was a break of more than 42 days between assignments, the 14-week period restarts from the beginning of the later assignment. This matters if you are trying to understand whether a fee can still apply to a worker who returned to you after a period away.

The single most effective thing you can do to protect yourself is to read the transfer fee terms in any agency contract before you agree to use that agency, and to negotiate them if they are not workable for your organisation. Trying to dispute them after a placement has started is a much harder position to be in. One question that comes up regularly in practice is whether an agency can use its contract to extend the time window beyond the statutory 8 and 14 weeks. The short answer is no. The time limits in Regulation 10 of the Conduct Regulations are a statutory cap, not a default that parties can contract around. If an agency includes a term in its contract stating that a transfer fee applies for 12 months after a worker was last placed with you, that term is unenforceable to the extent it goes beyond the statutory window. The contract does not override the legislation. There is one exception to be aware of: workers operating through their own limited company can opt out of the Conduct Regulations entirely, in which case the statutory protections do not apply and the parties can agree whatever terms they like, including longer restriction periods. If your agency is telling you that a 12-month fee window applies, it is worth asking whether a valid opt-out exists for the worker in question, because without one, that term has no legal force.

What information do you need to give the agency under the Agency Workers Regulations?

Once an agency worker has been in the same role at your organisation for 12 continuous weeks, they become entitled to the same basic pay and working conditions as a comparable employee doing the same work. For this to happen in practice, the agency needs information from you. Providing that information is your legal obligation as the hirer, and if you fail to provide it accurately and the worker is consequently underpaid, liability for that underpayment can fall on you.

The information you need to provide covers the terms and conditions that a directly employed member of staff in a comparable role would receive. This includes:

• Basic pay and hourly or daily rate

• Overtime rates and the conditions under which they apply

• Shift allowances or premium payments for unsocial hours

• Holiday entitlement, including any enhanced leave your organisation offers beyond the statutory minimum

• Any performance-related pay linked to individual output or quality of work

• Working hours and rest break entitlements

Benefits linked to long service — such as occupational pension schemes, loyalty bonuses, or company-wide discretionary awards — are not included in the equalisation requirement. The AWR covers basic working and employment conditions, not the full package that a long-serving permanent employee might have built up. However, if a bonus scheme relates directly to the quality or quantity of the work done in the role, an agency worker who has completed 12 weeks is entitled to the same opportunity to earn it.

The responsibility for having this information ready and sharing it with your agency sits with you. If you do not have a process for tracking when individual workers approach the 12-week mark and for communicating the relevant comparator information to your agency in advance of that point, you need to build one. It does not need to be complex, but it does need to exist and someone in your organisation needs to own it.

What counts as a comparable role?

This is one of the most frequently misunderstood aspects of AWR compliance, and getting it wrong in either direction creates problems. Understanding what the law actually means by a comparable role determines whether equalisation is required at all and, if it is, what the worker should be receiving.

A comparable employee is someone who is directly employed by your organisation, working at the same location or a comparable location, and doing the same or broadly similar work to the agency worker. The role does not need to be identical — it needs to be broadly similar in terms of the nature of the work, the skills required, and the level of responsibility involved. If you have a permanent member of staff doing essentially the same job as the agency worker, that person is almost certainly the comparator.

The comparison is made at the point the 12-week qualifying period is completed. If the agency worker’s role changes substantially during the assignment, the qualifying period resets. If their role remains the same but your organisation restructures around them, the comparator position needs to be reassessed.

If your organisation genuinely has no directly employed staff doing the same or broadly similar work — for example, if the agency worker is fulfilling a role that exists nowhere else in your business — there is no comparable employee and the pay equalisation element of AWR does not apply. The agency worker still retains their day one rights regardless. The absence of a comparator does not affect those.

One area that catches hirers out is job title. The comparison is not based on what a role is called but on what it actually involves. An agency worker placed as a “team support assistant” who is in practice doing the same work as a permanent “administrator” is likely to have a comparator, regardless of the different titles. If there is any uncertainty about whether a comparable role exists in your organisation, it is worth taking advice rather than assuming the question does not arise.

Support with your agency worker arrangements

If you are reviewing how your organisation manages agency workers — whether that is your contractual position with agencies, your AWR compliance process, or your approach to transfer fees and permanent hires — People Potential Success can help. We work with businesses to build clear, practical frameworks that reduce risk and protect both the organisation and the people working within it.

Get in touch at www.peoplepotentialsuccess.com