Pay and benefits for temps and agency workers
Signing up with a temping agency can be a good way to earn some money in the short term. Yet while temping and agency work can give you more flexibility, it’s important that you know your rights and pay the right tax.
- Your employment status
- Your rights as a temp or agency worker
- ‘Pay between assignments’ contracts
- Paying tax and National Insurance on your wages
- Having more than one job
Your employment status
You’re a temp or agency worker if you:
- have a contract with an employment agency, but work day-to-day for an employer
- are told what work to do by the employer, not the agency
- are not self-employed
Your rights as a temp or agency worker
Although you’re not directly employed by the people you work for, you still have rights as an employee. These are either the responsibility of the agency that employs you or the client company where you are deployed. Your agency worker rights entitle you to:
- minimum wage pay
- paid holiday days
- parental leave (unpaid), with conditions
- no discrimination on basis of age, race, sexuality, disability etc
- Statutory Sick Pay (SSP)
- use of the workplace facilities for staff, like the canteen, crèche or nursery
- after 12 weeks – same basic pay and working conditions as permanent staff if there are any doing comparable work to you
- after 12 weeks – paid time off for antenatal appointments if pregnant
‘Pay between assignments’ contracts
If you have a ‘pay between assignments’ contract, your employment agency pays you if there is a gap between jobs. Your rights with a ‘pay between assignments’ contract are slightly different to the normal rights of a temp or agency worker:
- you give up the right to have the same pay (and holiday pay) as the staff where you’re sent to work (which would otherwise apply after being there 12 weeks)
- your agency must pay you the minimum wage or at least 50% of the highest weekly rate you received on your last job (whichever is greater) if you’re between jobs for more than a week
- your agency has to look for jobs and offer them to you, and can’t end your contract unless it gives you at least four weeks’ pay (or you resign)
Problems with ‘pay between assignments’ contracts
A ‘pay between assignments’ contract may seem more secure, as you’ll get paid even if the agency can’t find any work for you to do. But there can be problems with this type of arrangement.
- The minimum you must work each week is one hour and the agency has to start paying you after any week without work. To prevent a workless week and the need to pay you, the agency might invent a very short-term job or ask you to come into the agency to work for an hour.
- The hours you end up working might be different to those specified in your contract with the agency, in which case you might not be a ‘pay-between-assignments’ worker at all in law. In that case, you’ll have lost your right to equal pay for no reason.
The agency is breaking the law if it tries to manipulate the rules in this way. So, if you’ve got a ‘pay between assignments’ contract and you think any of these things are happening, you may be able to make a claim to an employment tribunal to stop it and receive compensation.
If you’re asked to sign a ‘pay between assignments’ contract’, you don’t have to agree, although the agency may not want you to work through them if you don’t.
Paying tax and National Insurance on your wages
You’ll need to pay National Insurance and tax if you’re earning over a certain amount and you’re under State Pension age.
If you work as an employee of the agency, they will need to take your tax and National Insurance out of your pay through the PAYE system, along with any Student Loan repayments you owe. They also need to give you payslips which will show how the money you get has been worked out.
If you stop working for them, the agency must give you a P45 form to take to your next job. If you’re employed at the end of a tax year, you should also be given a P60 with details of your tax code and how much tax you’ve paid.
If your employer is paying you cash in hand without taking off tax and National Insurance, it’s against the law.
Some employers do this to reduce their wages bill. But if you’re working like this you won’t get the usual rights, like Jobseeker’s Allowance and sick pay. You could also end up having to pay the tax and National Insurance back yourself, paying fines and even getting a criminal record.
If you think your employer is paying you cash in hand to avoid tax and National Insurance, you can tell HMRC about it in confidence.
Having more than one job
Doing more than one job at the same time can be a good way of earning extra money, but it can make your tax situation more complicated. To avoid paying too much tax, or not paying enough, you’ll need to make sure you’ve got the right tax codes and that HMRC has the right information about your work.