Pay and benefits for temporary and agency workers

Pay and benefits for temporary and agency workers

Tempted to start temping?

Signing up with a temping agency is a good way to explore different jobs and earn some money in the short term. But while this type of work can offer more flexibility, it’s important to know your rights and pay the right tax. That way there’s no chance of getting caught out.

The Money Advice Service explains some of the key things you need to know to get started, and how you get paid as a temporary worker:

Your employment status and your contract

You are an agency worker or temp if you:

  • have a contract with an employment agency but work temporarily for an employer
  • are given work to do by the employer, not the agency, and
  • aren’t self-employed.

You need to be clear about your employment status to know what your entitlements are. Find out more about employment contracts on the Money Advice Service website.

Rights for all agency and temp workers

As a temp or agency worker you still have employee rights even though you’re not directly employed by the people you work for. These rights entitle you to:

  • the National Minimum Wage
  • paid holidays
  • unpaid parental leave, with conditions
  • freedom from discrimination under equality legislation
  • Statutory Sick Pay (SSP)
  • no unlawful deductions made from your wages
  • use of shared workplace facilities like a canteen, crèche or common room
  • work in a safe workplace

Your employment agency or the client company where you’re stationed are responsible for upholding these rights.

Paying tax and National Insurance on your wages

If you earn over a certain amount and you’re under State Pension age, you have to pay Income Tax and National Insurance.

Your agency needs to deduct both of these from your pay through the Pay As You Earn (PAYE) system. PAYE is how tax is collected from your earnings during the tax year. Any student loan repayments you owe will be made through this system.  Your agency also has to give you payslips showing how the money you receive has been calculated.

If you stop working for your agency, they have to 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 get a P60. This will show your tax code and how much tax you’ve paid.

Find out more with the Money Advice Service’s guide to Income Tax and National Insurance.

Cash in hand jobs – what to watch out for

It is against the law for your employer to pay you cash in hand and not deduct tax and National Insurance from your wages.

You risk losing rights like Jobseeker’s Allowance and sick pay if you’re working like this. You may also have to pay the tax and National Insurance back yourself, pay fines, and you could even end up with a criminal record.

You can report your employer to the HMRC in confidence if you think they’re avoiding tax and National Insurance by paying you cash in hand.

Pay between assignment contracts

Your agency may offer you a pay between assignments contract. If you sign it you become an employee of the agency and entitled to pay between jobs. Your rights with this type of contract are slightly different to those of other agency workers.

If you’re on a pay between assignments contract you won’t be entitled to the same pay as the staff where you’re sent to work. This is the case even after 12 weeks in the same job.

Your agency must pay you if you’re between jobs for more than a week. It has to be either the National Minimum Wage or at least 50 per cent of what you were paid in your last job, whichever is greater.

Your agency must 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.

This type of contract may seem more secure as you get paid even when the agency can’t find work for you, but it can come with problems. Find out more on the Money Advice Service website.

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