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8 Common Legal Risks of Using Agency Workers

27 April 2022

Use of agency workers in the United Kingdom is at an all-time high. In the last five years, the number of people working in agency jobs has more than tripled. Many people enjoy working in this type of environment because it allows them the flexibility or freedom to work in a variety of roles. However, not everyone is cut out for agency work.

Health care, construction, and facilities management are among the industries that have a ready supply of temporary workers, and it is uncommon for a company not to use agency workers on occasion. Recent government scrutiny of agency workers has been intense, and changes on the horizon will affect all those who use temp agencies.


What are the risks to your company?

1. Rogue Umbrella Payroll Schemes

Potentially liable for unpaid Tax and NI. Reputational damage like G4S last year.  

2. Illegal Workers/Rights to Work

Up 5 years in prison, and up to £20k fine per worker

3. Insurances

Unlimited liability rests with you

4. False Self Employment (IR35)

Unpaid Tax and National Insurance due from ‘End Hirer’ (unlimited)

5. Driving/Operators Licences

Up to 24 months prison & large fine based on company turnover

6. Minimum/Living Wage Breaches

Up to £20k fine per worker + unpaid amounts Directors banned for 15 years and admission to Gov.uk Naming and Shaming List

7. Modern Slavery

Up to 18 years in prison, Court proceedings and serious reputational damage such as Biffa last year.

8. Agency Workers Regulations (AWR)

Employment Tribunals – Fines of up to £5,000


The bottom line

Any company that hires agency workers should be aware of the risks involved as well as the rights of their employees. Agency workers have the following key rights.

● paid holiday (bank holidays may be included in your holiday entitlement – you need to check this with the agency);

● rest breaks and limits on working time;

● no unlawful deductions from wages;

● the National Minimum Wage;

● the right not to be discriminated;

● protection under health and safety laws

● the same access to shared facilities and services at work as other comparable employees (unless denial can be objectively justified).

It is likely that the government will make additional changes to agency workers' rights in the coming years. More generous rules, the right to request a more predictable and stable contract after 26 weeks of employment, and clarification of their employment status are likely to protect employees from retaliation.

Get in touch! We can help.

Datum RPO can help you to manage your agency providers, ensuring that the workers they provide are legally compliant, as well as deliver significant cost savings.

Download our eGuide- How to Audit Your Recruitment Agencies

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