Employing Agency Staff in the UK (2026): What Hirers Must Know

Agency staff let a small business cover peak season, sickness or a new contract without committing to a permanent hire. But "temporary" doesn't mean "rights-free". As the hirer you owe some duties from the first shift, more after 12 weeks, and since April 2026 the agency in your supply chain can be chased for an umbrella company's unpaid PAYE. This guide is for UK owners and managers who book temps through an agency. It covers the three-way relationship, the Agency Workers Regulations 2010, holiday pay, the cost of equal treatment in pounds, IR35, temp-to-perm fees and the Employment Rights Act 2025 dates that matter for agency staff in 2026.

Quick answer

When you take on agency staff, the agency (or an umbrella company) is normally the worker's employer for pay, tax and holiday, and you are the hirer who directs the work. Agency workers get worker rights from day one, access to your facilities and vacancies, and — after 12 weeks in the same role with you — the same basic pay and conditions as your own staff.

• Day one: canteen, transport, childcare facilities and your job vacancies — your duty as hirer

• After 12 weeks: equal basic pay, overtime and shift rates, holiday and working-time terms

• Holiday: at least 5.6 weeks a year from the start, paid by the agency

• Since 6 April 2026, HMRC can recover an umbrella company's unpaid PAYE from the agency, or from you if there's no agency

• Guaranteed hours and umbrella regulation under the Employment Rights Act 2025 are planned for 2027

How employing agency staff works: who is the employer?

Agency work is a three-way arrangement. The agency (legally an "employment business") recruits the worker and has the contract with them. You, the hirer, sign terms of business with the agency, tell the worker what to do day to day and pay the agency's invoice. The worker turns up at your premises, but their contract is with the agency, not you.

Sometimes there's a fourth party. Many agencies don't pay temps directly; they pass payroll to an umbrella company, which employs the worker under a contract of employment and runs PAYE. The agency pays the umbrella, the umbrella pays the worker. That extra link is why HMRC changed the rules in April 2026, covered below.

The arrangement only counts as agency work if the person is placed temporarily. If you use an agency to find a permanent or fixed-term employee whom you then put on your own payroll, that person is your employee, and the agency has just introduced them. The Agency Workers Regulations don't apply to them.

Most agency temps are legally workers, not employees, of the agency. That matters because workers get a narrower set of rights: no statutory redundancy pay, no unfair dismissal protection and no statutory maternity leave, though they can still qualify for Statutory Maternity Pay. Some agencies do employ temps on permanent contracts and pay them between assignments — those people are employees of the agency but still agency workers on your site.

Before the agency offers a worker any work, it must give them a key information document explaining how they'll be paid, the minimum rate, who pays them, any fees and a sample payslip, plus written terms of engagement. When it offers a specific assignment, it must tell the worker the start date, likely length, location, hours, health and safety risks and any qualifications needed. To do that, the agency needs accurate information from you — so expect it to ask about the role, hours and hazards before it places anyone.

Agency staff numbers that matter in 2026

12 weeks

Qualifying period for equal treatment

Same role, same hirer

5.6 weeks

Minimum paid holiday

From the first day of the assignment

£12.71 an hour

National Living Wage (21+)

From 1 April 2026

6 April 2026

Umbrella PAYE liability shifts

Agency or end client can be pursued

What you owe agency workers from day one

Some rights are owed by the agency and some by you. Mixing them up is a common reason hirers end up in tribunal alongside the agency.

Your duties as hirer from the first day come from the Agency Workers Regulations 2010. You must give agency workers the same access as comparable direct staff to shared facilities and amenities — a canteen or vending area, a workplace crèche, car parking, and transport such as a site shuttle or local pick-up. You can refuse access only if you can objectively justify the difference, and "they're only temps" isn't a justification.

You must also tell agency workers about job vacancies on the same basis as your own staff. An intranet temps can't log in to doesn't meet the duty; email vacancies to the agency and pin them up on site.

The agency's day-one duties come from general employment law, because the worker is its worker:

• at least the National Minimum Wage or National Living Wage for every hour worked — £12.71 an hour at age 21 and over from 1 April 2026 — even where a timesheet is missing;
• at least 5.6 weeks of paid holiday a year, accruing from the first day;
• Working Time Regulations limits: an average 48-hour week unless the worker opts out, a 20-minute break after six hours, 11 hours' rest a day and a day off each week;
• Statutory Sick Pay if eligible — since 6 April 2026 it's payable from the first day of sickness with no Lower Earnings Limit, at £123.25 a week or 80% of average weekly earnings if lower;
• itemised payslips, no unlawful deductions, and pay on time even if you, the hirer, are late paying the agency's invoice.

Some protections are shared. Agency workers are protected from discrimination from day one, and the agency, the hirer and individual staff can all be liable. You're also responsible for health and safety on your premises, including induction and protective equipment, whoever employs the worker. Pregnant agency workers are protected too: if a health risk can't be removed by adjusting the role, the agency must find suitable alternative work or keep paying them for the expected length of the assignment.

The 12-week rule: equal treatment explained

Once an agency worker has completed 12 weeks in the same role with the same hirer, they're entitled to the same "basic working and employment conditions" they'd have had if you had recruited them directly into that job. The agency must deliver that, but it can only do so if you tell it what your own staff get. The agency has a defence if it took reasonable steps to get that information from you, so if you give it nothing, or the wrong figures, liability can shift to you. A tribunal can split compensation between the two of you.

Equal treatment is narrower than many people assume. It covers pay and the core working-time terms, not every benefit you offer.

What equal treatment covers after 12 weeks

Included	Not included
Basic hourly or daily pay	Bonuses tied only to company performance or long service
Overtime rates and shift or unsocial-hours allowances	Occupational sick pay above SSP
Individual performance bonuses and commission	Occupational pension schemes
Holiday above the statutory minimum and holiday pay	Enhanced maternity, paternity, adoption or shared parental pay
Working hours, night work, rest periods and breaks	Redundancy pay, guarantee payments, season ticket loans
Paid time off for antenatal appointments	Expenses and paid time off for union duties

Basic hourly or daily pay

Not included

Bonuses tied only to company performance or long service

Overtime rates and shift or unsocial-hours allowances

Not included

Occupational sick pay above SSP

Individual performance bonuses and commission

Not included

Occupational pension schemes

Holiday above the statutory minimum and holiday pay

Not included

Enhanced maternity, paternity, adoption or shared parental pay

Working hours, night work, rest periods and breaks

Not included

Redundancy pay, guarantee payments, season ticket loans

Paid time off for antenatal appointments

Not included

Expenses and paid time off for union duties

How to count the 12 weeks

The clock starts on the worker's first day in the role. A "week" is any calendar week of seven days, starting with the first day of the assignment, in which the worker does some work — one shift is enough. The weeks don't have to run back to back.

Some gaps pause the clock, so the weeks before and after are added together:

• a break of up to 6 weeks between assignments in the same role;
• sickness, injury or jury service of up to 28 weeks;
• annual leave the worker is entitled to;
• a planned workplace shutdown such as Christmas closure, or industrial action.

Other leave keeps the clock running: pregnancy-related absence from the start of pregnancy up to 26 weeks after childbirth, maternity leave, adoption leave and neonatal care leave. Paternity leave may also count, though Acas describes this as a complex area.

The clock restarts from zero if the worker moves to a different hirer, returns to the same role after a break of more than 6 weeks (for a reason that doesn't pause the clock), or moves into a substantively different role with you — genuinely new work involving different skills or training, a different pay rate, location or hours.

For example, a picker placed with a Midlands wholesaler works shifts in weeks 1 to 5, has a two-week gap while orders are quiet, returns to the same role for weeks 8 to 13 and then sits out a one-week Christmas shutdown. The gap and the shutdown only pause the clock, so the twelfth qualifying week is completed in week 15 and equal treatment applies from the following week.

Don't try to engineer around it

The regulations contain anti-avoidance rules. If an agency or hirer structures assignments to stop a worker reaching 12 weeks — for example, rotating them between two near-identical roles every 11 weeks, or forcing seven-week breaks — a tribunal can treat the worker as having qualified and award extra compensation. Since 6 April 2020, the old "pay between assignments" contracts that let agencies opt out of equal pay no longer work either; agency workers on permanent agency contracts still get equal pay after 12 weeks.

Holiday and holiday pay for agency workers

Holiday is the right agency staff most often lose out on, usually because short or irregular assignments make accrual feel complicated. The rule is simple: every agency worker builds up at least 5.6 weeks of paid holiday a year from their first day, and anything not taken must be paid when the engagement ends. The agency or umbrella pays it, not you, but its charge rate to you will include the cost.

For irregular-hours and part-year workers — which covers most temps — the rules changed for leave years starting on or after 1 April 2024. Holiday accrues at 12.07% of the hours actually worked in each pay period. The agency can also choose rolled-up holiday pay: a 12.07% uplift added to every payslip as a separate line, instead of paying the worker when they take leave. Even then, workers should still be encouraged to take the time off.

After 12 weeks, the agency worker is also entitled to any extra holiday your own staff in the same job get. If your contracts give 33 days including bank holidays, the extra five days above the 28-day statutory minimum become part of equal treatment. The agency can give it as extra days, as an itemised addition to each payslip, or as a lump sum on the final payslip.

The cost of holiday is easy to underestimate if you compare an agency charge rate with a direct employee's hourly wage. The worker might cost £12.71 an hour an hour in wages, but the agency also has to fund holiday, employer National Insurance at 15%, pension contributions, the apprenticeship levy where it applies, and its own margin.

Worked example: what equal treatment costs a small hirer

Priya runs a food-packing business in Leicester. She books an agency worker, Tom, aged 30, to cover a 37.5-hour week on nights. The agency pays Tom £12.71 an hour an hour, the 2026-27 National Living Wage. Priya's own night-shift packers earn a basic £13.20 an hour plus a £1.00-an-hour night premium, and get 33 days' holiday including bank holidays. The figures below are illustrative — your own rates will differ.

That's roughly £66 a week more in Tom's pay once he passes 12 weeks — before the agency adds its on-costs and margin to the charge rate. Over a 26-week winter contract, the extra wages alone come to about £925. The holiday line assumes the five extra days at the new daily rate of £106.50, spread over 52 weeks.

Two lessons follow. First, tell the agency your rates before the assignment starts, so the charge rate from week 13 is agreed up front instead of arriving as a surprise invoice. Second, if you're likely to keep someone beyond 12 weeks, compare the agency's charge rate with the cost of hiring directly — for a long-term need, registering as an employer and running your own payroll can be cheaper.

Plan the cost of temps versus a direct hireFree, no login — set agency charge rates against wages, employer NI, pension and holiday for a direct employee.

Umbrella companies and the April 2026 PAYE rules

Umbrella companies aren't new, but the way they're policed changed on 6 April 2026. HMRC's view was that some "umbrellas" took the agency's money and failed to pay over the worker's income tax and National Insurance — the so-called mini-umbrella and disguised-remuneration schemes — then disappeared.

For money paid to workers on or after 6 April 2026, responsibility for making sure PAYE is operated correctly now also sits higher up the chain:

• the agency that contracts with the end client is jointly responsible with the umbrella company and can be pursued for the full shortfall in PAYE income tax and National Insurance, regardless of fault;
• if there is no agency — you contract directly with an umbrella — you, the end client, carry that liability;
• the umbrella stays the legal employer and must still calculate and pay PAYE correctly.

The rules apply to new and existing supply chains. They don't apply where the worker works through their own personal service company that meets the conditions (that's IR35 territory), is caught by the managed service company rules, is a salaried member of an LLP, or is already treated as employed by the agency under the agency legislation.

What a small hirer should do

If you book through a reputable agency, the new liability lands mainly on that agency, which is why many agencies now restrict which umbrellas they'll use. Your exposure is highest if you contract directly with an umbrella company, or if you use a small agency that might not be able to meet an HMRC bill. Ask your agency which umbrellas sit in the chain, whether it audits them, and whether it uses payroll-checking services. Treat offers of unusually high take-home pay as a warning sign; HMRC's tool lets workers check whether their umbrella payslip shows the right deductions.

A wider regime is still to come. The Employment Rights Act 2025 brings umbrella companies within the Employment Agencies Act regulatory framework, so they'll face the same conduct rules and Fair Work Agency inspection as agencies. The government's timeline lists regulation of umbrella companies for 2027.

IR35: when an agency contractor works through their own company

Not every "agency" placement is a temp on PAYE. Professional contractors — IT, engineering, interim management — often work through their own limited company (a personal service company) and are supplied by an agency. Then the off-payroll working rules, known as IR35, decide who pays the tax.

Since 6 April 2021, a medium or large private-sector client has had to decide whether the contractor would be an employee if engaged directly, issue a status determination statement with reasons, and pass it down the chain. The party that pays the contractor's company — usually the agency, called the fee-payer — then deducts PAYE and pays employer National Insurance if the role is inside IR35.

A company is small, and outside these client duties, if it meets two or more of the small-company tests: turnover not over £15 million, balance sheet total not over £7.5 million, and not more than 50 employees. If you're a small client, the contractor's own company decides its IR35 status. Don't skip the question entirely, though: misdescribing a role, or letting an agency treat a deemed employee as self-employed, can still cause problems under the separate agency legislation.

Employment Rights Act 2025: what changes for agency workers and when

The Employment Rights Act 2025 received Royal Assent in December 2025 and is being switched on in stages. The government's timeline, last updated on 25 September 2026, gives these dates. Every future date remains subject to Parliament and may move.

Employment Rights Act milestones relevant to agency staff

6 April 2026

Statutory Sick Pay from day one with no Lower Earnings Limit; umbrella PAYE liability (Finance Act measure)

7 April 2026

Fair Work Agency launched — enforces agency conduct rules, minimum wage and gangmaster licensing

1 October 2026

Employment tribunal time limit for most claims rises from 3 to 6 months

30 October 2026

Duty to take all reasonable steps to prevent sexual harassment, including by third parties

1 January 2027

Unfair dismissal qualifying period cut to 6 months (employees only)

2027

Right to guaranteed hours, reasonable notice of shifts and short-notice payments — extended to agency workers; umbrella company regulation

The biggest change for agency staffing is the right to guaranteed hours. The consultation on how it will work ran from 2 June to 25 August 2026. For qualifying agency workers, the government's proposal is that the hirer, not the agency, would by default have to offer guaranteed hours reflecting the hours regularly worked over a reference period. Accepting would put the worker on a worker's contract directly with the hirer. The thresholds, reference period (12 weeks is the preferred starting point) and exemptions are still being finalised.

Linked rights will require reasonable notice of shifts and payment when a shift is cancelled or cut at short notice. How these duties split between agencies and hirers is still being settled in regulations. If you rely on calling temps in at short notice and cancelling them when orders drop, budget now for short-notice payments from 2027.

The six-month unfair dismissal qualifying period from 1 January 2027 applies to employees, so it mostly affects agency workers only if they're employees of the agency, or once they've joined you directly. The longer tribunal time limit applies to agency worker claims too, so a dispute about equal pay or facilities can now be brought up to 6 months after the event.

Taking an agency worker on permanently

If a temp works out well, you can offer them a job. The agency can't stop the worker accepting and can never charge the worker a fee for it. Whether you pay a transfer fee depends on your terms of business and the Conduct of Employment Agencies and Employment Businesses Regulations 2003.

A transfer fee clause is generally only enforceable if the agency gives you a genuine alternative: an extended period of hire, after which you can take the worker on without paying a fee. The regulations also limit the window in which a fee can be charged after the assignment starts or ends.

Hiring a temp permanently without a fee dispute

1. 1

   Read the transfer clause

   Find the fee, how it's calculated (often a percentage of salary) and any extended-hire alternative in the agency's terms of business.

2. 2

   Ask for the extended-hire option in writing

   Ask how many more weeks of hire would let you take the worker on without a fee, and at what charge rate.

3. 3

   Compare the two costs

   Extra weeks of agency margin versus the one-off fee — then decide.

4. 4

   Make the offer and register for PAYE

   Once the worker joins your payroll, they're your employee from their start date with you.

   Register as an employer

The regulations also stop agencies withholding a worker's pay because you're unhappy with their work — that's a contractual matter between you and the agency. And under regulation 7, an agency cannot supply workers to cover staff taking part in official strike action. The 2022 attempt to lift that ban was quashed by the High Court in 2023, so the ban applies.

Common mistakes hirers make with agency staff

• No comparator information. If the agency asks for your pay rates and you ignore the request, you can share liability for an equal pay claim. Give accurate rates, premiums and holiday terms at the start.
• Losing count of weeks. Hirers often assume a break "resets" the clock. Only breaks over 6 weeks (or a substantively different role) do. Keep a simple log of each temp's start date and gaps.
• Shutting temps out of facilities. Separate canteen hours, no shuttle-bus access or no parking for temps are the easiest claims to bring and lose.
• Hidden vacancies. If your jobs board is internal only, temps can't see it. Send vacancies to the agency and post them on site.
• Assuming the umbrella is someone else's problem. Contracting straight with an umbrella company since April 2026 puts its PAYE risk on you.
• Using "temps" for permanent work. A temp who has been with you for two years at full hours is costing you agency margin, may be building claims, and from 2027 may be entitled to guaranteed hours.

Hirer checklist before an agency worker starts

0/9

• Signed terms of business that set out the charge rate from week 1 and from week 13
• Comparator information sent to the agency: basic pay, premiums, overtime, holiday, hours and breaks
• Role, hours, location and health and safety risks described to the agency
• Site induction and any protective equipment arranged
• Access to canteen, parking, transport and other facilities confirmed
• Vacancies shared with the agency and posted where temps can see them
• Umbrella companies in the chain identified and checked by the agency
• Start date logged so you can track the 12-week clock
• IR35 status determination issued if a contractor works through their own company and you're medium or large

Share Print

Where agency workers can complain — and what that means for you

An agency worker who thinks they've been denied a right under the Agency Workers Regulations can bring an employment tribunal claim against the agency, the hirer or both. Tribunals can apportion compensation according to who was responsible: denial of canteen access is the hirer's failure; wrong pay after 12 weeks is usually the agency's, unless the hirer gave wrong comparator information. Employees dismissed for asserting their rights are automatically treated as unfairly dismissed.

Separately, the Fair Work Agency, which launched on 7 April 2026, investigates agencies that charge workers fees to find work, fail to pay what's owed, or pass workers to an umbrella company without telling them who it is and what it charges. It also took over gangmaster licensing — so if you use labour providers in agriculture, food processing or shellfish gathering, check they hold a licence before you book anyone.

Official links

• Your rights as an agency workerDay one, 12 weeks, fees, key information document
• Acas: agency workersEqual treatment detail and counting rules
• Umbrella company PAYE rules from 6 April 2026Agency and end-client liability
• Employment Rights Act timelineCommencement dates for 2026 and 2027
• Understanding off-payroll working (IR35)Client and fee-payer duties
• Fair Work AgencyComplaints and gangmaster licence checks

What to do next

Before your next booking, ask the agency for its charge rates from week 1 and from week 13, send it your comparator pay and holiday terms, and confirm which umbrella companies it uses. If a temp is turning into a long-term role, plan the cost of hiring directly with the budget planner and read how to register as an employer. For the wider picture on business taxes, see the UK business tax overview.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Do agency workers have the same rights as employees?

Not from day one. Agency workers have worker rights from the start — minimum wage, 5.6 weeks paid holiday, rest breaks, Statutory Sick Pay and protection from discrimination — plus access to the hirer's facilities and job vacancies. After 12 weeks in the same role with the same hirer they get equal treatment on pay and basic working conditions. Most are workers rather than employees, so they don't get employee-only rights such as unfair dismissal protection.

What is the 12-week rule for agency workers?

Under the Agency Workers Regulations 2010, once an agency worker has done 12 weeks in the same role with the same hirer, they are entitled to the same basic pay and working conditions as if the hirer had recruited them directly. A week counts if any work is done in it. Breaks of up to 6 weeks, annual leave and some sickness only pause the clock, while a longer break or a substantively different role restarts it.

Who pays an agency worker's holiday pay?

The agency (or the umbrella company that employs the worker) pays it, not the hirer — though the cost is built into the charge rate you pay. Workers accrue at least 5.6 weeks a year from day one. For irregular-hours workers, holiday can be paid as a 12.07% uplift on each payslip for leave years starting on or after 1 April 2024. After 12 weeks, they're entitled to any extra holiday your own staff get.

Can a recruitment agency charge me for taking on a temp permanently?

Often yes, but only within limits. Under the Conduct of Employment Agencies and Employment Businesses Regulations 2003, a transfer fee term is generally only enforceable if the agency gives you the option of an extended period of hire instead, after which you can take the worker on without paying a fee. The agency can never charge the worker. Read the terms of business before the assignment starts.

Is the agency liable if an umbrella company doesn't pay PAYE?

Yes, for payments made on or after 6 April 2026. If an umbrella company in your labour supply chain fails to account for PAYE income tax and National Insurance, HMRC can recover the shortfall from the agency that contracts with the end client — or from the end client itself if there's no agency. Do due diligence on umbrellas and check payslips.

When will agency workers get guaranteed hours under the Employment Rights Act 2025?

Not before 2027. The government's timeline, updated on 25 September 2026, lists the right to guaranteed hours and to reasonable notice of shifts and short-notice payments for 2027, with exact timing to follow the consultation that closed on 25 August 2026. For qualifying agency workers, the consultation proposes that the hirer would normally make the guaranteed-hours offer.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Your rights as an agency worker (printable guide) — GOV.UK · accessed 9 October 2026
2. 2.Agency workers: your employment rights from the start — Acas · accessed 9 October 2026
3. 3.Agency workers: your employment rights after 12 weeks — Acas · accessed 9 October 2026
4. 4.Agency workers: if there's a problem with the agency — Acas · accessed 9 October 2026
5. 5.PAYE rules for labour supply chains that include umbrella companies from 6 April 2026 — HMRC · accessed 9 October 2026
6. 6.Plan to Make Work Pay and Employment Rights Act: timeline update (25 September 2026) — Department for Business and Trade · accessed 9 October 2026
7. 7.Make Work Pay: ending one-sided flexibility — reforms of zero hours and similar contracts (consultation) — Department for Business and Trade · accessed 9 October 2026
8. 8.Holiday pay and entitlement reforms from 1 January 2024 — Department for Business and Trade · accessed 9 October 2026
9. 9.Understanding off-payroll working (IR35) — HMRC · accessed 9 October 2026
10. 10.Fair Work Agency — GOV.UK · accessed 9 October 2026
11. 11.High Court quashes 2022 regulations which allow striking workers to be replaced by agency workers — DWF (law firm) · accessed 9 October 2026