Taking on agency temps as permanent staff – what you need to know

Jun 28, 2021 | Good Management

If you have been using an agency worker who has proved to be especially valuable, you may decide you would like to employ them directly. If you would otherwise use them for a long period of time, this is a sensible decision as it is possible they may become entitled to employment rights anyway (depending on a variety of factors relating to the relationship between your business and the worker), and could be considered to be employed by you even if you haven’t actually taken that step. Employing them directly may help show how much you value them and increase the chances of retaining them in the business.


But if you want to start employing an agency worker directly, there are a number of things you need to know:

Agency temp to perm fees

You need to check the terms and conditions of the agreement you have with the agency carefully to find out what fees may be payable to the agency if you take a worker on as an employee.

Under the Conduct of Employment Agencies and Employment Businesses Regulations 2003 right of agencies to impose these fees, previously common practice, was limited somewhat. Temp to perm, or ‘transfer’ fees are now only enforceable if there is also an option in your contract with the agency to take the worker on for what is known as an ‘extended hire’ period, after which the worker may transfer without a fee being payable to the agency. The length of the extended hire period must be specified in the terms and conditions, and the costs of the agency worker to the hirer during that period cannot be higher than they were before the extended hire period began.

Transfer fees are also not enforceable if you take on the worker as an employee either 8 weeks after their assignment with you ended or 14 weeks after the assignment started, whichever is later, known as a quarantine period.

The key is to check the terms and conditions you have with the agency, which will help you decide which of the options available is best for you. When you know the amount of any transfer fee and the length of the extended hire period you can decide whether to pay the fee, opt for the extended hire period or end the assignment and wait for the quarantine period to expire (the risk being that the temp finds alternative work during that period).

Continuous service

If you are taking on an agency worker as a permanent employee you will need to be clear about when their continuous employment started, for the purpose of calculation of any service-related rights or entitlements. To do this you will need to be sure whether the period they were engaged with you as an agency worker should or could be counted.

If the worker was engaged on a permanent contract of employment with the agency there will be no issue – they will have accrued employment rights with the agency up to the point they transfer to you, at which point they start accruing those rights with you.

If the worker was engaged through a contract for services with the agency, there is a risk that a tribunal may consider that they were in fact an employee of yours from the start of their temporary assignment. To establish this they will examine any relevant documentation governing the relationship between the parties but will also look at the facts of what was actually happening in practice in terms of whether the relationship was one of employment.

There are a number of things you can do to protect yourself in these circumstances;

  • Make sure the terms and conditions you have with the agency regarding the placement of the worker are clear about there being no employment relationship between the worker and you as the hirer.
  • Make sure managers don’t treat agency workers as being the same as direct employees in terms of how the relationship operates on a day to day basis and how they are managed/controlled, to avoid any ambiguity.
  • Consider implementing a break of service when taking on agency workers as permanent staff; two weeks is advisable.
  • In the contract of employment you issue to the worker, make the start of continuous service date very clear as being the date they transferred to your direct employment.


If you would like more information about taking on an agency worker as a permanent member of staff, please get in touch.