UK Contract Type Guide · 2026
What rights do UK agency workers have?
Definition
An agency worker is supplied by an employment business (the agency) to perform work for an end-user (the hirer). The agency typically employs the worker via PAYE; the worker performs work at and for the hirer. Different from 'self-employed contractor via agency' which is a different arrangement.
Rights and protections
DAY 1: NMW; rest breaks; rest periods; statutory holiday pay accrual (5.6 weeks pro-rata); access to canteen, parking, transport (same as direct employees); information about permanent vacancies (Hirer must inform agency workers). AFTER 12 WEEKS: equal treatment on basic terms — pay, hours, paid time off (subject to specific definitions); not less favourable than direct employees in equivalent roles. Conduct of Employment Agencies Regulations 2003: agency cannot charge for finding work; written terms required.
Employer obligations
Agency: PAYE, holiday accrual, NMW, written terms, provide information about Pay Between Assignments if applicable, not charge for work. Hirer: provide information about pay/conditions to allow comparison; same access to facilities; inform of vacancies; from week 12, equal basic terms.
Tax and pay implications
PAYE through agency. Holiday pay typically accrued (5.6 weeks pro-rata) and paid when leave taken — OR rolled up into pay rate (controversial; not technically lawful since 2006 ruling). Pension auto-enrolment may apply if duration meets threshold. Agency workers typically lower-paid than direct employees pre-12-weeks; equalised after 12 weeks.
Common use cases
Temporary work, seasonal demand, holiday cover, specialised short-term skills, screening for permanent hire, project-based engagements; common in healthcare (locums), education (supply teaching), industrial, hospitality, office support.
Worked example
James started agency work as a customer service rep at a retail company. Pay £11.50/hour; the equivalent direct employee was on £13.20/hour. From week 1 he had access to canteen, parking, and was told about permanent vacancies. From week 13, his pay rate was uplifted to £13.20/hour (AWR 12-week rule for equal basic terms). At week 16 he was offered a permanent role through the AWR vacancy notification path — total uplift over the 16 weeks of agency engagement: ~£1,100 just from the AWR equal-treatment kick-in.
Recruiter pro tip
The 12-week qualifying period for equal pay under AWR is widely under-claimed. Many agency workers don't know it exists, and some agencies/hirers obscure it. Track your assignment weeks carefully — same hirer, same role, breaks of less than 6 weeks count toward the 12. If you've been at the same hirer for 12+ weeks and pay hasn't been uplifted to match equivalent direct employees', raise it with the agency in writing citing AWR Reg 5. Backdated equal-pay claims are recoverable.
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