Businesses in the UK are losing millions because of mistakes in hiring temporary staff. Sometimes these mistakes lead to legal issues. Other times they cause unhappy clients or even damage to a company’s reputation. Reports have it that the cost of non-compliance is around £1.2 million.
This is why compliance is so important. If you don’t already know what compliance is, it means following all the laws and regulations that apply when you hire temporary workers. It covers things like checking if someone can legally work in the UK, making sure workers are paid correctly, and keeping the right documents on file.
For clarity, temporary recruitment is different from hiring permanent staff. It moves fast and often involves many people in a short time. Because of this, it can be easy to miss important checks or break rules by accident.
If you get compliance right, your agency protects itself, your clients, and the workers you place. Nevertheless, let’s look at what laws you need to know about and how to put compliance into practice when hiring temporary staff.
When hiring or placing temporary staff, you are not only finding people jobs, you are also legally responsible for a lot. Let’s walk through the main compliance laws you need to understand.
The Employment Agencies Act 1973
This law protects both workers and clients. These are some important details to note under this law:
You can't charge workers fees for finding them a job unless you’re in entertainment/modeling and even then, there are strict rules.
You must be transparent with your terms of business both to clients and candidates.
You mustn’t engage in misleading advertising or job offers.
You can be inspected by the Employment Agency Standards (EAS) Inspectorate and if they find serious issues, they can shut you down.
Conduct of Employment Agencies and Employment Businesses Regulations 2003
These rules apply directly to temporary recruitment. Before you send someone out to work, you must confirm their identity, qualifications, and whether they are suitable for the job. You must also give the worker clear details about the role. That includes pay, duties, location, start time, and hours. The client must also be informed of who is being supplied and what checks have been done.
Agency Workers Regulations (AWR) 2010
These rules are made specifically for temporary workers. There are two key things to know. First, after 12 weeks in the same role with the same client, the worker must get the same pay and working conditions as someone hired directly by the client. Second, from day one, the worker must have access to staff facilities, such as the canteen, rest areas, or parking. They must also be told about any job openings at the client site. Your agency must keep track of how long each worker has been in each role. Your client will expect you to get this right.
National Minimum Wage and Holiday Pay
Temporary workers are entitled to the national minimum wage. This is the law. You must check the current rates and make sure each worker is being paid correctly. Pay must be calculated properly, especially where hours change from week to week. Holiday pay must either be included in the pay or paid separately. Temporary workers are also entitled to other basic rights such as sick pay, rest breaks, and fair treatment under the Working Time Regulations.
Health and Safety Regulations
This regulation provides that even though the worker is based on the client’s site, you must make sure the workplace is safe. This means checking that the client has proper health and safety procedures in place. You must also pass on key safety information to the worker. If there is an accident, both your agency and the client may be held responsible. Do not rely on verbal agreements. Document your checks.
Data Protection Laws
You will typically collect personal information during the recruitment process. This includes names, addresses, right to work documents, and bank details. Under GDPR, you must only collect what you need, store it securely, and keep it only for as long as necessary. You must also tell the worker how their data will be used. If you fail to protect personal data, your agency could face heavy fines and loss of trust.
Right to Work
Every candidate must have the legal right to work in the UK. This must be checked before the assignment begins. It is not enough to ask the worker. You must see the original document yourself. Take a clear copy and keep it on file. Acceptable documents include a UK passport, a visa, or a settled status letter. You must not place anyone until this is confirmed.
ID and Proof of Address
You must verify the candidate’s identity. Ask for an official photo ID, such as a passport or driving licence. For proof of address, you can use a utility bill or a bank statement dated within the last three months. This helps confirm who the person is and that they are traceable. It also helps protect against fraud.
References and Work History
For most temporary placements, you need to check that the candidate is suitable for the role. This includes reviewing their work history and collecting at least one reference from a previous employer. References should confirm job titles, dates, and duties. If the role involves vulnerable people or financial responsibilities, more detailed checks may be needed.
Skills, Qualifications, and Training
If the role requires specific qualifications or training, you must check that the candidate has them. This might include a forklift licence, a care certificate, or a food safety qualification. You must see original documents or verified copies. Keep a record. Never assume someone is qualified just because they say they are.
DBS Checks
Some roles require a criminal record check. This is usually needed if the job involves working with children, vulnerable adults, or sensitive information. There are three levels of checks: basic, standard, and enhanced. You must know which level applies to each role. You must not place a candidate in a role that requires a DBS check until you have seen the certificate or have confirmation from the DBS service.
Bank Details and Payment Setup
To pay temporary workers, you must collect accurate bank details. This includes their account number, sort code, and national insurance number. Make sure this information is stored securely. Wrong or missing information can lead to payment delays and complaints.
Tax and National Insurance Status
You must confirm how the worker will be taxed. For temporary recruitment, this is usually PAYE. You will need their national insurance number and a starter checklist or P45. If the worker is operating as a limited company or through an umbrella company, you must confirm their status and check any IR35 implications if they are working in the public sector or for certain private clients.
Health and Safety Awareness
Before a candidate starts work, you must check that they are aware of basic health and safety requirements. You should tell them who to report to, what to do in an emergency, and any risks involved with the role. If the client site has specific training or induction, make sure this is completed and recorded.
Terms of Engagement
You must give the candidate a written contract before they start work. This is called a “terms of engagement” document. It should clearly explain how they will be paid, what notice they must give, and what the agency is responsible for. The worker must sign this document. Keep a copy on file.
Pension Auto-Enrolment
If the worker meets certain conditions, you are legally required to auto-enrol them in a workplace pension. This applies if the worker is aged 22 or over and earns more than £10,000 a year. You must enrol them after 12 weeks of work unless they opt out. You are also responsible for paying employer contributions into the pension. This is your duty as the employer, not the client’s.
Record Keeping
Accurate records are essential in temporary recruitment. You must keep written agreements, ID copies, right to work checks, pay records, timesheets, assignment details, and client confirmations. Keep everything organised and accessible. Good records protect your business and prove compliance if you are audited.
Uniforms, PPE, and Equipment
If the role requires any equipment like steel-toe boots or gloves, you must make sure the worker has what they need before starting. In some cases, the client will provide these. In others, your agency will. You must tell the worker in advance what they need and who provides it.
Compliance in temporary staff recruitment protects your agency, your clients, and the workers you place. Getting it right means following the rules from start to finish. Non-compliance can be costly. But with the right processes and attention to detail, you can avoid problems and build trust with clients and workers alike.
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