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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50158
Experience:  Qualified Employment Solicitor
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Im a temp, employed by an agency for two years. The reason

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I'm a 'temp', employed by an agency for two years. The reason I signed such a contract was to be employed by my hirer afterward, and this is how the deal is sold by the agency.

Now, I'm nearing the end of the contract, and it turns out that the agency has a contract with my hirer to prevent myself being hired if they haven't had me for more than a year (I changed hirers to this one after 14 months with another hirer).

Is this legal? I've read this: but I'm not sure what these mean together:
"If you run an employment business you can charge transfer fees to hirers:
when they’re supplied a temporary worker who is then taken on permanently by the hirer (temp-to-perm fees)"

"you can’t use transfer fees unreasonably to discourage hirers from:
offering permanent work to temporary workers"

My agency has already extended my contract with my hirer to a few months after *my* contract ends, but which ends after a year at the current hirer, so assumes I continue with the agency beyond my 2 year contract, until the year with the hirer is made up. None of this was mentioned when I was signing up to the contract.

Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. Employment agencies have traditionally been eager to protect the revenue they get from supplying temporary workers to end user clients. They normally do so by including certain "restrictive covenants" or clauses within their contracts to either prevent a contractor from taking up direct employment with an end user, usually for the duration of the contract plus an extended period after termination, or which imposes a substantial fee if they do. The civil courts have on many occasions deliberated whether such "restrictive covenants" are fair and reasonable and there is still no single definitive answer.

Under UK and EU legislation there have been attempts to allow workers to seek employment wherever they choose, without restriction, thus removing any restraint of trade prohibitions. The most relevant piece of legislation in this respect is Regulation 10 of The Conduct of Employment Agencies and Employment Businesses Regulations 2003.

Where a temporary contract between an agency and an end user contains provisions to charge fees in a situation where the worker is taken on by the end user, it must now also provide the option of an "extended period of hire" where the end user client continues to pay the agency margin while engaging the worker directly (or through another agency).

Where there are provisions for the payment of a fee and/or an extended hire period, the Regulations state that they are unenforceable beyond 8 weeks from the termination of the contract (or, if longer, 14 weeks from the start of the contract).

So effectively this creates a situation where an end user client who wishes to employ a contractor directly (or transfer the contractor to another agency) will have 3 options:

1. Pay the transfer fee stipulated in the contract.
2. Pay the extended hire fee stipulated in the contract.
3. Terminate the contract (presumably with due notice) and wait for the specified 8 or 14 week period to end.

The wording you enquired about does at first sight appear contradicting but the second part simply means that the agency should not unreasonably use the fees to prevent the hirer from employing someone permanently, meaning they cannot use these as a ransom and should only apply them in a fair manner.
Customer: replied 4 years ago.

Hmm, Thanks.


Can I ask if there is a limit to the transfer fee amount?

Does "The supply terms can’t be worse for the hirer than those before the hirers opted for the set hire period." imply it can't be worse than what would otherwise be the agencies margin?

I'm not sure how this applies to me - I'm not told how long the hire period is for, and was under the impression that it is periodically extended.


Additionally, is option 3 possible, considering the period has already been extended by 3 month beyond my contract end? From what I read here, it seems like the agency cannot enforce a transfer fee 2 months after my contract end, so why am I being asked to work for another 3?


Yous said "here there are provisions for the payment of a fee and/or an extended hire period" - is this not guaranteed? If so, it seems you are saying that no agency can prevent a company from hiring you 2 months after your contract ends?


In this case, I've been told the client contract states that the hire period must be for at least a year until they can employ you.

No there is no limit on the fees and they will depend in the circumstances, so an employment business may, for example, calculate the fee based on the expected duration of the hirer's subsequent engagement of the worker and increase the transfer fee in circumstances where the hirer extends the subsequent engagement beyond the period originally envisaged.

Your contract may have ended but that is not really the case,there is still an ongoing relationship so it would have continued on a rolling basis and a formal relationship would have continued to exist. So the time will run from the actual time the relationship ends.

You are correct that once the 8 week period after termination ends the agency can no no longer charge fees if you were to be employed directly by the hirer
Customer: replied 4 years ago.

AHh, THanks. I'll have to find out if the agency is an "employment business".


They provide some "training" at the beginning, and agree to waive this if you fulfill your contract - otherwise they charge excessive fees. I guess this is how they prevent people leaving before 2 years. Are they still a "employment business" though? I'm worried that they also have some mechanism for maintaining that they aren't.


leaving my potential employer for 2 months is perhaps a big ask - Can I chip away at the period with current holidays? That is, Can I move allowed holidays to the end of my contracted period in order to bring forward my termination date?


I don't want to tie you up much longer before I'm satisfied, so just one more thing - I got a strange letter from the agency that went as follows:

"New legislation entitled 'Agency Workers Regulations 2010' is effective from 1st Oct 2011. While this is not applicable to your employment, to the extent that it is deemed applicable, by entering into this contract variation you will have no entitlement to rights conferred under Regulation 5 of the AWR insofar as they relate to pay."

The message urged signing it in order to receive a 'variation', which I didn't since the 'variation' was a 1-year pay increase already promised by my current contract. Was this an attempt to trick me into signing away a right I might have (is it legal to make it seem like I had to sign the letter in order to get what I was already contracted to get?)? What is this (regulation 5)?

Hello, sorry about the slight delay I was offline by the time you had replied last night.

The definition of employment business is actually found in statute and is defined as a “business involved in supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity"

There is also a definition for an employment agency, which is involved in "providing services (whether by the provision of information or otherwise) for the purpose of finding workers employment with employers or of supplying employers with workers for employment by them".

The issue with using holidays is that whilst on holiday you are still deemed employed by the business so your employment would not be terminated yet and the holidays would still count towards your period of employment.

As to Reg 5, this applies to agency workers and allows them to receive the same basic terms and conditions as permanent staff doing the same job, basically allowing equal treatment of agency workers and permanent employees, at least to an extent. Whatever they say in the letter, the contract cannot overrule statute so they can’t really have tricked you into signing away your rigts – if you are an agency worker and you meet all relevant criteria to be covered by these Regulations, you will be, regardless of what your contract says.

If your original question has been answered I would be grateful if you could please quickly rate my answer - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you
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