Difference between agency/subcontractors?

[YULEY]

Hi,

Can anyone shed some light on what the difference is between an agency worker, subcontractor and someone working on a zero hour contract?

Have been looking for something that can clearly state the difference as they all seem very similar in terms of their employment contracts.

Thanks!

 

[Newchodge]

An agency worker is employed by an agency and supplied to different clients who need wokers. They have special employment rights. They have no emplloyment relationship with the end client, only the agency.

A zero hour contract employee has an agreement with a potential employer that, if the employer needs a worker, they may ask the zero hours worker to do that work. If they are offered the work they are employed by the employer.

A sub contractor has no employeee relationship with anyone. They work for themselves, tell their client their price for the work needed and choose how and when they do the work.

They are all completely and utterly different.

It is unusual to have an essay assignment at this time of year.

 

[Mr D]

Zero hours contracts are popular with people that need variable work - they can refuse to do a shift / week or whatever.
So carers and students may find work when they are free and refuse work / arrange not to work when they are not free.

Zero hours works both ways. Employer does not have to give work, employee does not have to accept work.

 

[YULEY]

Thanks both for your help.

 

[Recruitment&HR]

Just to add to this - on the "casual front", you also differentiate between casual worker and casual employee. A basic comparison:


Has implied obligations towards employer, such as confidentiality during and after termination of employment?
Casual Employee: Yes
Casual Worker: No

Can include express obligations in the employment contract, such as restrictive covenants?
Casual Employee: Yes
Casual Worker: No

Unfair dismissal rights and statutory redundancy payment?
Casual Employee: Yes, depending on length of service
Casual Worker: No

Family friendly rights?
Casual Employee: Yes, depending on length of service
Casual Worker: No, in most cases

Sick pay?
Casual Employee: Yes
Casual Worker: Maybe

Right to membership of a pension scheme?
Casual Employee: Probably, as long as fulfils auto-enrolment criteria
Casual Worker: Unlikely but possible, if fulfils auto-enrolment criteria

Holiday leave and pay?
Casual Employee: Yes
Casual Worker: Yes

 

[YULEY]

An agency worker is employed by an agency and supplied to different clients who need wokers. They have special employment rights. They have no emplloyment relationship with the end client, only the agency.

A zero hour contract employee has an agreement with a potential employer that, if the employer needs a worker, they may ask the zero hours worker to do that work. If they are offered the work they are employed by the employer.

A sub contractor has no employeee relationship with anyone. They work for themselves, tell their client their price for the work needed and choose how and when they do the work.

They are all completely and utterly different.

It is unusual to have an essay assignment at this time of year.

Would subcontractors and agency also come under self employed or limited company?

 

[Newchodge]

Would subcontractors and agency also come under self employed or limited company?

Sub contractors are either self employed or employed by their own limited company.

Agency workers are employed by the agency.

 

[juliaperlman]

Agency: A business or organization providing a particular service on behalf of another business, person, or group.

Subcontractor: A firm or person that carries out work for a company as part of a larger project.

 

[neelyang77]

Hi,

Can anyone shed some light on what the difference is between an agency worker, subcontractor and someone working on a zero hour contract?

Have been looking for something that can clearly state the difference as they all seem very similar in terms of their employment contracts.

Thanks!

The main difference is who they are employed by and how hands-on they are. Put simply: Home (or business) owners hire a contractor to carry out an entire project. Contractors hire (or subcontract) subcontractors to do most of the hands-on work.

 

[NicoJ]

Sub contractors are either self employed or employed by their own limited company.

Agency workers are employed by the agency.

Agencies can and do supply self employed and ltd company contractors. The contract is with the agency still though.

 

[IanSuth]

Agencies can and do supply self employed and ltd company contractors. The contract is with the agency still though.

Agencies do supply ltd contractors where you have a contract with agency and the agency has a contract with the supplying ltd or sometimes the contract is direct between end user client and supplying ltd (where needed for specific contractual reasons for instance needing to define IP rights or specific confidentiality etc)

However agencies do not supply self employed people on a hourly basis (other than the very small subset via CIS) they are not allowed to, the agency has to deduct PAYE at source unless they can see proof of PSC LTD company status OR an umbrella company (which is basically the same thing but as an overarching ltd).

(ex recruitment consultant of 27 years with industry legal qualifications)

 

[Frank the Insurance guy]

Just in case this is relevant, regardless of what they are called, you may be required to hold Employers Liability Insurance and they be treated as an "Employee" - much depends on whether a "master/servant" relationship exists, are they supervised, do you provide them with tools/equipment etc.

I suggest you speak to your insurance company/broker to make sure your Employers Liability cover is on the correct basis.

 

[NicoJ]

Agencies do supply ltd contractors where you have a contract with agency and the agency has a contract with the supplying ltd or sometimes the contract is direct between end user client and supplying ltd (where needed for specific contractual reasons for instance needing to define IP rights or specific confidentiality etc)

However agencies do not supply self employed people on a hourly basis (other than the very small subset via CIS) they are not allowed to, the agency has to deduct PAYE at source unless they can see proof of PSC LTD company status OR an umbrella company (which is basically the same thing but as an overarching ltd).

(ex recruitment consultant of 27 years with industry legal qualifications)

It can be done Ian - you will notice I didn't mention how the contractor was paid....

The reason that most agencies tend to not touch sole trade is that HMRC have a higher chance of winning in an employment dispute but it can (and is) being done.

 

[IanSuth]

It can be done Ian - you will notice I didn't mention how the contractor was paid....

The reason that most agencies tend to not touch sole trade is that HMRC have a higher chance of winning in an employment dispute but it can (and is) being done.

Then they are not acting as a recruitment agency or employment business as defined in the regulations, they are acting as a some other form of agent and the self employed person will not be covered by the protections of those regulations (such as a right to be paid whether the end user has paid or not)



“work-finding services” means services (whether by the provision of information or otherwise) provided—

(a)
by an agency to a person for the purpose of finding that person employment or seeking to find that person employment;
(b)
by an employment business to an employee of the employment business for the purpose of finding or seeking to find another person, with a view to the employee acting for and under the control of that other person;
(c)
by an employment business to a person (the “first person”) for the purpose of finding or seeking to find another person (the “second person”), with a view to the first person becoming employed by the employment business and acting for and under the control of the second person;
“work-seeker” means a person to whom an agency or employment business provides or holds itself out as being capable of providing work-finding services.

 

[NicoJ]

Don't know what to tell you Ian, they are recruitment agencies and they have self employed workers on their books. Fact, not fiction.

 

[Newchodge]

Don't know what to tell you Ian, they are recruitment agencies and they have self employed workers on their books. Fact, not fiction.

But are they being supplied as self employed workers?

 

[NicoJ]

But are they being supplied as self employed workers?

Yes - this was more common following the introduction of the IR35 rules for the private sector.

 

[IanSuth]

Yes - this was more common following the introduction of the IR35 rules for the private sector.

Nope they are then being supplied either as PCS Ltd companies or via an umbrella.

Neither of those employment models are self employed worker models.

In one the individual is employed by their own ltd and that ltd has a business contract with the agency/client (that is a b2b contract not an employment contract)

In the other the individual has a contract with the umbrella company and the umbrella company has a B2B contract with the agency

I stand by what i said - other than some CIS work and the particular specified industries of Au Pairs, Nannies and Theatrical workers agencies do not employ self employed workers.

 

[NicoJ]

Nope they are then being supplied either as PCS Ltd companies or via an umbrella.

Neither of those employment models are self employed worker models.

In one the individual is employed by their own ltd and that ltd has a business contract with the agency/client (that is a b2b contract not an employment contract)

In the other the individual has a contract with the umbrella company and the umbrella company has a B2B contract with the agency

I stand by what i said - other than some CIS work and the particular specified industries of Au Pairs, Nannies and Theatrical workers agencies do not employ self employed workers.

Ian, with the greatest of respect I am well aware of the distinctions. An agency can (and do) supply self employed workers. I know because I've seen it happen, please don't tell me I don't know what I've seen with my own eyes!