Temporary work plays an invaluable role in the world's economy.
Some reports estimate that in the UK alone, the gig economy contributes 20 billion GBP a year to the national economy.
Temporary work, and the gig economy in particular, are often portrayed as a recent phenomenon.
In fact, throughout history, many people have worked in temporary roles. This was especially true of seasonal work in agricultural societies.
What is a temporary worker?
A temporary worker can range from someone working somewhere for a matter of hours (as is common in hospitality) to several years (such as consultants or independent contractors).
It can technically be used to describe many kinds of non-permanent roles.
However, temporary work is typically used to describe agency, seasonal and freelance workers working within the range of a few hours to a few months.
Let's take a brief look at the main categories of temporary work.
Agency workers (also known as temp workers) work for short periods with companies that have hired them through 'temp agencies.'
While the temp agency may seem to be a middleman responsible for finding agency workers' positions and paying them directly, they are often still an employer.
Therefore, agency workers are often classed as employees of the temp agency that hires them.
The temp agency must comply with all relevant hiring and employment pay regulations. And the hiring company must also adhere to all relevant regulations, including those around health and safety and other working conditions, rest breaks, etc.
Seasonal work covers a range of roles that take place over a particular season (or two). Many industries would not be able to operate without them.
When most people think of seasonal work, it is agricultural work that usually comes to mind. But there are also many seasonal roles in hospitality and tourism, education, the arts, and other industries.
Because of the nature of the work, employers also often provide accommodation and other living expenses for seasonal workers, too.
Agricultural and Horticultural seasonal work
Seasonal workers in agriculture and horticulture often come from abroad and work in the UK on seasonal worker visas.
The Department for Environment, Food and Rural Affairs (Defra) estimates that up until the last 2 years, 99% of the UK's seasonal horticultural workers were from abroad.
In horticulture, there is a critical period where a workforce is needed.
A recent UK government pilot scheme review found that the majority (56%) of seasonal workers' work hours were spent on picking soft fruit, followed by vegetables (29%), salads and legumes (9%), and top fruit (6%).
Holders of other types of visas, such as youth mobility visas, could also do seasonal work. However, these visa holders would likely be looking for more long-term work (their visa lasts for two years) and it is unlikely that employers will find these in the right numbers.
Self-employed freelance workers
Freelance workers work on the basis of short contracts and/or retainers over longer periods.
The employment status of a freelance worker is self-employed. This means they are not paid through pay-as-you-earn (PAYE).
It also means that they do not have the same responsibilities or rights as employees who are directly employed by a company.
Are Uber drivers freelancers?
The precise definition of what constitutes a self-employed worker made headlines in recent years when Uber lost a Supreme Court Case. Many believe that this has wider consequences for the gig economy.
Prior to the ruling, Uber's drivers were defined by the company as self-employed. The drivers' pay and rights reflected this status.
In court, the drivers' successfully argued that because Uber set fares and contractual terms (amongst other matters), the drivers were in fact 'workers', which is essentially half way between 'self-employed' and 'employees'.
This updated status gives Uber drivers minimum wage and holiday pay. But the bigger impact of the case is the signal it sends about the use of 'disguised employment' by employers.
Disguised employment is when employers incorrectly categorise workers as something other than regular employees, thereby gaining unwarranted advantages (such as not paying National Insurance contributions, holiday and sick pay, pension, etc.)
The advantages and disadvantages of hiring temporary workers
Hiring temporary workers comes with both benefits and drawbacks.
Broadly speaking, the advantages outweigh the disadvantages, hence the large global market for such services.
The main advantage for businesses is flexibility. Temporary staff can fulfill a need when it arises, often on short notice.
It helps businesses cover full-time employees on leave (holiday, maternity/paternity leave, etc.), or simple staff shortages.
In some cases, there may even be an opportunity to fill or create permanent positions from amongst the ranks of temporary workers.
As with the advantages of using temporary workers, the disadvantages vary according to the roles and industries in question.
Generally speaking, the disadvantage of temporary work is consistency and short return on investment in skills.
It is possible to largely overcome the former with an effective recruitment process (or temp agency). The latter is inevitable and unavoidable.
How to pay temporary workers
How exactly temporary workers get paid varies according to what category of worker they are.
Generally speaking, consultants, contractors and freelance workers have their own payment arrangements. This generally involves sending their employers invoices according to agreed payment terms.
If businesses hire agency workers, they will not directly pay them. Instead, businesses will pay the temp agency they hired the agency workers through.
It is worth noting that after 12 weeks, some temporary workers are entitled to some of the same pay and rights as permanent workers in the same company. These include annual and other paid leave, overtime pay, and working duration limits.
When it comes to directly paying temporary workers, there are four main issues businesses should consider:
1. Income tax and National Insurance Contributions (NIC)
Businesses employing agency workers via a temp agency don't need to pay their National insurance or tax contributions. The temp agency pays those.
If they are employing self-employed freelance workers, businesses don't need to pay these contributions either (the worker themselves is responsible for this).
Paying these contributions for seasonal workers depends on whether or not the business is their direct employer. If they are, they need to pay them through the payroll and deduct the appropriate values for these.
2. Sick Pay
At present, Statutory Sick Pay (SSP) is £99.35 GBP per work in the UK.
Agency workers can qualify for SSP if they meet the following conditions, listed on the government's website:
- Have an employment contract (and have completed work under it)
- Have been sick for four consecutive days (including non-working days) during the period of their contract
- Earn at least £123 GBP per week
- Provide notice and proof of illness when needed
However, for agency workers who are categorised as self-employed, SSP is not available (just as it is not for other self-employed freelance workers).
For agricultural seasonal workers, Agricultural Sick Pay (ASP) usually applies (it is different to SSP). This means that if the worker has been working for less than 12 weeks, they are not entitled to any pay. Beyond that, different time periods involve different ASP.
3. Holiday pay
Broadly speaking, in the UK, most workers (except those who are self-employed) are entitled to paid holiday leave (often referred to as annual leave). The total amount full-time workers are entitled to is 5.6 weeks per year.
The amount they are paid for this leave reflects what they are paid normally.
As with statutory sick pay, this issue can be different with temporary workers according to their contract of employment and how long they have been in a role already.
Generally speaking, non-self-employed workers who have worked in a role for over three months are eligible for the same holiday pay rights as other employees. But by definition, a lot - but not all - of temporary work doesn't surpass this time length.
To calculate exactly how much paid holiday they need to give their temporary workers, employers should check the government's guidance on this and their holiday entitlement calculator.
As well as holiday and sick pay, temporary workers are entitled to:
- Use of workplace facilities for staff such as canteen or nursery
- Unpaid Parental Leave, with some conditions
- After 12 weeks, paid time off for antenatal appointments if pregnant
4. Practicalities of paying
For most temporary work roles, the process of directly paying each employee is simple. Most will have their own bank accounts.
All employers need to consider is whether to first deduct income tax and national insurance contributions.
However, there are occasions when paying temporary workers is not so easy. This is often the case for seasonal workers who have arrived from abroad.
The OnePay account was created to overcome this hurdle. It's used by leading temp agencies, seasonal agricultural employers, and other employers with both large and small workforces.
It provides a secure and easy-to-use card and account for temporary workers. Crucially, it is easy to set up and has a multi-lingual app and customer support as well as dedicated account managers.
Temporary work is a large and fundamental part of the economy.
There are different categories of temporary worker, including agency/temp workers, seasonal workers, freelancers, consultants, and contractors.
Different employment regulations apply to each group. Agency workers on a fixed-term contract, for example, can have the same employment rights as someone with a permanent job if they have worked at the employment agency long enough.
There are exceptions to this though. For example, agricultural sick pay does not apply to cases where the employee has been working for less than 12 weeks.
Paying national insurance and tax for temporary workers applies in cases where they are employees. When they are hired as self-employed freelancers, they are responsible for these themselves.
Most temporary workers can be paid directly into their bank accounts. But some agency and seasonal workers, particularly those from abroad, might not have access to banking services in time for this.
Given the short-term and urgent nature of a lot of temporary work, finding a solution for workers like these can make a big difference for employees, employers and the economy.