How to hire temporary employees – a step-by-step guide

Hiring temporary employees can help small businesses fill staffing gaps, especially during busy seasonal periods, and is useful if you need to bring in specialist skills.

But how do you hire temporary employees? And what are your legal responsibilities?

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Benefits of hiring temporary employees

You might need temporary employees for reasons such as managing increased seasonal demand, reducing pressure on existing staff, or for a specific event.

There are several benefits to taking this approach, including:

• filling positions for specialist staff, for example catering experts
• being able to hire quickly and plug immediate gaps in your staffing
• having the option to take temporary staff on permanently if you find the right person
• avoiding being overstaffed at times when business is slower

What are the downsides?

• it can be expensive if you take on a lot of new staff at once or for a long period
• some temporary employees may not be as motivated as their full-time counterparts
• it could take extra time to train temporary staff and they could take a while to get up to speed
• a high level of staff turnover could cause morale or customer service problems

How to hire temporary employees

If you’re considering hiring temporary employees, make sure you’re aware of your legal responsibilities. For example, you’ll need to understand the different rules for hiring on fixed-term contracts and using agency workers. It’s important to do your research as depending on the sector you work in, different types of temporary employment are likely to be more suitable.

Here’s an overview of three of the main ways you can hire temporary employees:

1. Fixed-term contracts

An employee is on a fixed-term contract if they have a contract of employment, and it ends on a specific date or on the date a task or project is completed.

Fixed-term contracts are usually used for maternity cover, specialist employees needed for individual projects, and seasonal or casual employees.

Temporary workers on a fixed-term contract are still entitled to holiday pay, and notice periods depend on the terms of the contract, as well as how long the employee has worked for you.

The government’s guide to fixed-term employment contracts gives you more details on ending this type of employment legally and workers’ rights.

2. Zero hours contracts

A zero hours contract is a type of employment where the worker is not guaranteed a set number of hours by the employer. Staff on these contracts are only paid for the hours they work, so you have more flexibility if there’s less work for them to do.

A zero hours contract allows the employer and temporary staff to have a more long-term agreement, even if the number of hours being worked is inconsistent.

They also offer a more defined legal framework than other types of temporary employment, including measures such as performance reviews.

Download our free zero hours contract template to find out how offering this type of temporary employment could work for your business.

3. Agency workers

You may choose to hire temp staff through a temporary work agency. This is particularly common in the retail and hospitality sectors. If you’re hiring agency workers, you need to be aware of their rights under the Agency Worker Regulations.

All agency workers are classed as ‘workers’, rather than employees. They’re still entitled to things like paid annual leave, rest breaks, and the national minimum wage.

You’ll also need to give them standard health and safety at work, and protection from unlawful wage deductions and discrimination as set out in the Equality Act 2010.

Once an agency worker reaches 12 continuous weeks in a job, they have a right to the same treatment as comparable employees. This means you must treat them the same as if you’d hired them directly.

This includes pay (as well as bonuses and commission), and working time rights on top of those guaranteed by law, such as paid leave.

Choose a hiring route

Next, you need to choose whether you’ll hire staff directly, through a recruitment agency, or through a temp agency.

It’s important to note that temp agencies operate in a different way. This is a popular way of hiring temporary staff, but you should make sure that you understand it before you jump in.

How do temp agencies work?

If you’re considering hiring through a temp agency, it pays to know how the system works. In the UK, the cost of hiring through an agency falls on the employer.

In most cases, the worker will be paid by the agency, which will also be responsible for tax and National Insurance.

The amount you pay will vary not only by agency you work with, but also by sector and industry. For example, a specialist recruitment contractor is likely to cost more than a member of hospitality staff working at an event.

If you decide to take on an agency worker as a permanent member of staff, you’re likely to be charged a ‘transfer fee’. There are some exceptions, for example if a certain period has expired between the agency assignment being completed and the worker being hired as an employee.

It’s generally best to speak to a range of different agencies in your industry before making a choice. You should feel that you trust the agency you choose, and that they understand your business and its needs.

Have you got temporary employee insurance?

If you employ people, even on a temporary or casual basis, you’re legally required to have employers’ liability insurance. This protects you against compensation claims if an employee is sick or injured while at work.

How legal expenses insurance can help

If you have legal expenses insurance as part of your Simply Business policy, you have access to a number of useful services through DAS Businesslaw (you’ll just need your voucher code found in your policy documents to register).

DAS has a legal advice helpline, available whether you’re facing a serious legal issue or just want to check something with an adviser. They also offer a range of legal templates and guides to help you with temporary employees.

Consider doing an exit interview

What happens when the temporary contract comes to an end? While many may leave and go on to their next employment, some may be happy to give an exit interview.

This is something you can suggest as their contract nears the end and can be useful to find out your employee’s experience of your business and the role. It might even help you identify ways you can improve things for future staff.

Read our guide to exit interviews and important questions to ask.