Conduct & regulation
What is an employment business?
An employment business supplies temporary workers to hirers while itself engaging and paying those workers. An employment agency, by contrast, introduces candidates for permanent engagement by the hirer.
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<img src="https://agencyoptix.co.uk/glossary/employment-business/diagram.svg" alt="employment business — diagram from AgencyOptix" width="880" height="620" loading="lazy">
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<a href="https://agencyoptix.co.uk/glossary/employment-business">What is an employment business?</a> — diagram by
<a href="https://agencyoptix.co.uk">AgencyOptix</a>
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</figure>The distinction determines which obligations apply. It is decided by what actually happens in the arrangement — who engages the worker, who pays them, who directs the work — and not by which term appears on the letterhead.
A single firm commonly acts as both, sometimes on the same client account. The obligations attach per engagement, so running one compliance process for everything means applying some rules where they do not belong and missing others where they do.
For temporary supply the firm carries continuing obligations for the duration of the assignment, not just at placement — which is the practical difference in how the two need to be administered.
What goes wrong in practice
- One set of terms used for both permanent and temporary work.
- A permanent introduction handled under temporary supply procedures, or the reverse.
- Obligations treated as complete at placement when temporary supply continues them.