What is a Temporary Work Agreement?
A temporary work agreement, also known as a contract for a definite period, is an employment agreement between an employer and an employee that lasts for a fixed period of time. These agreements have a wide range of purposes and can be used to fill many different positions as temporary assignments. The employers can avoid the financial and procedural burdens of hiring permanent staff by granting temporary workers short-term employment status under a work contract.
Many companies, such as staffing agencies and event coordinators, rely heavily on temporary employees to help them address the everyday highs and lows in the pace of their business. Parties like temporary employees tend to enjoy the flexibility that comes with it, as well.
A temporary work agreement, often more than permanent employment contracts, needs to emphasize the scope of employment. By identifying the work they will be doing , both parties can establish a greater level of trust in one another going forward. A good agreement should use clear language to identify the parties, give a thorough description of the work expected, and clearly state the length of employment. It should also require that the employee fulfill any conditions of a contract with a third party, notify the employer after termination of employment with the third party of any offers of employment subsequent to termination, and respect confidentiality.
Since this type of employment agreement is temporary, many people find themselves a little out of practice when they attempt to draft one for the first time. In addition to being detailed and focused, a temporary work agreement should be tailored to each individual situation. There needs to be a separate agreement for every new assignment and employer.
Key Terms Common to Temporary Work Agreements
Essential terms and conditions typically included in temporary work agreements include the duration of the assignment (noting that this may be for a fixed period or otherwise), scope of duties and where the assignment will take place, as well as the person(s) to whom you will report. It is also common to include both a termination clause and a non solicitation provision. A typical termination provision would include the ability to end the contract without notice during an initial probationary period, followed by mutually reciprocal notice periods tying to length of service. Non solicitations usually kick in after the termination date for a defined period but the key is making sure the scope of this provision is as narrowly defined as possible.
Rights and Obligations of a Temporary Worker
The rights and obligations of temporary workers are largely defined by the law. For example, the Labour Standards Act sets out the minimum wage, hours of work, overtime pay, and vacation for all workers. With respect to workplace safety, both the Occupational Safety and Health Act and Regulations and the Workplace Safety and Insurance Act (WSIA) apply equally to temporary workers.
In addition to complying with these general minimum employment standards, employers must also ensure that a temporary worker’s wages, working conditions, and benefits are consistent with those of regular employees under the same or similar circumstances.
Employers are permitted to provide more favourable terms and conditions to some employees than others (e.g. benefits and/or wages), provided the practice can be justified and does not create inequality within the group of employees to whom the more favourable terms and conditions are provided.
However, the Ontario Human Rights Code protection against discrimination based on certain enumerated grounds is interpreted to be broad enough to include equal pay, equality in work environment and conditions, and benefits. Specifically, the Code protects individuals against discrimination because of race, colour, ancestry, place of origin, ethnic origin, citizenship, creed, sex, pregnancy, sexual orientation, gender identity, gender expression, age, record of offences, marital status, family status or disability.
Employers cannot include a temporary worker into a group of employees and then offer benefits to that group which are not offered to the temporary worker. Otherwise, temporary workers can assert an indirect discrimination claim under the Code.
It is not enough, for example, for employers to pay a temporary worker 10% less that what it pays its regular workers doing the same work (unless they fall within an exception). Rather, the Code can impose higher minimum employment standards when justified on the basis of one of the enumerated grounds. In short, employers need to be careful when treating a group of employees differently from each other, particularly if they wish to exclude particular classes of employees. In determining whether the differentiation can be justified, the employer will be expected to consider whether the chosen group is appropriate and whether the differentiation advances a legitimate business goal.
Advantages and Disadvantages of a Temporary Work
For the Employee:
Flexibility – temporary work places more emphasis on independence and self-direction than permanent work. Most temporary workers welcome the ability to choose assignments that have flexible hours and require less responsibility than is typical for permanent employment.
Variety – temporary workers have the advantage of being able to experience different jobs and work with a wide range of people.
Additional Experience – additional job experience is usually provided for temporary workers, giving them exposure to new environments, and helping them to build their skills.
Exposure – temporary workers are often in a prime position to learn about permanent job openings, and can even be offered permanent positions within the organizations where they are placed.
For the Employer:
Cost – hiring a temporary worker to fill a vacancy can save a company money in the long run. An employer may be able to save money over hiring a full-time employee when only a short term placement is required. An employer may also benefit from hiring a temporary employee when there is a high rate of employee turnover, or when high turnover is anticipated. Hiring temporary workers also allows an employer to avoid paying benefits that must be offered to permanent employees.
Talent – hiring a temporary employee can provide access to a larger talent pool, as many temporary workers would not be willing to take a permanent position with that employer.
Testing- Hiring temporary workers provides an excellent opportunity to "test" them for a permanent position without making a permanent commitment. This approach also provides a "bite-sized" recruitment strategy.
How to Draft a Temporary Work Agreement
When considering how to draft a robust temporary work agreement, there are several elements that should be taken into account. There are a number of legal requirements that must be considered, as well as specific requirements for each type of temporary work. We will take a look at each in turn.
Temp agency agreements. When using a temp agency, the host employer and the agency will sign a contract that sets out each party’s responsibilities. There are a few key factors that should be examined when drafting the host-employer’s obligations in the contract.
The contract is often divided into two parts: the core contractual obligations, and the passage of risk. The core contractual part of the agreement usually includes:
The passage of risk relates to what happens to the transfer of risk when the agency places the employee with the host employer. There are two key principles that typically apply to the passage of risk:
As indicated above, the host employer is quite exposed to liability when a temp agency employee is placed at the host employer’s workplace. However, a well drafted host-employer / agency agreement can help to mitigate some of the host-employer’s liability.
Although a host-employer / agency agreement can help to identify responsibility for management of risk, any defence or indemnity given by the agency (or supplied by the host employer) will need to be carefully considered and drafted . Care must be taken that the agency’s actions at the placement do not limit the agency’s exposure. This is particularly important if the temp agency carries its own insurance to cover an incident.
An employee seconded from one employer to another typically signs a secondment agreement with the two employers that details the legal obligations of the parties, such as compensation, confidentiality, non-solicitation, etc. It is important that the agreement make clear, in no uncertain terms, who the ’employer’ is and what his or her legal responsibilities are. For example, the agreement should set out the limitations on the seconded employee’s authority to act on behalf of the employer, such as whether the seconded employee may make purchases or enter into contracts. There should also be a clear prohibition against the employee from making statements purporting to be on behalf of the seconded employer, as this could create liability for the employer who is not actually a party to the agreement.
While a secondment agreement may have standard contractual provisions similar to any other contract, there are some specific requirements that every secondment agreement should include:
In sum, there is no "one size fits all" temporary work agreement. Each roles and responsibilities should be considered when drafting a temporary work agreement, and the plan determined at the outset should be included in the agreement.
Important Legal Considerations for Temporary Work Agreements
Before an employer is able to lawfully employ an individual on a temporary or casual basis the employer must consider a number of legal matters such as:
Employment contracts: Temporary employees must be given a written agreement which contains a clear statement of employment particulars in relation to their employment terms and conditions under the Employment Rights Act 1996. Having effective written agreements in place protects both the employer and the temporary employee by giving clarity about employment terms and conditions. It also serves to protect the employer against any potential unfair dismissal claims arising from termination of the temporary employee’s services if the agreement is properly drafted.
Application of agency worker regulations: Under the Agency Workers Regulations (AWR), agency workers must be treated equally to direct recruits in relation to the basic terms and conditions which would be provided to a direct recruit doing the same job. Employers using agency workers must therefore be mindful of the AWR and the fact that agency workers may claim equal treatment should the terms of their engagement be breached (e.g. pay, holiday entitlement, working hours etc.). This claim would not only be against the agency supplying the agency worker but also against the employer using agency workers.
Tax and National Insurance: Any remuneration paid to the temporary worker (even if only a small amount, for example a flat fee) is likely to be subject to income tax and national insurance contributions. Employers must therefore ensure that they operate the correct payroll and tax system otherwise they may be liable for back payments and/or fines from HMRC for back payments of NI.
Working time regulations: The Working Time Regulations 1998 (WTR) applies to all workers over the age of 16 regardless of their employment status and it is therefore important that employers using temporary workers are aware of the restrictions applicable to temporary workers under WTR.
Time limits: If the employment relationship with an individual is terminated because the employer has breached the terms of their contract with the temporary employee a claim could be brought as an unlawful deduction from wages and the employee may try to recover any lost wages (or commission) dating back over 2 years.
When to Use a Temporary Work Agreement
Employers may consider a temporary assignment when there is a clearly defined short term work requirement that is unlikely to become a permanent need, such as seasonal work, construction, or other project-based work. Similarly, employers who are completing a search for a new regular employee may consider a temporary assignment for a position that will remain open for some period of time. The use of a temporary worker can enable an employer to have any appropriately skilled individual "at the ready" while it completes its search for a permanent employee. Further , a temporary assignment allows employers to evaluate workers who may be strong candidates for the permanent position. A clear agreement and corresponding policies should be in place, however, to define the relationship between the temporary worker and the employer so there is no confusion about whether the worker is an employee, temporary time-limited employee, intern or contractor.
