Are your PAYE Terms up to date?

In April 2020, a key change was introduced affecting employment businesses supplying PAYE temps, which, due to the timing, in the midst of the first lockdown and introduction of furlough, may have slipped under the radar of many. However, it is important to check your compliance and take any required actions.

Since April 2020, all contracts issued to workers, including PAYE agency workers, are required to be compliant with section 1 of the Employment Rights Act 1996. This means that all relevant contracts must include certain particulars, such as probationary periods, collective agreements, disciplinary and grievance procedures, that may not commonly have been provided for in such agreements.

Whilst it may have been easy to overlook these changes and contracts may not have been updated to take them into account, any failure to do so could have repercussions. Where a worker brings a claim to the Employment Tribunal, they can also raise the fact that they have not been issued with a compliant contract, In the event of a dispute, a tribunal has the power to award up to two weeks wages as compensation and can determine what terms should have applied. If your terms have not been updated to meet these requirements, you should do so as soon as possible.

The requirements are similar to those in respect of employment contracts. However, as a relationship with a PAYE temp is not usually one of employment, businesses should be careful to avoid falling into the trap of simply replicating terms from an employment contract, and inadvertently creating an employment relationship, with both the associated rights and obligations and the risk of employment status claims.

Lawspeed can provide contracts for use with your PAYE Temps which meet legal requirements whilst also being commercially protective; available on subscription.

Ravi Murphy, Director at the recruitment and employment law specialists Lawspeed.


Lawspeed group corporate clients benefit from immediate up to date advice on staff engagement and related regulation; employment status; client, IR35, PAYE, and umbrella contract templates; contract review/negotiation; self-employment and CIS contract templates; trade membership and government representation; accreditation services and a state of the art digital contract management platform.

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