ESM2320 | Agency and temporary workers: overarching contracts of employment - background

An overarching contract of employment links together a series of separate assignments so that each location of each assignment becomes a temporary workplace. A temporary worker effectively becomes a permanent employee of the employment business under an overarching contract of employment.

Temporary workers, traditionally engaged under agency contracts and caught by the agency legislation, are not entitled to relief for payment of travel and subsistence expenses, including home to work travel to a client’s work premises, as each assignment is deemed to be a separate employment and so each new place of work becomes a permanent workplace.

Many employment businesses and umbrella companies have changed their business model by looking to implement an overarching contract of employment. If it is accepted that contracts are overarching contracts of employment, then each new place of work usually becomes a temporary workplace (subject to the “24 month rule” - see Employment Income Manual EIM32080) and the individuals travel and subsistence expenses would qualify for relief under the travel rules. The employment businesses then apply for a dispensation to include the travel and subsistence payments. (See guidance relating to dispensations in the Employment Income Manual at EIM30050 onwards.