HMRC internal manual

Employment Status Manual

ESM2006 - Agency and temporary workers: meaning of ‘supplied to the client’

The worker’s services must be supplied by the agency to the client. Workers who are simply introduced to the client, leaving them and the client free to enter into a contract between themselves, are not within the legislation. In those cases the worker will be engaged by the client either under a contract of service or a contract for services.

This distinction was dealt with in the case of Brady v Mrs M A Hart trading as Jaclyn Model Agency (58TC518). In that case, Jaclyn Model Agency provided the cigarette manufacturer John Player with the names of models considered suitable for promotion work. John Player then notified the agency which workers it required. Payments for the work carried out were made by John Player to the agency. The agency, after deducting its commission, passed on the net amount to the models. The Commissioners found for the agency holding that the agency merely introduced the models to Player; it did not supply them.

In the High Court, Harman J held that the facts did not justify the Commissioners’ conclusion. He found there was an oral contract between the agency and each worker under the terms of which the agency promised to pay each one for the work done for John Player. Consequently, the agency supplied the models to Players and the arrangement came within Section 134.

The worker does not have to be supplied by an Employment Agency registered under the 1973 Act. The tax and NICs agency legislation applies to any third person that supplies the services of someone else.