Who employs the worker? What a temporary staffing contract actually covers

Most disputes between a company and a staffing agency come down to one question that nobody asked at the start: who actually employs this person? It sounds like a technicality. It decides who pays the wages, who is liable when something goes wrong on site, who can end the assignment, and who answers to the labour inspectorate. Get it written down clearly and the rest of the relationship is straightforward.

The two arrangements

Direct employment. Your company signs the employment contract with the worker. You pay the salary, you deduct the tax and social insurance, you sponsor the residence permit, and you carry every obligation an employer carries towards any other employee. The agency recruits, assesses and handles the immigration paperwork, then hands the worker over. You pay a one-off recruitment fee.

Temporary staffing. A licensed temporary employment agency employs the worker and assigns them to your site. The agency pays the wages and the contributions; you pay the agency a rate for the hours worked. This is regulated activity in Lithuania and Latvia, and the agency must be registered as a temporary employment agency — ask for the registration and check it.

The important thing is that these are not two ways of describing the same arrangement. They put the employment relationship in different places, and everything else follows from that.

What shifts with the model

Under temporary staffing the agency is the employer, so the agency is responsible for the contract, wages, holiday pay, sick pay, working-time records and terminating employment. But you are the one directing the work, and health and safety on your premises stays yours. If a worker is injured on your line, "they're the agency's employee" is not a defence — you control the site, so you control the risk.

The other rule that catches people out is equal treatment. In the EU, a temporary agency worker is generally entitled to the basic pay and working conditions they would have received had you hired them directly for the same job. You cannot use agency workers as a cheaper class of labour on the same line. Anyone offering you that is offering you a problem.

Under direct employment you carry everything, but you also gain everything: the worker is yours, the relationship is yours to build, and the cost after the initial fee is simply their salary.

What the contract should actually say

Whichever model you choose, insist that these are written down rather than assumed:

• Who the employer is, named as a legal entity with its registration number, and the agency's temporary employment registration if the model is staffing.
• The rate and what it includes — for a staffing rate, exactly which of wages, taxes, holiday accrual, administration and permit costs sit inside it, and which are billed separately.
• Working time and overtime, and who keeps the records that the labour inspectorate will ask for.
• Accommodation: who provides it, what standard, what it costs the worker, and what happens to it if the assignment ends.
• Replacement and notice: how much notice either side gives to end an assignment, and what happens if a worker leaves early or does not work out.
• Permit responsibility: who files, who pays the state fees, and who is responsible if the permit is refused or expires.
• Data protection, since you will both be handling passport and permit data for the same person.

The question to ask before signing

Ask the agency to explain, in one sentence, who the worker's employer is and who is liable if that worker is injured on your site. If the answer is confident and specific, the paperwork behind it is usually sound. If it wanders, keep asking until it doesn't.

If you'd like us to walk through which model fits a particular role and headcount, send us the requirement and we will set out both, with the obligations on each side written plainly.