Contractors’ Questions: Should the agency be charging me admin fees?

Contractor’s Question: I landed a temp job in IT seemingly without the agency charging me for finding the work, but my payslip reveals they are charging me 5% of my gross weekly pay for “Management Fees.’ Is this legal? When I enquired with them, they said this money was deducted as a ‘management fee’ for admin-related duties such as processing my timesheet, payroll and other duties related to me being paid.

In the agency’s terms and conditions, it does say that a management fee of 5% will be deducted from my wages, but I was not clearly told of this deduction. Please outline my options if legal action is not permissible.

Expert’s Answer: The Employment Agencies Act 1973 makes clear that an employment business (which is what a temp agency is) may not charge an employee (which I suspect for these purposes is what you are) for providing services (whether by the provision of information or otherwise), for the purpose of finding or seeking to find work. 

The Conduct of Employment Agencies and Employment businesses Regulations 2003 provide that an employment business may not make the provision of work-finding services conditional on a worker agreeing to pay for other services for which they are not prohibited from charging a fee.

Breaches of the act and of the regulations are offences, for which the agency may be prosecuted.

There are also provisions in employment legislation which make deductions from wages unlawful unless the worker expressly agrees.

One way or another, it seems to me that they are seeking to charge you for paying you – something they are obliged to do anyway; to me, this seems fundamentally wrong, and unlawful.

Let us assume that the client is paying them £11 per hour, and they have offered you an engagement at £10 per hour; that is fine, and they must pay you £10 per hour. They could have offered you £9.50 per hour, and (had that happened, and had you accepted) they would have lawfully got to keep the extra 5% they wanted.  But it seems to me that if, in that situation, they had offered and you had accepted £10 per hour, then £10 per hour is what they must pay, without deductions (other than legally permitted deductions such as tax and NIC).

I suggest you complain to the Employment Agency Standards Inspectorate (EASI) – start the process here.They have the power to investigate and (where appropriate) prosecute.

The expert was Roger Sinclair, legal consultant at egos, a contract law specialist.