An Agency worker (temp) is usually contracted and paid by the Agency who employs them, and the Company that hires them pays a fee to the Agency for their work.
Employment Law is now mostly clear in this area over the last few years – case law has been consistent that most agency workers are not ‘employees’ – although there may be circumstances where an agency workers may be viewed as an employee of the hirer.
Ultimately, an agency workers employment status can only be decided by an Employment Tribunal on the basis of the facts of each case and the reality of the situation. Tribunals will look at the ‘normal’ employment status tests of mutuality of obligations, control over the worker, integration into the clients organisation. Such cases are called ‘tripartite’ cases as 3 parties are involved – the temp, the agency and the hirer/client.
Generally, now, if there is a contract in place between the worker and the agency then there will not be a contract of employment between the worker and client (end-hirer). Just because an agency worker appears to be an employee of the end-user that is not in itself any reason to imply a contract between the worker and the hirer.