The main service that an Employment Businesses offers is finding and supplying Temporary Workers.
Employment Agents deal with Permanent Roles, Employment Businesses deal with Temporary or Contract workers.
I’ll explain how they make their money in a moment but first let’s deal with the Temporary / Contract name.
Both Terms are used but by different types of Employment Businesses (EBs)
A Free online Dictionary explains the terms as follows
tem·po·rar·y [tem-puh-rer-ee] Show IPA adjective, noun, plural tem·po·rar·ies.
lasting, existing, serving, or effective for a time only; not permanent: a temporary need; a temporary job.
an office worker hired, usually through an agency on a per diem basis, for a short period of time.
con·tract [n., adj., and usually for v. 15–17, 21, 22 kon-trakt; otherwise v. kuhn-trakt] Show IPA
an agreement between two or more parties for the doing or not doing of something specified.
an agreement enforceable by law.
Temporary is exactly that. The person is hired often at short notice for an undefined period of time.
For as long as the Hiring Manger needs them around, and every day work is coming in, they will need you to keep coming back and doing the work.
Once the work drops off you’ll be given notice to leave and this can range from hours to weeks.
Contract workers are generally hired for a more defined period of time.
Often it will be to carry out a specific task, for example hired to do an Engine change, or to build 20 control panels, or write a specific piece of code, but it’s generally a longer term commitment.
I’ve seen contractors stay with a client for years often moving onto a new project as one finishes.
In both cases you’re working as a flexible worker designed to help a company realise its commercial commitments.
As a temporary worker you’re paid by the EB either on a PAYE or a Self Employed (via an Umbrella Company or your own Limited Company) basis.
In both cases there is potentially an opportunity to go Permanent.
How the Employment Business (EB) makes Money.
The Employment Business will essentially find the best person for the job, with right skills, and hire the person to the end client.
The Employment Business will agree a pay rate with you, and will then agree a charge rate with the client.
The charge rate will depend on your pay rate and costs will need to be factored in such as Tax, National Insurance deductions, Employers National Insurance, Holiday Accrual on your behalf and lastly the Profit Margin.
The contractual relationship will be two fold. The Employment Business will have a contract with the worker, as well as a contract with the client.
While working on site a Contractor supplied by an Employment Business will generally be working under the direction and supervision of the client.
The Employment Business will pay the worker their wages on a weekly basis, and will at some point receive payment from the client as a result (and that is when the employment business will make its money).