How to Start a Temp Agency in 2026

Starting a temp agency in the UK means building two things at the same time: a recruitment business that can win clients and place workers, and an operation that can handle compliance, bookings, timesheets, payroll and invoicing without slowing you down.

At RECRUSO, we know the pressure behind a busy temp desk because we were founded by former recruitment agency owners. If you are preparing to launch your own agency, the decisions you make before your first placement can have a big effect on how easily the business grows.

Here are the main areas we recommend putting in place before you start supplying temporary workers.

1. Decide what kind of temp agency you want to build

Start with a clear market.

Choose the sector you want to recruit in, the type of clients you want to work with and the geographic area you plan to cover. You should also decide whether you will focus purely on temporary recruitment or offer permanent recruitment alongside it.

Think about the likely shape of your operation too. Will you be managing a small number of specialist contractors or large volumes of workers across multiple shifts and locations?

That matters because the way you manage bookings, compliance, time and attendance, payroll and invoicing will depend heavily on the type of temp agency you are building.

Your sector can also affect your legal responsibilities. Some areas of labour supply have additional licensing requirements, so check the rules that apply before taking your first booking.

2. Set up the business and understand the rules that apply

In the UK, a business that supplies temporary workers will commonly operate as an employment business.

That differs from a traditional employment agency, which generally introduces a candidate to an employer that then employs the person directly.

Employment agencies and employment businesses are governed by the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003.

The Fair Work Agency began operating on 7 April 2026, so new recruitment businesses should make sure they are working from current government guidance.

Not every temp agency needs a licence. However, labour suppliers operating in certain sectors, including agriculture, horticulture, shellfish gathering and food processing or packaging, may need a Fair Work Agency gangmaster licence.

Before you launch, check the latest GOV.UK guidance for your business model and sector.

This article provides general business information, not legal advice.

3. Plan how you will fund payroll

For a temp agency, payroll is not something to think about after the placements arrive.

You may need to pay temporary workers before your clients have paid you, which creates a cash flow gap that needs to be planned for from the start.

Before taking on workers, be clear on:

• When workers will be paid

• Your client payment terms

• How much working capital you may need

• How payroll will be calculated and processed

• What happens when worker numbers increase

• How payroll information will connect with approved timesheets

This is why the idea of starting a temp agency with no money needs careful thought. Even a lean recruitment business can still face payroll commitments before client invoices are settled.

You should also decide whether payroll will be handled internally or outsourced.

At RECRUSO, we support recruitment agencies with both recruitment payroll software and outsourced payroll, giving founders the option to choose an approach that suits the way they want to run the business.

4. Build your worker compliance process before launch

Candidate compliance should be part of your operating process from the beginning.

Employers must carry out prescribed right to work checks before employing someone. Depending on your chosen sector and the roles you recruit for, other checks or documentation may also be required.

You also need a reliable way to store and manage candidate information.

Recruitment businesses process personal data, so your approach must account for UK GDPR and the Data Protection Act 2018. That includes how information is collected, stored, accessed and retained.

The key is consistency. You do not want important worker documentation spread across inboxes, spreadsheets and folders once bookings start increasing.

5. Choose a technology partner that can support the way you work

The right recruitment technology partner can make a major difference to how smoothly your agency operates.

When you are starting out, it can be tempting to manage different parts of the business through separate spreadsheets, email threads and individual systems. That may feel manageable when volumes are low, but temp recruitment creates a lot of connected administration.

A single placement can involve:

• Worker registration

• Compliance checks

• Client records

• Availability

• Bookings

• Shifts

• Time and attendance

• Timesheets

• Client approvals

• Payroll

• Invoicing

• Reporting

If those processes sit in disconnected systems, your team may end up entering the same information several times.

That is why we recommend choosing your technology partner early.

A good temp recruitment platform should help information move through your operation from the worker and client record to the booking, timesheet, payroll and invoice.

Our RECRUSO Temp Software is built around that workflow, bringing workers, clients, bookings, shifts, timesheets, payroll, invoicing and compliance together in one platform.

For a new agency, that can help create a cleaner operating process from day one rather than trying to replace fragmented systems later.

6. Map out the complete placement process

Before you go live, walk through a placement from beginning to end.

A simple temp workflow might look like this: Client requirement, worker availability, booking, attendance, timesheet, client approval, payroll, invoice.

Then decide who owns each stage.

How will a client request workers? How will consultants know who is available? How will hours be captured? Who approves a timesheet? When does approved time move into payroll? When is the client invoice created?

These questions may sound operational, but they directly affect the experience of your workers, clients and internal team.

The more of that process you can streamline through your recruitment technology, the less time your team has to spend moving information manually between systems.

7. Think about scale before you need it

You do not need to build a large agency on day one, but it helps to choose processes that will still work when the desk gets busier.

Ten active temps can be relatively straightforward to manage manually. A much larger worker base across many clients, locations and shift patterns creates a different level of administration.

Before choosing any recruitment system or payroll setup, ask what happens when your volumes increase.

Can you manage more bookings without creating more admin? Can workers submit information easily? Can clients approve timesheets? Can payroll use the same approved data? Can invoices be produced from it?

Choosing a technology partner such as RECRUSO early can help you put that structure in place before operational pressure starts dictating how the business runs.

8. Run a full pre-launch check

Before supplying your first temporary worker, make sure the core parts of the business are ready.

Check that you have:

• Defined your market and recruitment model

• Completed the necessary business setup

• Checked the regulations relevant to your sector

• Prepared client and worker processes

• Planned your payroll and cash flow

• Set up right to work and compliance checks

• Established how candidate data will be managed

• Chosen your recruitment technology

• Tested bookings and timesheets

• Confirmed how payroll will work

• Tested your invoicing process

We would also recommend running a sample placement through your systems before launch. Take a fictional worker from registration through to booking, timesheet approval, payroll and invoice.

That is one of the simplest ways to find gaps before a live client or worker encounters them.

Common mistakes we see new temp agencies risk making

• Choosing technology too late: Software can look like something to add once the agency grows, but your systems affect almost every temp recruitment process. Choosing a strong technology partner at the beginning can reduce the need to rebuild working practices later.

• Focusing on sales before payroll: Winning clients is only part of running a temp agency. You also need to know how workers will be paid and how that payroll will be funded.

• Relying too heavily on spreadsheets: Spreadsheets can be useful, but using them as the main operating system for workers, shifts, timesheets and payroll can become harder to control as activity increases.

• Treating timesheets and invoicing as separate jobs: They are connected parts of the same placement process. The cleaner the flow from worked hours to approved timesheet, payroll and invoice, the easier the back office is to manage.

Do you need software to start a temp agency?

You could begin with several separate tools, but we recommend thinking carefully about how they will work together.

Temp recruitment involves a chain of connected information. Worker records feed into bookings. Bookings create worked hours. Worked hours feed into timesheets. Approved timesheets affect payroll and invoicing.

A recruitment platform that manages those processes together can help reduce duplication and create a clearer operating process.

That is exactly what RECRUSO is built to do.

Build the operation properly from the start

Starting a temp agency is exciting, but the businesses that run well are supported by strong processes behind the recruitment.

Get the commercial model right. Understand your responsibilities. Plan payroll carefully. Build a reliable compliance process. Most importantly, choose technology that supports how you want the agency to operate as it grows.

RECRUSO was built with more than 20+ years of recruitment insight and shaped by people who understand what running an agency involves.

If you are starting a temp recruitment business and want to see how RECRUSO can help streamline workers, clients, bookings, shifts, timesheets, payroll, invoicing and compliance, book a RECRUSO demo and see the platform in action.