Agency employment remains one of the most discussed yet least understood areas of the labour market.
In the Czech context, it is often perceived through the lens of short-term contracts or “cheaper labour”, even though its true function is much broader.
In advanced economies, it serves as an instrument of macroeconomic stability – providing labour market flexibility, absorbing cyclical fluctuations, and ensuring smoother transitions between jobs.
From a legal perspective, it is a highly sophisticated model of a tripartite relationship that combines elements of an employment contract, a commercial service, and a public-interest mechanism.
From the standpoint of economic theory, agency employment represents a form of institutional flexibility that allows firms to respond to changes in demand without permanently expanding their workforce.
This flexibility is crucial in sectors with strong seasonality, project-based management, or fluctuating orders – areas where traditional full-time employment becomes less efficient.
Macroeconomic studies (such as the OECD Employment Outlook 2023) repeatedly confirm that labour markets with a higher share of temporary work show lower structural unemployment and faster recovery after economic shocks.
Agency workers act as a “buffer” between employment and unemployment – helping ensure that production slowdowns do not result in mass layoffs but rather in temporary reallocations of labour between companies.
At the microeconomic level, agency employment reduces recruitment transaction costs, enables efficient allocation of labour, and strengthens competition on the labour market.
In practice, this means that firms can focus resources on key activities instead of maintaining surplus capacity, while workers can re-enter the labour market more quickly after job loss.
Legally, agency employment is a unique construct.
An agency worker is formally employed by the agency, but performs tasks for a client company – creating a three-party relationship:
Employment agency – the legal employer that signs the employment contract, pays wages, and handles insurance contributions.
User company (client) – provides the workplace, supervision, and day-to-day work tasks.
Employee – performs the work physically but remains contractually bound to the agency.
This structure requires clearly defined responsibilities.
Under the Czech Labour Code (§307a–309), both the agency and the user company must ensure equal treatment and comparable working and pay conditions for agency and core employees.
From a compliance perspective, agencies must hold a valid licence from the Ministry of Labour and Social Affairs (MPSV), prove debt-free status, and maintain a mandatory financial deposit of CZK 1,000,000 (pursuant to §60a of Act No. 435/2004 Coll., on Employment).
This deposit serves as a financial guarantee for employees and the state in the event of unpaid wages or other obligations.
Agencies are also subject to regular reporting obligations – including information on the number of assigned employees, identification of user companies, and confirmation of equal treatment.
The MPSV conducts regular inspections and verifies debt-free status every six months.
Failure to comply may result in licence withdrawal or a ban on operations.
One often-overlooked principle of agency employment is its social stabilization function.
Agencies, in effect, complement public employment services in areas where the state cannot react flexibly enough.
During recessions, they absorb surplus labour; in times of growth, they quickly reallocate it to where it is needed most.
Another interesting aspect is the international dimension.
In countries with higher HR digitalization (e.g., the Netherlands, Denmark, Sweden), agency employment has evolved into a platform-based labour market, where agencies act less as intermediaries and more as coordinators and quality guarantors.
The Czech regulatory environment remains relatively conservative, but early steps toward digitalization are emerging – including electronic employment documentation and online working-time records.
A notable legal feature is the principle of equal treatment after nine months of assignment at a user company.
In practice, this encourages natural selection of high-performing workers – many of whom subsequently transition to permanent employment.
Rather than being a source of cheap labour, agency work often serves as a testing phase for mutual compatibilitybetween employee and employer.
Critics argue that agency employment creates “precarious” work with less stability and weaker loyalty.
However, empirical data suggest a more nuanced picture.
A 2022 study by the World Employment Confederation (CIETT) showed that over 35% of agency workers transition into permanent employment within six months.
In many cases, agency work serves as a springboard to stable employment, not a substitute for it.
Economically, agency employment also plays an important anti-crisis role.
It mitigates market shocks, helps firms retain critical capacities without mass layoffs, and allows workers to gain experience across different industries.
The future of agency employment will rest on three pillars: digitalization, ethics, and transparency.
Modern agencies are transforming into technology-driven HR companies, utilizing predictive analytics, recruitment automation, and data-driven performance management.
This helps better align the needs of firms and workers and shifts agency employment from an “emergency solution” to a strategic component of human capital management.
At the same time, pressure will increase for compliance and fair treatment.
European legislation is moving toward greater harmonization – for example, through the Directive on Transparent and Predictable Working Conditions – which will further clarify responsibilities between agencies and user companies.
Agency employment is not a marginal phenomenon — it is an essential part of the modern labour market.
It balances flexibility with security, reduces unemployment, and helps businesses withstand economic volatility.
In an era of rapid technological and structural change, it remains one of the few models capable of addressing uncertainty both in the short term and systemically.
From the perspective of corporate management and HR departments, agency employment is therefore not merely a temporary staffing tool but a strategic instrument of human capital management — combining legal precision, economic logic, and growing social responsibility.
We believe in long-term cooperation.
We help companies divide their recruitment efforts into smaller, practical steps, focus on less visible target groups, find effective combinations of work arrangements, and prepare teams for generational change – with an emphasis on sustainability, loyalty, and quality of work.
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