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It’s a long title, but these Regulations are important for Limited Company Contractors (or Personal Service Companies) and agency temps.
These regulations were introduced in April 2004 (2005 in Northern Ireland) and were updated in 2010 and agin in 2016. They provide a framework of minimum standards that govern the conduct of the private recruitment industry in the UK (and supplement the 1973 Employment Agencies Act 1973). The Government is currently consulting on the Regulations again in 2013 and says it will create a new framework reducing “some of the burdens on business but continue to protect people who are looking for work” – we will update this article when more details are known, but it is unlikely that the Contractors existing Opt-Out of the Regulations (see below) will be removed.
Here we look at what they mean and why they are important (for details of the separate Agency Workers Regulations see our Guide).
They essentially provide protection for what is known as ‘work-seekers’ – those looking for either temporary or permanent employment. Any breach of the regulations is a criminal offence.
They cover Employment Agencies and Employment Businesses which provide temporary and permanent staff to end-hiring companies (but entertainment and modelling agencies / businesses have their own separate rules; local councils, certain educational institutions, trade unions, certain professional members bodies, charities and services provided for ex-members of HM forces or for people released from prisons and other institutions are not covered by these Regulations).
Employment Agencies are defined as:
Companies that find permanent work for work-seekers who are employed and paid directly by the employer – they have permanent employment with the end company (or a fixed term PAYE contract).
Employment Businesses are defined as:
Companies that provide temps to organisations. The Employment business engages a work-seeker under a contract with them, and the temp then works under the supervision of someone else at a hiring organisation. Temps are paid by the employment business not the company they are supplied to. See our new Guide to Can an Agency worker ever become permanent here.
Under the Regulations an Employment Agency or Business cannot:
An Employment Business must make sure temporary workers are:
An Employment Business can delay payment to a work seeker while it makes reasonable enquiries to verify the hours the temp has worked – but DTI guidance says this delay should only be for a few days.
These written terms and conditions of employment should cover:
(Since 2010, Employment Agencies supplying permanent workers do not legally need to agree terms with a work-seeker before seeking work for them, or agree terms with Clients before introducing them to the work-seeker)
The Employment Agency or Employment Business must also:
If you believe your Agency is charging you inappropriate fees you can make a complaint to the Employment Agency Standards Inspectorate (EAS) here.
Limited Company Contractors (or Personal Service Companies) can choose to opt-out of all these Regulations – however the LCC must opt-out, and the end hirer must be told this, before the assignment starts (otherwise the Opt-out will be invalid).
LCC’s who decide to opt-out can decide to opt-into the rules again, but only when they’ve finished working for the hirer they’ve opted-out with. However, LCC’s cannot opt-out if they’re going to be working with ‘vulnerable’ people (see above).
Employment Businesses must not make opting-out a condition of providing work-finding services for the LCC.
An Employment Business (supplying temps) can charge “reasonable” transfer fees to end-hirers:
Temp-to-perm fees and temp-to-temp fees
In 2015, the Government consulted on proposed changes to the Conduct of Employment Agencies and Employment Businesses Regulations, including banning agencies from recruiting work-seekers solely from other EEA countries, without advertising the relevant vacancies in Great Britian. From 8th May 2016 the legislation is amended to:
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
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