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Law for Business

Knowhow - guidance - precedents

Loch Employment Law , 29 APR 2015

Regulation of Recruitment Agencies

Pam Loch

Managing Partner


Regulation of Recruitment Agencies
Whether you are a recruitment agency and are fully aware of the regulations governing the way you operate your business or a company considering engaging an agency to provide either temporary or permanent workers, it is important to know about the specific rules that are in place governing the relationship.

There are various pieces of legislation which apply here. They are:

  • The Employment Agencies Act 1973 (“the 1973 Act”) and the Conduct of Employment Agencies and Employment Business Regulations 2003 (“the 2003 Regulations”) regulate the employment agency industry as a whole; and
  • The Agency Workers Regulations 2010 (“AWR”) which came into force on 1 October 2011 and provides certain rights and protection to workers hired out by temporary work agencies.

It is important to note that a work seeker for the purpose of the 1973 Act and the 2003 Regulations includes both individuals and companies, although a company does have the option to opt out of the 2003 Regulations.

The other important distinction is between:

  • an Employment Agency which is a recruitment agency in the business of introducing work seekers to a potential employer who then enter into a direct contract of employment between the work seeker and the end user, either on a temporary or permanent basis; and
  • an Employment Business which supplies work seekers to an end user or hirer who the work seeker then acts for and is under the control of. This is the usual arrangement for an agency who specialises in temporary positions where the end user does not employ the worker, has no direct contract with them and does not pay them. Instead, the end user pays the Employment Business who then subtracts their fee then pays the workers their wages.

Whether you are dealing with or are an Employment Agency or you are an Employment Business there are set rules about the information and the terms of the agreement between a work seeker and an agency that have to be agreed before any work is undertaken. In the case of an Employment Business, this includes:

  • the type of work that they will be seeking out;
  • whether the worker will be employed by the Employment Business or work under a contract for services;
  • an agreement that the work seekers will be paid for work done (regardless of whether the Employment Business has been paid by the end user);
  • the provisions in relation to notice of termination;
  • the rate of pay; and
  • any holiday entitlement.

Once all the terms have been agreed and the work seeker has been placed with an end user, it’s important to understand the rights given to temporary workers under the AWR. Some of these apply from day one of an assignment including access to collective facilities and an obligation on the end user to inform the temps of any relevant vacancies in the business. However, the most significant right that the AWR gives a worker is that after completing a 12 week qualifying period, they are then entitled to the same basic working and employment conditions with the end user as if they had been hired by them directly.

If you need any further information on this or have any queries please contact us at Loch Associates Employment Lawyers on 01892 773 970 or at www.lochassociates.co.uk.
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