Yesterday Lawspeed held a face to face seminar to discuss the current consultation on modernising the agency work regulatory framework. Joined by two policy representatives from the Department of Business and Trade the meeting rapidly developed into a broader discussion. “We had anticipated strong comments, but the depth of feeling in the room was staggering” commented Adrian Marlowe, CEO of the recruitment and employment law specialist.
Firstly all attendees welcomed the approach taken in the consultation to consider relaxing current regulations that interfere with business. Examples of these were the timing of requirements to provide information to candidates, the worthlessness of having to give information which would clearly change up to the point of issuing an assignment proposal, and the waste of effort in having to obtain health and safety information from a hirer when responsibility for health and safety lies with the hirer. “What are the health and safety risks of a hospital or a building site” asked one attendee. “What are you meant to tell the candidate?” This against the backdrop of the consensus that hirers often don’t answer questions around health and safety.
“However attendees can live with these issues”, continued Adrian. “What they vociferously objected to was the combination of growing burden of risks from recent industry developments, new regulation, and proposals for change.”
Examples discussed include the emergence of an ever growing number of MSPs and RPOs who increasingly control larger supply chains, some of whom drive down margins to ultra low levels, and impose pay when paid rules. Then the ongoing results of the joint and several liability rules which will see fewer and significantly larger umbrella companies with a handful of due diligence firms gaining a near monopoly status. There was a general agreement that will inevitably damage flexibility.
Examples of burden from recent legislation include risk arising from IR35 status, and the joint and several liability rules themselves. “What is the government doing classifying umbrella companies as employment businesses? The services are completely different.” And now upcoming, the guaranteed hours requirements which risks not only the future of entitlement to transfer fees, but also to book value.
“If I agree a 6 month supply of a contractor and the guaranteed hours rules require the hirer to offer the worker a permanent job after 3 months, what is the book value of my agreed assignment, what can I rely upon” asked another attendee. Another posed the question “and which hirer in that position offering the job would be willing to pay a transfer fee for an offer that he is forced to make by legislation?”
Adrian Marlowe, CEO of Lawspeed and Chair of the Association of Recruitment Consultancies (ARC), said “what is crystal clear is that if the government wants to make changes to allow streamlining in the agency supply sector, to help improve growth as it has expressed the desire to do, it must look at the whole picture, not just the conduct regulations or the agency worker regulations. The imposition of guaranteed hours on agency workers in the Employment Rights Act 2025 is causing and will cause huge upset unless the rules are clarified and can be workable with the flexible workforce as we currently know it. As things stand because there is to be a further consultation on the qualifying period after which an enforced job offer must be made, there is great uncertainty. Apart from anything else this leaves agencies in an impossible position when being asked to comment on transfer fees rules in the current consultation.
Adrian continued “It is the flexible workforce provided by the recruitment supply sector that has historically played a pivotal role in helping businesses recover in difficult and recessional times. Anything that damages this great resource should be avoided at all costs. Focus should be on tidying up the anomalies in the chain of supply.
It makes no sense to regulate agencies and umbrella companies yet leave MSPs and RPOs unregulated. Similarly it makes no sense to force agencies to set up their own PAYE arrangements (which will also necessitate HR arrangements) as currently suggested – how will that facilitate start ups or help smaller businesses? And it makes no sense to limit agency worker supply as threatened by the guaranteed hours law, that can only serve to push up margins and increase hirer cost.”
Adrian concluded “this seminar was highly informative, exposing the sentiment that clearly has been justifiably boiling under the surface for some time. Attendees were from across the board, agencies in engineering, medical, education, auto, construction and so on indicating widespread feeling in the industry.”
“If the government insists on new legislation, which I believe the industry largely would like to avoid, there is a great opportunity for the government to steer it in a direction that is beneficial not detrimental; help all businesses flourish, not just big business, so that recruitment supply and maximum flexibility is once again allowed to be the fuel for growth.”
The Association of Recruitment Consultancies shall be responding to the consultation accordingly. To join ARC, a representative trade association for recruitment businesses please email info@arc-org.net.
