Resources /Q&As re the industry
Q&As re the industry
Recruitment and the law
Being in the business of introducing one person to work for another in exchange for a fee sounds simple, but operating as a recruitment business is highly regulated, with, in some extreme cases, fines and other penalties for breach.
We have therefore collated these questions and answers to help an understanding of the rules and pitfalls. These are not intended to be detailed answers that can be relied upon in any legal sense, but simple explanations to help with understanding.
These Q&As also do not apply to agencies that supply individuals in certain trades such as the media, where to some extent different rules apply.
General questions
‘Employment agency’ (‘EA’) and ‘employment business’ (‘EB’) are specific terms used in legislation, but ‘recruitment business’ has no meaning in law and is just a general description which could apply to either. An ‘employment agency’, otherwise referred to as just an ‘agency’, is the business of introducing someone to be employed by another, sometimes referred to as a ‘perm agency’. An ‘employment business’ is the business of supplying a person to work for another, otherwise known as a ‘temp agency’ or ‘contractor agency’. It is unfortunate that the word ‘agency’ can apply to all sorts of different circumstances without having anything to do with recruitment!
The Employment Agencies Act 1973 is the current defining legislation under which regulations are made. This Act for example prohibits the charging of fees to candidates (defined as ‘work-seekers’) for finding them work, and it sets out the definitions in the previous question. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 set out the main rules relating to acting as an EB. Since the name is a bit of a mouthful these regulations are often referred to as ‘the Agency Conduct Regulations’ or just ‘the Conduct Regulations’. Candidates on temporary supply are often referred to as ‘agency workers’ and there is specific legislation that gives agency workers rights against an EB that supplies them and also against clients that hire them.
They are there to stop exploitation of people who are looking for work, and also to prohibit unfair actions which can block individuals from obtaining work.
Recruitment law is a loose term given to those laws that apply to how EAs and EBs act, and the rights of work-seekers and agency workers. Actually Lawspeed was the first to use that expression as beforehand this area of law was previously simply part of ‘employment law’ which is the broad expression used to relate to all laws relating to the employment or engagement of individuals. There are a very large number of lawyers who practice employment law, but few law firms such as ourselves specialise in recruitment law.
In short, yes. As well as all the usual data protection rights, and employment rights if they are actually employed, candidates are entitled to information about the service being provided and jobs offered to them including around health and safety. In particular if they are looking for temporary work they are entitled to information about payment, and depending on the arrangements when a placement is made, they will be entitled to pay and worker rights as a minimum. If their work is the same as other employees or workers on a client site, they may be entitled to the same pay and conditions as those workers.
The words ‘umbrella company’ have no legal definition but are used to describe organisations that pay contractors who are being supplied by recruitment agencies to clients. Rather than pay the contractor direct, agencies pay the umbrella company that then pays the contractor, and it is often the case that the umbrella company also employs the contractor. More recently regulations (see here[AM1] ) require agencies to disclose payment details of umbrella companies they work with in writing to the contractor at the outset.
There are a host of umbrella companies in operation in the UK. Because of years of controversy due to some non compliant umbrella companies, care should be taken in selecting an umbrella company to work with.
Recruitment law is a specialist area of law that differs from employment law. Specific regulations apply to timing of contracts, terms of contracts, and processes that must be undertaken by recruitment businesses. Terms in contracts can impose unanticipated liabilities or increase risk to other kinds of loss. No one wants to lose a fee, face a regulatory investigation or face an unwelcome tax bill due to a mistake. Knowledge is power and so getting the information and help in advance makes huge sense provided it is obtained from experts. Lawspeed has specialised in this niche area since 1997 and has effectively carved it out as a practice area. We are ideally placed to be your legal partner, to lock in the value that you want from your business.
This question almost does not need an answer! Businesses keen to succeed know that having the right contracts in place makes commercial common sense, whilst regulations require contracts to be in place where there is any kind of contractor or temp supply.
Back in the day agencies commonly cut and pasted terms from other contracts, and this practice still continues today. However a piecemeal approach is often a recipe for disaster, may not have been thought through, and may be non compliant in a host of different ways. Whilst trust is always a live issue, clear well worded and up to date terms will be what gets you over the line.
For over 25 years we have provided and updated specialised terms of business for our many agency clients. This not only gives them maximum advantage and protection, but also helps them get terms accepted with minimum fuss in the first place. Through great presentation Lawspeed terms support our client’s brands and encourage trust. We can safely say that, to our knowledge where Lawspeed terms are properly in place, no hirer has ever been able to avoid a fee due, and none of our clients have ever faced an unexpected liability or loss. Today, unlike any other recruitment law service in the UK, Lawspeed ‘tailored for recruitment’ terms of business are hosted online, maintained and updated, and are designed for maximum ease of use. With issue track and log functions that enhance compliance, secure business, and save time, this comprehensive solution is second to none.