Regulatory Framework for Employment Agencies and Recruitment Businesses

Written by Karen Ainsworth-Smith | Blog | Legal | Posted 19/04/2013

A rather lengthy title for a rather lengthy and convoluted piece of legislation. RSG have taken part in Government’s recent consultation on this, and for those not in the know, there is specific legislation that governs the recruitment industry. It sets out a framework not only for how the industry engages with the client (or ‘hirer’), but also with the temporary worker / contractor and those seeking permanent employment.

Traditionally, I think we all recognise that temporary workers and contractors are not ‘one and the same’. However, the legislation we have been working with now for a number of years is a ‘one size fits all’ and the higher end of the contracting market, where individuals are supplied by a third party (their own personal service company or an umbrella company), have inadvertently been pulled into this. This leaves us having to follow due process with each contractor we place. Not only is the legislation poorly drafted in places, but the chances are that if you ask a contractor what their intentions are, and would they like to opt out, a majority will not entirely be sure what you are talking about!

Consultation has just closed, and RSG welcomed the opportunity to work with APSCo (the Association of Professional Staffing Companies), taking an active part in their Working Group to review the effectiveness and appropriateness of the current legislation.

It is crucial that Government supports legislation that protects work-seekers at risk of exploitation by unscrupulous staffing companies. It is also, however, important that legislation does not act as a barrier to economic growth by imposing unnecessary burdens on recruitment businesses that do not pose a risk to work-seekers. Having a new regulatory framework that protects the vulnerable sectors of the labour market while recognising a distinct professional sector where temporary workers are not at threat is paramount and we would like to see this distinction clearly reflected in a move away from the ‘one size fits all’ legislation. This has been a feature of regulation in the staffing industry over the past 13 years and we, like all APSCo’s members, recognise change is necessary.

RSG fully share and support APSCo’s views that the highly-paid business professionals who use professional recruitment businesses neither want nor need the protections of such legislation, and habitually opt out of the Conduct Regulations. However, the current opt-out system is fraught with difficulties. What we would like to see are arrangements between client businesses, recruitment businesses, and professional business consultants working via limited companies be considered ‘business to business’ relationships and therefore out of scope of any future regulations, in a similar manner to many professional business consultants being out of scope of the Agency Workers Regulations.

Alternatively, we would expect a minimum standard to be spelt out that protects the vulnerable but does not impact upon these business to business relationships. We want, and we think the industry desperately needs, a clear distinction between: highly-paid, highly-skilled professional business consultants providing their services through limited companies to end-user clients who do not have day to day supervision, direction or control over the method by which they provide the required service and lower-paid, often unskilled and vulnerable individuals who work under the supervision, direction, and control of the end-user client.

Whether there will be change or not remains to be seen; we at RSG are committed to continuing to voice our concerns and lobby government effectively in order to reach a point where this distinction can more easily be seen and dealt with. In the meantime we will keep you updated as to the results of this consultation.

Karen Ainsworth-Smith, RSG, Legal Services

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