A Guide to the Conduct of Employment Agencies and by nyx11518


									A Guide to the Conduct of Employment Agencies and Employment Business
Regulations 2003 (Conduct Regulations 2003) for Limited Company
Contractors (LCCs)
The Conduct Regulations raise standards within the recruitment industry. The Conduct Regulations stipulate how
recruitment businesses should operate, providing added protection for work seekers and companies using the
services of recruiters.

Before the Government introduced the Conduct Regulations; industry stakeholders such as the
 Recruitment & Employment Confederation (REC) argued that LCCs did not want to be treated as
PAYE workers under the Conduct Regulations, as it was considered that such legal formalities would significantly
jeopardise a LCCs tax position.

Opting Out of the Conduct Regulations
A provision now enables LCCs to Opt Out of the protection of the Conduct Regulations, so that LCCs
may continue to enjoy the tax benefits of supplying their services through the limited company.

Deciding to remain within the Conduct Regulations
If you remain within the Conduct of the Regulations, a recruiter will owe you and the client a range of obligations.
Some of the obligations the recruiter will be required to follow are;

A recruiter must confirm on what basis they are to offer work finding services, the type of work the recruiter
is seeking for you and the terms which apply between you.

Before you start an assignment or position by the recruiter you must be given information about the
proposed position including;

            The identity of the hirer, start date, likely duration of the work, type of work, location, hours,
            any risks to health and safety and steps the hirer has taken to prevent or control such risks,
            the experience, training and qualifications required for the role, any expenses applicable
             and the actual rate of remuneration to be paid.
        Such information should be confirmed verbally and in writing.

            • Employment businesses are no longer allowed to withhold payment regardless of if they
            have received a signed timesheet or not. The employment business is however allowed
             to delay payment for a reasonable period of time to check whether you have worked the
            hours claimed.
            • The ‘6 month’ restriction clause, which was commonly found in terms and conditions
            and prevented a work seeker from working for the client for 6 months after
             the end of assignment, is void as the EAA Regulations stipulate that an
            Employment Business/ Agency cannot prevent a work-seeker from finding permanent employment.
            Therefore, a work seeker is entitled to agree a transfer to work direct for the client within the relevant
            period (first 14 weeks of the contract period or first 8 weeks from the day the contract ended).

Why Opt Out?
Under HMRC IR56 rules there are a range of factors which are assessed by the HMRC to determine
whether an LCC is genuinely self-employed, such as the contractual relationship between parties,
the level of control a client maintains over the LCC, financial risk taken by the LCC and length of engagement.
If an LCC decides that they wish to enjoy the legal protections of the Conduct Regulations and be treated
akin to a PAYE worker, then the obligations owed to them by the recruiter may affect the assessment of
their status for tax purposes under HMRC tests of self-employment. If they are genuinely self-employed
then they may wish to consider Opting Out so to maintain their tax advantages.

How do LCC’s Opt Out?
In order to Opt Out, the LCC must give notice to the employment business before the introduction or
supply to the client. The notice must be in writing and signed both by an authorised representative of
the company and the individual who will be supplied by the company to do the work.
You can Opt back in again at any time, but if you start an assignment having given notice of Opt Out,
your Opt back in will not take effect until the end of that assignment.

What to do next
Consider your own circumstances, we recommend that you do seek independent legal advice if needed.

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