All UK companies must comply with the regulations contained under the Companies Act 2006. In addition the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 impact on recruitment agencies.
Highlighted below, however, is the key tax and employment legislation that currently affect the day-to-day operations of recruitment agencies.
In addition, you can download a free copy of our guide Commonly overlooked compliance procedures and how to address them. Topics covered include:
- Putting contractual terms in place with clients;
- Notifying clients of an opt out;
- Registering with the ICO;
- Identifying the party with which you are dealing;
- Checking candidates’ right to work; and
- Including correct company information on your website.
The AWR (Agency Worker Regulations) is legislation which affords rights to temporary workers who are supplied through a temporary work agency to work for a hirer. As well as rights that apply from day one of an assignment, such as access to collective facilities at a hirer site (e.g. a canteen), agency workers are also entitled to parity of treatment in basic working and employment conditions (pay, working time, breaks and leave) as the hirer’s own staff doing the same job once the agency worker has completed a qualifying period of 12 weeks at that hirer.
The Conduct Regulations (The Conduct of Employment Agencies and Employment Businesses Regulations 2003) establish a framework of minimum standards by which employment agencies and employment businesses should operate in respect of candidates and clients. These standards include information to be obtained from the candidate and hirer as well as rules surrounding transfer fees. It is possible for individuals providing their services through a company (umbrella, PSC) to opt out of these regulations.
The Agency Tax Rules (Ss 44-47 Income Tax (Earnings and Pensions) Act 2003) require that an agency that has a contract with a hirer for an individual’s services must pay that individual subject to employment taxes (PAYE income tax and NICs) unless it can be shown either that the manner in which the individual provides the services is not subject to, or to the right of, supervision, direction or control, or that the employment taxes are paid by another party. The agency (and its directors) is liable for any taxes that are due should it fail to apply these rules.
The Working Time Regulations (WTR) implement the EU Working Time Directive and detail rights of a worker, and obligations of the employer, with regards to working time. The regulations include provisions concerning rest breaks and night shift work, as well as entitlement to annual leave. Self-employed individuals, those operating through a PSC, and some sectors (covered by their own sector specific regulations) are outside the scope of the WTR.
The National Minimum Wage (NMW) is the minimum pay per hour that workers are entitled to receive. Within the NMW there are different bands according to age and for apprentices; for example, everyone over the age of 25 is entitled to the top tier of NMW, referred to as the National Living Wage.