Sector Guide - Recruitment

Definitions - Am I classed as an employment agency or an employment business?
 
Employment agencies

Their service is to find work for people, who will then be taken on directly by an employer and classed as an employee.

Agencies need licenses and may also need to register with sector bodies if they intend to deal with work seekers in particular sectors, such as nurses and care workers.  You can read more here.


Employment businesses

They take on a work seeker themselves under a contract, then hire them out temporarily to different employers.  The work seeker is paid by and classed as an employee of the employment business rather than the end client.

They need to declare their terms and conditions to a work seeker before starting to find work for them, including things like holiday and sick pay entitlements

Sometimes they will charge the employer a fee, but there are rules around this.


Regulations

The recruitment industry has a number of rules employment businesses and agencies need to follow if they want to supply personnel to potential employers, falling within two pieces of legislation:
The Conduct of Employment Agencies and Employment Business Regulations 2003 and the Employment Agencies Act 1973.

They apply to both employment agencies and employment businesses regardless of whether they are run to make a profit or by nonprofit-making bodies, and any person who contravenes the Act and/or the Conduct Regulations is guilty of an offence and liable to a fine on conviction.

The Employment Agency Standards Inspectorate enforces the laws that protect agency workers, and is the regulator of employment agencies and employment businesses in Great Britain. 


Advertising jobs

Job adverts need to have full details included in them, and an agency must be certain the employer definitely wants to advertise the role.  Examples of what must be detailed can be found here 


Preparing to place someone with a business

Employment agencies and businesses have a responsibility to gather key information about a position before advertising a job or placing a work seeker with a client.

Details such as who the client is and what their company does, how long the employment role will be for, what the job entails, and where it will be based.

Agencies specifically need to disclose to the work seeker what the wage will be, how it will be paid, and any required notice period to terminate the employment that would apply.

They also have a legal requirement to find out what qualifications, experience, and references are needed, and take copies of any certificates.

If the role involves working with vulnerable people two references will be needed, and with sectors such as childcare or healthcare, a DBS check too.


Work seekers who are registered as Limited Companies

Sometimes, a person chooses to register a Ltd company and seek work under that company name, in these cases they are classed as a contractor rather than being employed by an agency or employment business.  They can choose to opt out of the rules agencies must follow if they want to, as long as they tell the business hiring their services. 


Charging a fee

In many cases, employment businesses can charge a fee to an employer if they take on a worker permanently.  There are different types of fees, and they can be known as ‘temp to perm’, ‘temp-to-temp’ ‘temp to third party’, and introduction fees.

There are specific criteria and exceptions for this, so it depends on the circumstances involved.

If you take a fee directly from a worker’s wages, you must follow the National Minimum Wage and Living Wage  rules.

You are allowed to charge workers a fee for any additional services you provide them, such as CV writing or transport to and from jobs.  These services must be offered on an optional basis, and all costs and full details, including how to cancel the services if they change their mind, must be declared upfront beforehand.

In some cases, you may need to provide travel and accommodation costs free of charge to the worker, especially if the job requires working away from home.


Terms and Conditions and Key Information Documents

It is compulsory to have terms and conditions in place if you are an employment business. 

These are known as a ‘written statement’ or ‘key information document’ and need to be shared with a candidate before you find work for them. 

They should confirm details such as: your business details, the type of employment you will find for them and minimum pay rate, how the contracting will work, how they will be paid by you and when, notice periods, holiday pay allowance.

Work seekers can go to employment tribunal if necessary, if they wish to make a claim against an employment agency or a prospective employer.

You can read more about what must be included here and here.

It is advisable even if you draft your own terms and conditions, to seek independent legal advice and industry guidance to ensure they meet with regulations and legislation. 


Record keeping

Agencies and Employment businesses must keep accurate records about the workers they employ and place with employers.  You can read more about what information should be kept and how it must be stored here. 


Resources

The Employment Agency Standards Inspectorate enforces the laws that protect agency workers, and is the regulator of employment agencies and employment businesses in Great Britain.  They have published a helpful guide for employment agencies
https://assets.publishing.service.gov.uk/media/5fb53e94d3bf7f63def366c3/eas-brief-guide-for-agencies.pdf

The pay and work rights helpline can provide guidance for employers and workers about their rights and obligations
https://www.gov.uk/pay-and-work-rights

Agency Workers’ rights
https://www.gov.uk/agency-workers-your-rights

Acas provide free and confidential advice to employers and employees about rights, best practice and putting the right policies in place.  They also have a guide about working through an employment agency
https://www.acas.org.uk/agency-workers

Employers should also familiarise themselves with the rights of agency staff they take into their business
https://www.gov.uk/contract-types-and-employer-responsibilities/agency-staff

Gangmasters and Labour Abuse Authority
Gangmasters are employment businesses that supply workers for the agriculture, horticulture, shellfish gathering or food processing and packaging industries. The GLAA is sponsored by the Home Office to handle license applications from Gangmasters so they can operate.
https://www.gla.gov.uk/


Working with Umbrella Companies

An umbrella company is a business often used by recruitment agencies to pay temporary workers.  The umbrella company is classed as the worker's employer, for any temporary work from that particular recruitment agency.  Each entity involved in this process has a contract for the temporary work but with different responsibilities.  The agency sets up a contract with the umbrella company that sets out what their responsibilities are, and the agency would also confirm details of jobs to the worker.  

There are factors to consider such as whether a worker is classed as a Ltd Company, whether the assignment falls within off-payroll rules, or where it stands within IR35 regulations.  You can read more here.


Complain about an Employment Agency

The Employment Agency standards Inspectorate provide an online form for anyone who wishes to complain about employment agencies, gangmasters, not being paid the National Minimum Wage or unreasonable working hours.

Umbrella companies are limited companies which act as intermediaries between a contractor and a particular organisation.

Umbrella companies allow self employed contractors to get work with organisations who only contract with limited companies. The umbrella company acts as an agent, invoicing the organisation on behalf of the contractor.

Advantage: Saves a self employed contractor the extra complexities of setting up a limited company; the contractor can remain self employed, while being able to undertake work which they may otherwise have lost out on (due to the legal structure).

Disadvantage: Most umbrella companies charge the contractor a fee for providing this service, possibly a percentage of money earned on the contract.

General information on umbrella companies from ACAS: Working through an agency - Agency workers - Acas

Spotlight 64 — warning for employment agencies using umbrella companies

HMRC is aware of some umbrella companies who use employment and recruitment agencies to promote their tax avoidance schemes.

As a business you need to be aware of the potential dangers of umbrella companies that operate tax avoidance schemes. 

The Spotlight 64 guide can help you learn more about this by providing information on:

- signs that employment and recruitment agencies should look out for which may indicate an umbrella company is operating a tax avoidance scheme. 

- potential risks for businesses using non-compliant umbrella companies, such as potential penalties and reputational damage.

- steps businesses can take to protect themselves and their workers and reduce your risk.

If you suspect an umbrella company is not complying with the tax rules, you can report it to HMRC.

Care Provider Regulation
Any person (individual, partnership or organisation) who provides regulated activity in England must be registered with the CQC, otherwise they are committing an offence under the Health and Social Care Act 2008.

Should I register with Care Quality Commission (CQC)?
Registration with the CQC is dependent on what activities you will be carrying out under your care business and whether it falls under one of the fourteen CQC regulated activities:
https://www.cqc.org.uk/content/what-registration

Scope of registration:
https://www.cqc.org.uk/guidance-providers/scope-registration

Regulated Activity
Regulated activities are listed in Schedule 1 of the Health and Social Care Act 2008
(Regulated Activities) Regulations 2012. They are:

• Personal care
• Accommodation for persons who require nursing or personal care
• Accommodation for persons who require treatment for substance misuse
• Treatment of disease, disorder or injury
• Assessment or medical treatment for persons detained under the Mental Health Act 1983
• Surgical procedures
• Diagnostic and screening procedures
• Management of supply of blood and blood-derived products
• Transport services, triage and medical advice provided remotely
• Maternity and midwifery services
• Termination of pregnancies.
• Services in slimming clinics
• Nursing care.
• Family planning services

CQC provide a handy quick guide to regulated activities, to help you check which ones apply to you based on the services you want to provide.

CQC charge annual fees as opposed to registration costs: Every registered provider will pay a single annual fee on the same date each year. This fee will cover all registration and compliance requirements for all locations.
https://www.cqc.org.uk/organisations-we-regulate/registered-services/fees

Guide on how to start a care agency
https://agencycarestaff.co.uk/how-to-start-a-care-agency-in-uk/