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Shout99 - Freelancers, FO35, Section 660
  
Shout99 - Freelancers, FO35, Section 660

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DTI consultation on draft changes to Employment Agencies Act
by Richard Powell at 15:46 23/07/02 (Conference Papers)
The Department of Trade and Industry has amended the 'Draft Conduct of Employment Agencies and Employment Businesses Regulations 2002' to incorporate a number of changes suggested during its previous consulation. These include some made by the Professional Contractors Group. Shout99.com readers can comment below and we will submit these to the DTI as part of the consultation process.
The Government announcement is reproduced below:

In the main, the changes reflect points made in the representations received. However, three of the Government's proposals represent changes on which it wishes to re-consult.

These are:

  • Regulation 10, the 'temp-to-temp' and 'temp-to-third party' transfer fee provisions;
  • New Regulation 20 (paragraphs (2) - (7)), to provide an extension of the obligations on agencies and employment businesses regarding the suitability of work-seekers after the work-seeker’s initial introduction or supply;
  • Regulation 26, to exempt employment agencies from the prohibition on charging fees to work-seekers who are companies.

    In addition, the Government is inviting comments on the application of the draft Conduct Regulations to work-seekers who are incorporated.

    Copies of the proposed amendments to Regulations 10, 20 and 26 are available here.

    The Government intends to lay the final draft of the Regulations, subject to any changes resulting from the present consultation, before Parliament by the end of the year with a view to bringing them into force in the first half of next year, 6 months after they are approved by Parliament.

    Details of the new proposals:

    Temp-to-Temp and Temp-to-Third Party Transfer Fees - Regulation 10

    The draft 2001 Conduct Regulations provided that the quarantine period for 'temp-to-temp' and 'temp-to-third party' transfers was four weeks, but for 'temp-to-perm' it was, broadly speaking, eight weeks from the end of supply, or 14 weeks from the beginning. A number of the representations from the last consultation exercise were concerned that the length of the temp-to-temp and temp-to-third party quarantine periods was inadequate. Ministers have considered this issue and propose to extend the quarantine periods for temp-to-temp and temp-to-third party and make them the same as for the temp-to-perm transfer fee provisions. This will also have the effect of simplifying the regulation.

    Unsuitable Workers - Regulation 20(2) - (7)

    A recent court case highlighted possible gaps in the draft 2001 Conduct Regulations in relation to any ongoing responsibility on agencies and employment businesses regarding a work-seeker's possible unsuitability for the position concerned, after introduction or supply to a hirer. The previous draft Regulations contained requirements to be satisfied before a work-seeker is introduced or supplied to a hirer. However, the proposed amendment will impose a continuing duty on agencies and employment businesses to act where they receive information concerning a work-seeker’s unsuitability, once he is in post.

    Marketing Service Companies - Regulation 26(8)

    Marketing Service Companies (MSCs) are used by some work-seekers who are Limited Company Contractors (LCCs). MSCs provide marketing and promotional services, for which they currently charge. However, such services may result in employment for the LCC. If LCCs were brought in scope of the Regulations, then MSCs would be prevented from charging fees to LCCs under section 6 of the Employment Agencies Act 1973, where they might be acting as an employment agency. Ministers acknowledged that a likely consequence of LCCs being covered by the Regulations could be to deter MSCs from offering their services to LCCs. To resolve this possible problem, the Government proposes to exempt employment agencies from the prohibition on charging fees to work-seekers who are companies, apart from in the entertainment and modelling sectors, i.e. occupations listed in Schedule 3 of the Conduct Regulations, where the prohibition on charging fees would still apply.

    Limited Company Contractors

    The substitution of the term 'person' for 'worker' in the 1973 Act, (by virtue of the Employment Relations Act 1999), and the substitution of 'work-seeker' for 'worker' in the Regulations themselves, has the effect of bringing LCCs into scope.
    Regulation 32 of the draft Conduct Regulations 2001 provides how specific Regulations will apply to work-seekers who are incorporated. During the previous consultation exercise, we received a number of representations from trade associations, individual recruitment companies, and the body representing some LCCs, objecting to the application of the Conduct Regulations to work-seekers who are incorporated. These claimed that, as LCCs are businesses engaged on business-to-business contracts, they do not need the protections provided by the legislation. We would welcome comments on the possible continued exclusion of LCCs from the legislation, in particular from those individuals who operate as LCCs. In addition, should LCCs be brought into scope, we are seeking views on the proposal that the Regulations would not apply to new contracts involving incorporated work-seekers until the end of the 3-month transitional period.

    Comments on these four proposals should be sent to:

    Employment Agency Standards - Consultation
    Department of Trade and Industry
    ER 4138,
    1 Victoria Street, London SW1H 0ET

    By e-mail to: eas@dti.gsi.gov.uk

    Or by fax to: 020 7215 2636

    Main revisions proposed for the draft conduct of employment agencies and employment business regulations

    Regulation 10 - Restriction on charges to hirers

    10. (1) Any term of a contract between an employment business and a hirer which is contingent on a work-seeker taking up employment with the hirer or working for the hirer pursuant to being supplied by another employment business is unenforceable by the employment business in relation to that work-seeker unless the contract provides that instead of a transfer fee the hirer may by notice elect for a hire period of such length as is specified in the contract during which the work-seeker will be supplied to the hirer -

    (a) in a case where there has been no supply, on the terms specified in the contract; or
    (b) in any other case, on terms no less favourable to the hirer than those which applied immediately before the employment business received the notice.

    (2) In paragraph (1), 'transfer fee' means any payment in connection with the work-seeker taking up employment with the hirer or in connection with the work-seeker working for the hirer pursuant to being supplied by another employment business.

    (3) Any term as mentioned in paragraph (1) is unenforceable where the employment business does not supply the work-seeker to the hirer, in accordance with the contract, for the duration of the hire period referred to in paragraph (1) unless the employment business is in no way at fault.

    (4) Any term of a contract between an employment business and a hirer which is contingent on any of the following events, namely a work-seeker -
    (a) taking up employment with the hirer;
    (b) taking up employment with any person (other than the hirer) to whom the hirer has introduced him; or
    (c) working for the hirer pursuant to being supplied by another employment business,
    is unenforceable by the employment business in relation to the event concerned where the work-seeker begins such employment or begins working for the hirer pursuant to being supplied by another employment business, as the case may be, after the end of the relevant period.

    (5) In paragraph (4), 'the relevant period' means whichever of the following periods ends later, namely -
    (a) the period of 8 weeks commencing on the day after the day on which the work-seeker last worked for the hirer pursuant to being supplied by the employment business; or
    (b) subject to paragraph (6), the period of 14 weeks commencing on the first day on which the work-seeker worked for the hirer pursuant to the supply of that work-seeker to that hirer by the employment business.

    (6) In determining for the purposes of paragraph (5)(b) the first day on which the work-seeker worked for the hirer pursuant to the supply of that work-seeker to that hirer by the employment business, no account shall be taken of any supply that occurred prior to a period of more than 42 days during which that work-seeker did not work for that hirer pursuant to being supplied by that employment business.

    (7) An employment business shall not -
    (a) seek to enforce against the hirer, or otherwise seek to give effect to, any term of a contract which is unenforceable by virtue of paragraph (1), (3) or (4); or
    (b) otherwise directly or indirectly request a payment to which by virtue of this regulation the employment business is not entitled.

    Insert as Regulation 20 (2) - (7)

    (2) Where an employment business receives or obtains information, which gives it
    reasonable grounds to believe that a work-seeker is unsuitable for the position with a hirer for which he is being supplied, it shall, without delay -

    (a) inform the hirer of that information; and

    (b) end the supply of that work-seeker to the hirer.

    (3) Where an employment business receives or obtains information which
    indicates that a work-seeker may be unsuitable for the position with a hirer for which he is being supplied, but where that information does not give it reasonable grounds to believe that the work-seeker is unsuitable, it shall, without delay -

    (a) inform the hirer of that information; and

    (b) commence making such further enquiries as are reasonably practicable as to the suitability of the work-seeker for the position concerned, and inform the hirer of the enquiries made and any further information it receives or obtains.

    (4) Where, as a result of the enquiries made under paragraph (3) an employment business has reasonable grounds to believe that the work-seeker is unsuitable for the position concerned, it shall, without delay;

    (a) inform the hirer of that information; and

    (b) end the supply of that work-seeker to the hirer.

    (5) Where an agency, having introduced a work-seeker to a hirer, receives or obtains information, which indicates that the work-seeker is or may be unsuitable for the position in which he has been employed with that hirer, it shall inform the hirer of that information without delay.

    (6) Paragraph (5) shall apply for a period of 3 months from the date of introduction of a work-seeker by an agency to a hirer.

    (7) In this regulation, 'without delay' means on the same day, or where that is not reasonably practicable, on the next business day.

    Regulation 26 - Circumstances in which fees may be charged to work-seekers

    26. (1) Subject to paragraphs (2) and (3), the restriction on charging fees to work-seekers contained in section 6(1)(a) of the Act shall not apply in respect of a fee charged by an agency for the service provided by it of finding or seeking to find a work-seeker employment in any of the occupations listed in Schedule 3, and in such a case any fee charged by the agency may consist only of a charge or commission payable out of the work-seeker’s earnings in any such employment which the agency has found for him.

    (2) Paragraph (1) shall not apply where the agency, or any person connected with it, charges a fee to the hirer in respect of the service of supplying or introducing that work-seeker to him.

    (3) In any case in which the agency is connected with the hirer, paragraph (1) only applies if, prior to the provision of the service in respect of which the fee is to be charged, the agency informs the work-seeker of the fact that it is connected with the hirer.

    (4) Subject to paragraph (5), the restrictions on charging fees to work-seekers contained in section 6(1)(a) of the Act shall not apply to any fee charged to a work-seeker by an agency in respect of the inclusion of information about the work-seeker in a publication wholly for one or both of the following purposes, namely the purpose of finding work-seekers employment in, or providing hirers with information about work-seekers in relation to, any of the occupations listed in Schedule 3.

    (5) Paragraph (4) shall not apply unless -
    (a) either -
    (i) the only work-finding service provided by the agency or any person connected with it to the work-seeker is the service described in paragraph (4); or
    (ii) the fee charged to the work-seeker amounts to no more than a reasonable estimate of the cost of production and circulation of the publication attributable to the inclusion of information about that work-seeker in the publication; and
    (b) in addition to the requirements in regulations 13, 14 and 16, the agency has, before it entered into the contract with the work-seeker by reference to which the fee is to be charged, made available to him a copy of a current edition of the publication (or, where the publication exists only in electronic form, given him access to a current edition of the publication) in which it is offering to include information about him.

    (6) Subject to paragraph (7), the restrictions on charging fees to work-seekers contained in section 6(1)(a) of the Act shall not apply to any fee consisting of a charge to a work-seeker in respect of the purchase of or subscription for a publication in paper form containing information about employers.

    (7) Paragraph (6) shall not apply unless -
    (a) the only work-finding service provided by the agency or any person connected with it to the work-seeker is making available the information contained in the publication; and
    (b) the work-seeker is given the opportunity by the agency to examine a current edition of the publication in paper form free of charge, in advance of purchasing or subscribing for it.

    (8) Without prejudice to paragraph (1), the restriction on charging fees to work-seekers contained in section 6(1)(a) of the Act shall not apply in respect of a fee charged by an agency for the service provided by it of finding or seeking to find a work-seeker employment where -
    (a) the work-seeker in question is a company; and
    (b) the employment is in an occupation other than any of those occupations listed in Schedule 3.

    Log in and comment on the proposals below using the 'Reply' button.

    --
    Richard Powell, © Shout99.com 2002

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