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Government acts on reforming recruitment industry
by Susie Hughes at 15:44 12/07/13 (News on Agents)
There was mixed reaction to the Government's response to the recent consultation on the future of regulating the agency market. Limited companies retain their right to opt-out; the Government will retain some regulatory responsibility though the Employment Agency Standards Inspectorate (EAS) amid fears there would be a shift towards self-regulations.
The new proposals for regulating the agency market aim to protect the more vulnerable workers, bring simpler regulation for employment agencies and employment businesses; and give the sector
greater freedom to fulfill its role in providing labour market flexibility and adaptability.

The Government has proposed that new legislation could cover areas including:

  • Ensuring that employment businesses do not withhold payment from a
    temporary worker
  • Restricting employment agencies and employment businesses from charging fees to work-seekers – exemptions for certain circumstances in the
    entertainment and modelling sector as in the current legislation
  • Ensuring that where more than one business work together to supply a
    temporary worker to a hirer there is clarity on who is responsible for paying the
    temporary worker
  • Preventing employment businesses and employment agencies from
    penalising a temporary work-seeker for terminating or giving notice to
    terminate a contract
  • Preventing employment businesses from enforcing unreasonable terms on a hirer when a temporary worker takes up permanent employment with that hirer
  • Ensuring that employment agencies and employment businesses keep
    sufficient records to demonstrate they have complied with the regulations
  • Amend the current definition of ‘employment agency’ to remove job boards from the scope of the regulations. Government does also acknowledge that clarity around which businesses the definition applies to is key to effective regulation in the sector.
  • Carry out a further short consultation on draft legislation, including the
    new definition of ‘employment agency’, after it has been prepared.
  • Retain a provision for individuals who are limited company contractors to opt out of the regulations and engage with employment businesses and employment agencies, in a business to business relationship.
  • Change the enforcement strategy in the recruitment
    sector by moving to a more focussed and targeted enforcement regime. In future we will focus Government resource on helping the most vulnerable workers
  • A small team will remain in BIS to enforce the other regulations which apply to employment agencies and employment businesses, including non-payment to workers earning above national minimum wage and workers in the entertainment and modelling sectors.

Agency group the REC was generally welcoming in its reaction. There was relief that the Inspectorate had not been disbanded as some had feared; that limited companies could retain an opt-out; and that the prohibition of fee-charging to work-seekers has been reaffirmed.

However, there was some concern that its reach didn't go further.

REC's Director Tom Hadley said: “The Government must listen to sense on the need for key enforcement mechanisms to be maintained. There was a real risk that the Employment Agency Standards Inspectorate (EAS) would be disbanded altogether with a focus on tribunals as a means of redress.It is good news that is being retained, but the fact that resource is being downscaled and responsibilities split between departments raises concerns about how effective it can be. Businesses cannot bring employment tribunals, and where an unscrupulous agency has failed to comply with the rules, they should be named, shamed and thrown out of our industry.

“Some measures outlined today appear sensible and reflect the arguments the REC and our members have made consistently to Ministers, particularly the retention of an opt-out for Limited Company Contractors.

"It’s also good news that the prohibition of fee-charging to work-seekers has been reaffirmed. How ‘reasonable’ temp to perm fees will be defined is not yet clear and we will pay close attention to the detail of draft legislation when it is published. The last thing our industry needs is unnecessary government intervention into business-to-business arrangements.”

However, REC did see it as a failure of the Government not to use the opportunity to update regulations to include specific reference to umbrellas and intermediaries.

Mr Hadley said: “Jo Swinson (BIS Minister) has missed a real opportunity by failing to update legislation to reflect the contemporary recruitment industry in which umbrella companies and other employment intermediaries are now significant actors. The recruitment market has changed dramatically over recent years and it is just plain wrong that the burden of new red tape still falls solely on recruitment agencies.

“The vast majority of recruitment agencies have embraced self-regulation and are driving up standards through membership of bodies like the REC, whilst the umbrella and intermediary market continues to operate without any regulatory oversight whatsoever, despite significant levels of non-compliance.”

For more information see Shout99's News on Agents.

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Susie Hughes © Shout99 2013

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