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Amendments to employment agency regulations

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dtiThe DTI has published unexpected amendments to the Conduct of Employment Agencies and Employment Businesses Regulations 2003 so they now include the category of workers who supply their services through a limited company.

This will mean that many more recruitment agencies and businesses will have to comply with the regulations – whose main provisions will come into force on 6 April 2004 – and many of them will be completely unaware.

The Regulations also appear to be in conflict, the result being that, whereas an opt-out provision for such limited company contractors was included, the wording renders it useless for all those workers on existing contracts. This is not the only conflict or mishandling of this piece of legislation and this comes after a consultation period that has lasted the best part of four years.

This unexpected change to the legislation is the inclusion of ‘incorporated’ work-seekers, in other words those providing their services through a limited company. Regulation 32, which will come into force on 6 July 2004, will mean that employment businesses who supply persons working through a limited company will be bound by the Regulations. That is unless under sub-paragraph 9 “…the work-seeker… agree that they should not apply, and give notice of that agreement to an employment business…”

Paragraph (9) Subject to paragraph (12), paragraphs (1) – (8) shall not apply where a work-seeker which is a company, and the person who is or would be supplied by that work-seeker to carry out the work, agree that they should not apply, and give notice of that agreement to an employment business or agency, provided that such notice is given before the introduction or supply of the work-seeker or the person who would be supplied by the work-seeker to do the work, to the hirer.

The notice, however, has to be given by the company and the person, who is or would be supplied to carry out the work, to the employment business or agency before the introduction or supply of the work-seeker or person. In scrutinising the regulations it could also be read that such notice is to be given ‘to the hirer’ due to the existence of the misplaced comma at the end of the paragraph.

It is assumed that the intention is that the notice is given by the company and person, to the business or agency, before the introduction or supply to the hirer. And not, as the misplaced comma suggests, given to the hirer by the worker before the introduction or supply, which would of course be virtually impossible.

In paragraph 10 of Regulation 32, the person but not, it appears, the company, may withdraw the earlier notice, by giving notice. Whereupon, subject to a further paragraph, paragraphs (1) – (8) shall thereupon apply but not, where in paragraph (11) the person is in fact carrying out the work, until that person stops working in that position. All very clear.

However, paragraph 2 of Schedule 1 states that “…these Regulations apply in respect of existing contracts with effect from the date these Regulations come into force.” This will mean that although those persons in existing contracts may, under paragraph 9 of Regulation 32, opt-out of the Regulations, the notice has to be given before the introduction or supply to the hirer, which is obviously not possible under the circumstances. Paragraph 11 offers no further exemption because even if a notice is given whilst a person is in fact carrying out the work with a hirer, the notice shall not take effect until that person stops working in that position. Which, in turn, means that the Regulations will apply to all existing contracts where workers are supplied through a company, until such time as that contract comes to an end. A very serious miscalculation.

Further ‘miscalculations’ were noted by Baroness Miller of Hendon, reported in Hansard, who had strong reservations about some aspects of the Regulations: “First, Regulation 10, the so-called “temp to perm” fees restriction, is incompatible with Article 6.2 of the Agency Workers Directive. Regulation 10 sets a time-limit for claiming a fee. Article 6.2 enables the agency to receive a “reasonable fee” for the loss by what is in effect the poaching of its agency worker. The time-scale is not a reasonable way to define the word “reasonable”.

The Baroness continued: “I suspect that when the directive comes into effect, the present definition may be incompatible with it. We may then be faced with revised regulations. It is a pity that the Government did not anticipate the terms of the intended directive.”

Commenting further, the Baroness noted that Regulation 20 is in apparent conflict with Regulation 28. “Regulation 20 states that where information comes to light that suggests that the work-seeker is not suitable for an assignment, the agency is obliged to inform the client. In the most extreme cases, the agency will be required to terminate the assignment. However, Regulation 20 seems to be at odds with Regulation 28, which states that agencies may not disclose information about work-seekers without their prior consent. There are three exceptions to that rule, but they do not cover the circumstances set out in Regulation 20.”

“There is a danger that in meeting the requirements of Regulation 20, agencies may well find themselves in breach of Regulation 28 and therefore liable to action by the temporary worker.”

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