This note is intended to clarify the recent amendments that have been made to the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“the Regulations”). The 2010 amendments came into force on 1 October, and reduced many of the administrative burdens on Employment Agencies, who introduce candidates for direct hire by clients.
The changes are not relevant to Employment Businesses that only engage and supply temps or contractors to clients.
The changes remove certain legal obligations from employment agencies:
- agencies are no longer legally required to agree terms with clients, or candidates in most situations before services are performed
- agencies are no longer legally required to confirm the identity of a candidate, or the experience, training, qualifications or other authorisations required unless the candidate is taking up a position caring for vulnerable persons (being any person under the age of 18, and any person who by reason of age, infirmity, illness, disability or any other circumstance is in need of care or attention)
- agencies are no longer legally required to obtain copies of relevant qualifications, authorisations, references or take any other practicable steps to confirm that the candidate is suitable for a role unless the candidate will be working with vulnerable persons
- agencies and Employment Businesses no longer need to state that they are Agencies or Employment Businesses in any adverts. Rather, any adverts for roles must state whether or not the role is permanent or temporary.
Employment agencies will no doubt be relieved that this legal burden has been removed. However, before rushing to delete the processes and documents from your sales flow it is crucial that the commercial implications are considered.
Whilst the 2010 amendments have removed the legal obligation to agree terms with candidates and clients before any services are provided, it remains a commercial necessity that terms of business are agreed as early as possible in the business relationship.
Terms with clients
Failure to have terms in place means that there is no entitlement to receive a fee if your client engages a candidate that you have introduced. Not having terms in place would be commercial suicide as the protection of fees is the most important consideration for an Agency – it is your business.
Our approach is always that prevention is better than the cure. Your terms should be your first line of defence, and should clarify the obligations between the parties, cover off your liability, and contain robust fee protection. Further, the 2010 amendments have not removed all of the administrative burdens on an Agency. For example, the legal requirement to obtain information from the hirer in respect of the role, including the nature of the work and health and safety risks remains. You can therefore use your terms to push obligations up to the client – such as the requirement to provide you with the information required under the Regulations, to ensure that necessary checks for the candidate are undertaken by the client, and to ensure that the client satisfies itself as to the suitability of the candidate for its requirements.
Terms with candidates
We recommend that Agencies continue to agree terms with candidates. Commercially, it is helpful to set out the obligations of the parties, to cover off liabilities, and to push obligations on to the candidate – for example for the candidate to ensure that information they provide you is accurate and up to date. Agencies also need consent from the candidates to process their personal data and an easy place to obtain that consent, as well as the other points, is in the initial registration agreement.
There are two additional points.
- Do not include unnecessary provisions in your terms of business
Some organisations use terms that contain a contractual obligation to comply with the 2003 Regulations and spell out by repeating the individual obligations under those Regulations. We have always advised against including such provisions in contracts either with the client or the candidate as they have the effect of making the organisation contractually liable in addition to being liable for breach of regulation, and thus more likely to result in a claim. You would not normally include other legal obligations in your contracts, for example agreeing not to discriminate, so why include these? Regardless of the changes in these regulations, organisations that have such provisions in their terms of business should remove the relevant clauses rather than simply stop putting any terms in place.
- Client own issued terms may still apply
It is important to note that although Agencies are no longer legally required to undertake the steps outlined above in order to be compliant with Regulations, client terms issued by your clients to you may still contain some or all of these obligations. You should still therefore refer to and comply with the terms contained in those contracts and agreements.
If you are unsure of the effect of your current terms, please call us for a free initial consultation. For more information or enquiries about client and candidate terms or compliance under the 2003 Regulations call 01273 236236.