The Government has launched a consultation on the Conduct of
Employment Agencies and Employment Businesses Regulations 2003 which
could have a significant impact on the day-to-day business of
Whilst the document addresses some positive aspects, the principal
area affecting supply recruiters is a proposal to remove the limited
company opt out under regulation 32. The opt out has been widely used by
many contractors including those operating through umbrella companies.
It allows a significant benefit to supply recruiters wishing to avoid
administrative procedures and to protect transfer fees since the fact of
an opt out removes the need to comply with the Regulations.
Although the proposals in the consultation are “dressed up” as trying to
solve the problem of low skilled workers being pushed through umbrella
companies, the practical effect of one of the proposals would be to
remove the limited company opt out altogether.
The consultation closes on 11th June. As with the Agency
Workers Directive, the new proposals demand careful consideration. Most
suppliers of limited company contractors will no doubt be highly
concerned as will umbrella and service company providers.
Lawspeed’s proposal of the opt out to government in 2002 was
followed by its inclusion in the Regulations as Regulation 32. The
government has already changed the original wording of Regulation 32 in
For more information call 01273 236236.