All UK companies must comply with the regulations contained under the Companies Act 2006. In addition the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 impact on recruitment agencies.
Highlighted below, however, is the key tax and employment legislation that currently affect the day-to-day operations of recruitment agencies.
In addition, you can download a free copy of our guide Commonly overlooked compliance procedures and how to address them. Topics covered include:
- Putting contractual terms in place with clients;
- Notifying clients of an opt out;
- Registering with the ICO;
- Identifying the party with which you are dealing;
- Checking candidates’ right to work; and
- Including correct company information on your website.
IR35 (also known as the ‘intermediaries’ legislation’) is tax legislation applicable to individuals operating through their own personal service company which effectively asks whether ‘but for the existence of the intermediary (i.e. the PSC)’ the relationship between the individual and the hirer would be one of employment. If this is found to be the case then all sums paid for the individual’s services must be taxed as employment income.
The AWR (Agency Worker Regulations) is legislation which affords rights to temporary workers who are supplied through a temporary work agency to work for a hirer. As well as rights that apply from day one of an assignment, such as access to collective facilities at a hirer site (e.g. a canteen), agency workers are also entitled to parity of treatment in basic working and employment conditions (pay, working time, breaks and leave) as the hirer’s own staff doing the same job once the agency worker has completed a qualifying period of 12 weeks at that hirer.
The Conduct Regulations (The Conduct of Employment Agencies and Employment Businesses Regulations 2003) establish a framework of minimum standards by which employment agencies and employment businesses should operate in respect of candidates and clients. These standards include information to be obtained from the candidate and hirer as well as rules surrounding transfer fees. It is possible for individuals providing their services through a company (umbrella, PSC) to opt out of these regulations.
The Agency Tax Rules (Ss 44-47 Income Tax (Earnings and Pensions) Act 2003) require that an agency that has a contract with a hirer for an individual’s services must pay that individual subject to employment taxes (PAYE income tax and NICs) unless it can be shown either that the manner in which the individual provides the services is not subject to, or to the right of, supervision, direction or control, or that the employment taxes are paid by another party. The agency (and its directors) is liable for any taxes that are due should it fail to apply these rules.
The Working Time Regulations (WTR) implement the EU Working Time Directive and detail rights of a worker, and obligations of the employer, with regards to working time. The regulations include provisions concerning rest breaks and night shift work, as well as entitlement to annual leave. Self-employed individuals, those operating through a PSC, and some sectors (covered by their own sector specific regulations) are outside the scope of the WTR.
The National Minimum Wage (NMW) is the minimum pay per hour that workers are entitled to receive. Within the NMW there are different bands according to age and for apprentices; for example, everyone over the age of 25 is entitled to the top tier of NMW, referred to as the National Living Wage.
“In everything we do, we strive to maintain the highest ethical standards and professionalism, treating both candidates and clients with the same care and respect that we would hope to be treated with ourselves. Until now there has been no genuinely independent audit of our processes and operations and that is why we were first attracted to Standards in Recruitment. Elbrus Partners Limited is extremely proud to be one of the early adopters of this important accreditation. We passionately believe that our industry needs this kind of quality control.”
“Standards in Recruitment goes further; into more depth and because it is specifically for recruitment, which fundamentally is what we’re about, the accreditation reinforces that we are providing the best service to our clients and our organisation. The standards were easy to understand, straight forward and most importantly relevant. It’s a clear value-add to our business to complete the SiR process.“
“Even with all our experience we found the SiR standards and audit process very thought provoking, and it made us examine how we go about our business with a continued focus on quality, which we found very encouraging.” The SiR accreditation goes the extra mile, and gives us a very real differentiator from our competitors. It’s refreshing that this is available to companies like ours to reflect our drive for high quality standards in addition to our continued commitment to regulatory and legal compliance.”
For some time NAHT has voiced the concerns of its members reporting issues with teacher supply agencies in relation to the recruitment of permanent staff. During the year we have been in discussions with Standards in Recruitment (SiR) in the development of their independent education standards for recruitment agencies to ensure these reflect the needs of schools. NAHT welcomes the development of those independent standards to raise the quality of services that teacher supply agencies provide to schools.
An excellent framework for consultants to drive their performance ...
...comprehensive and consistent standards...it answers a longstanding need for quality assurance within the recruitment industry
SiR is reassuringly robust for education hirers like us...