UK: Top 5 New Year's Resolutions For Recruiters/Staffing Businesses

Last Updated: 13 January 2016
Article by Clare Gilroy-Scott

The festive season can be a busy time in HR and recruitment, with many employers spending the final month of the calendar year looking ahead at staffing proposals for 2016 as well as looking at headcount and temporary cover over the Christmas period.   While many of you may want to spend January in hibernation it is a good time for internal housekeeping to ensure that your business has proper policies and procedures in place and can enjoy a successful (and not stressful) 2016.

To help you get started we have set out our top 5 New Year's resolutions for recruiters and staffing businesses:

1. Assess the impact of the forthcoming travel & subsistence relief legislation

On 9 December 2015 the anticipated draft legislation restricting tax relief on travel and subsistence expenses for workers providing services through intermediaries was published.  The proposed amendments to the Income Tax (Earnings and Pensions) Act 2003 are expected to be in force from 6 April 2016 and will affect agency and contract workers supplied through umbrellas and PSCs (where the PSC is operating within IR35).  February 2016 will see a further period of consultation on the wording of the legislation.  Staffing businesses and recruiters are advised to review their current contracts and supply models (i.e. whether using PSCs or umbrellas) and liaise with the umbrellas they are supplied by.  It is anticipated that this restriction on tax relief will impact the umbrella supply model in particular, as well as the take home pay of workers.  According to the draft legislation, the new provisions will not apply if it is shown that the manner in which the worker provides the services is not subject to (or to the right of) supervision, direction and control by any person.    In all other circumstances they will no longer be able to pay travel and subsistence expenses free of tax and national insurance contributions.  Whilst the supervision, direction and control test may be a familiar one due to its use in IR35 it is likely to be problematic for workers employed by umbrellas.

2. Carry out a holiday pay audit

Holiday pay cases continue to be heard by the courts and tribunals.  The Employment Appeal Tribunal (EAT) decision in the case of Lock v British Gas Trading Limited (heard in December 2015) is expected to be handed down in the first few months of 2016, and the Court of Appeal will be sitting in the case of Mr Conley King v The Sash Window Workshop Ltd & Anor on 9 February 2016.  Both are long-running cases concerning back-dated commission-based holiday pay.  Employers who pay commission-based remuneration are advised to look out for these decisions and carry out an audit of the possible impact on their workforce and the calculation of pay for periods of holiday absence. 

Subject to the decision of the EAT in Lock, the current position is that holiday pay should be based on the employee's "normal remuneration", being all elements of pay that are intrinsically linked to the performance of the employee's contractual duties. This can include (amongst other things) overtime that the employee is required to work, commission payments, shift allowances and performance/productivity bonuses. How should this be calculated?  This is where further uncertainty lies.  The Advocate General, when considering Lock before the ECJ in 2014, suggested a 12 month reference period to average out pay but there has been no definitive finding.  The only guidance from the courts that we have is that the reference period must be a "period that is representative".  This will vary from workplace to workplace and will depend upon the actual commission and overtime schemes in practice.  Some employers may be able to use a representative 12 week period but for others a longer period may be more appropriate to find an appropriate average pay. 

What is the current position on back-dated holiday pay claims?  If there has been a break of more than three months between the employee taking leave or being paid holiday pay at the correct rate, their claim for backdated holiday pay is likely to be curtailed.

Note also that these rules apply only to the 4 week annual leave entitlement derived from the European legislation (the Working Time Directive) and not the additional 1.6 weeks under domestic UK legislation (the Working Time Regulations). This means that in most cases, for full-time employees, the first 20 days of holiday pay may need to be at a higher rate than the last 8 days to factor in commission and overtime etc.  You may need to check what the employee's contract of employment specifies.  Note also that claims submitted after 1 July 2015, are subject to an overall 2 year limit for backdated holiday pay.

3.  Review and update your contractual terms with workers and hirers

If you did not do so in 2015, the New Year may be a good time to review your terms of business with clients and terms of engagement with workers (whether engaged as PAYE workers or through umbrellas and PSCs).  April 2015 saw the introduction of what is known as the Intermediaries False-Self Employment or "Agency" legislation, requiring businesses supplying workers to make reports in respect of PAYE tax and national insurance contributions not deducted in respect of a worker, with records and reports to HMRC required from August 2015.  This was a good reason for staffing business to review their supply contracts and hirer terms to ensure that the correct indemnities and assurances in relation to the payment of tax and national insurance contributions were received by the recruitment business.  If you are carrying out such an exercise it would be a good opportunity to ensure also that obligations under the Conduct Regulations and the Agency Workers Regulations are adequately reflected in your contractual terms and that you have signed terms or clear deemed acceptance of terms from your workers and hirers.

4.  Review and update your internal employment contracts

No less important than your contractual arrangements with hirers and workers are your internal contractual arrangements with your recruitment consultants, resourcers and other staff.  Are these up to date, appropriate and signed?  In the recruitment and staffing sector you will want, in particular, to ensure that your commission arrangements and obligations to make payments are absolutely clear.  If there have been changes to any written scheme, ensure that these are clearly notified to employees.  Bear in mind that contractual schemes may require some consultation to effect a change.  Consider what happens to commission payments upon resignation, during notice and after termination.  What happens if the hirer does not pay an invoice or if a refund is required but a commission payment already made?  If you don't have a clear commission scheme or rules, consider implementing one in 2016 to avoid future dispute.

Other contractual terms that are important are the use of reasonable and appropriate restrictions against competition and solicitation of clients and candidates after termination of employment.  The staffing sector often has a high turnover of staff and post-termination restrictions are a valuable tool for protecting business contacts.  These should be drafted carefully and should go no further than is reasonably necessary to protect a legitimate business interest.  They should be drafted carefully and appropriately for the recruitment sector covering clients, candidates and prospective clients and candidates, and possibly also supplier relationships where the employee may be able to materially adversely affect such a relationship to the detriment of your business.  Are your restrictions adequately incorporated into your employees' contracts of employment?  The best position is to have signed copies on file. Whilst provisions contained in an unsigned contract can still be held to be binding, it is an area ripe for dispute and there is some doubt about the value of unsigned restrictive covenants in particular.  In carrying out your audit of such covenants, consider in particular employees who have been promoted but where no additional protections have been agreed which would be relevant to their possibly more client-facing position or their management of other employees where restrictions specifically designed to prevent team moves may be appropriate.  Note that new restrictions being introduced may require consultation with employees and some form of consideration in return, such as a salary increase, one-off bonus or new role.

5.  Ensure that your business contacts and confidential information are adequately protected

Much of the goodwill your business will have built with its clients will be as a result of a strong relationship and rapport with particular employees you have working on their accounts.  As well as their contact with your clients, your consultants will also have access to good candidates and presumably a database that your business will have expended considerable time, energy and expense in creating.  You will want to ensure that you have adequate protection in place in respect of confidential information, including information on your database and client and candidate contacts.  Whilst there are some implied obligations of confidentiality, these are limited and really only apply during employment unless the employee also owes a fiduciary duty due to their position or if the information amounts to a trade secret.  Furthermore, without an express definition of confidential information that is detailed enough to capture the type of information you would like to protect, the implied duty will only cover information that an employee is expressly told is confidential or is obviously confidential by nature.  Why leave this to argument and interpretation, particularly where there is likely to be some dispute over what is the employee's skill and knowledge. 

Don't overlook the database protection that you have in the Copyright and Rights in Database Regulations 1997.  Departing employees sometimes download sections of databases to take with them and this may be an infringement of the database right, offering another remedy alongside any claim for damages for breach of confidentiality.  Provided that there has been a "substantial investment in obtaining, verifying or presenting" the contacts of the database, you will have a database right.  The remedies for infringement of such a right include injunctions and/or an account of profits.

You may have confidentiality and database protection provisions in your contracts but are these up to date?  Do you require your employees to use social media such as LinkedIn but do not assert ownership over contacts made on such sites? Consider monitoring use of such sites (assuming you have policies entitling you to such monitoring) and consider requiring access to individual passwords, particularly where the business name and email address is used. 

Good contractual provisions and up to date policies are essential to protect your business information.  By putting in place adequate protections your employees will have a clearer understanding of what information they can or cannot disclose and will be less likely to attempt to copy parts of your database.  Furthermore, your business will be in a better position to take action against a departing employee who is benefiting from information they have obtained whilst working for you, or otherwise using it for the benefit of a new employer, with clear restrictions to show the court. Don't wait until an employee misuses confidential information or leaves along with a copy of your database! 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.