UK: Regulation Of The Recruitment Sector: Changes From 8 May 2016

Last Updated: 28 April 2016
Article by Clare Gilroy-Scott

Much anticipated reform of the regulation of the recruitment sector comes into force on 8 May 2016 with the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016 which were published this week.

Much of the current regulation of the recruitment sector is set out in the 2003 Conduct of Employment Agencies and Employment Businesses Regulations (the Conduct Regs) and the Employment Agencies Act 1973, with various amendments made over the years since. More significant reform of this legislation has been anticipated since 2013, when the coalition government stated its intention to commence a consultation with the aim of simplifying and streamlining the regulation of the sector to allow greater freedom to recruiters, remove business to business regulation, while retaining work-seeker protection.

Further consultation commenced on 13 October 2015 and there were 30 responses received, which included comment by APSCo, the REC, those in the sector and the Employment Lawyers Association.

The government response to the consultation was published in February 2016 and confirmed the government's intention to proceed with amending the legislation in line with the majority of the proposals in the consultation. The following is a summary of the main changes to the Conduct Regs and what the government response to the consultation on these points was (references to "regulations" are to regulations contained in the Conduct Regs):

  • Removal of regulation 9: Employment agencies and businesses will no longer be prevented from claiming to be acting on one basis (as an agency or business) while stating to the client they are acting on the other basis. A significant proportion of the respondents felt that there would be no impact on employment agencies/businesses, the hirer or the work-seeker if regulation 9 were to be removed as the basis on which the agency or business is acting is already clear to all parties.
  • Removal of regulation 11: This regulation currently prevents agencies/businesses from entering into a contract with a hirer on behalf of a work-seeker (and vice versa), except where the agency has authority and is permitted to charge fees for finding work.
  • Removal of regulation 17: Employment businesses will no longer be required to obtain agreement to terms with hirers. 30% of the respondents felt that this was a business to business arrangement which should not be included in the regulations. Further, such arrangements would be made anyway, to avoid dispute on terms and fees, so impact would be minimal at most.
  • Amend regulation 23: The amendment removes provisions requiring an employment agency/business to ascertain that any other agency/business they contract with is suitable to act in that capacity
  • Extending the scope of regulation 27A ("overseas only" recruitment): This regulation currently prohibits employment agencies and businesses from placing advertisements for specific job vacancies (based in Great Britain) in other EEA countries, without also advertising the vacancy in Great Britain. The extension will cover generic recruitment campaigns carried out.
  • Schedules 4, 5 and 6 are amended to remove some of the requirements to include certain particulars in records held on work-seekers, hirers and any other employment agency/business.

The government has stated its belief that these changes will allow the recruitment sector "more freedom" in its role of matching "demand for jobs to demand for workers".

No change: Information in job advertisements

The consultation also considered the possible removal of regulation 27 of the Conduct Regs, requiring certain information to be included in job advertisements made by employment agencies and employment businesses. It was suggested that "unscrupulous" agencies would be more likely to include misleading information in their advertisements in order to attract a wider number of applicants. An example given was where a worker was underpaid a previously agreed hourly rate and they would have less evidence of the pay rate agreed. There was concern at the negative impact on work-seekers so regulation 27 will be retained for their benefit.

Job Boards: to remain within the scope of the regulation

An interesting result of the consultation concerned the decision not to remove "job boards" from the scope of the legislation. 33% of the respondents felt that job boards should remain in scope as they offer work-finding services. In contrast, 10% felt that they should not be included as they only advertise the vacancies with 17% feeling that the differences should be clarified, which would probably be welcomed given the administrative burden of much of the regulation. The government has decided to stand by its decision not to remove job boards from the scope of the regulation, despite some "strong comments" from affected stakeholders. It is noted that not many job boards took part in the consultation process.

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.

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