The Conduct of Employment Agencies and Employment Businesses 2003, commonly known as the "Conduct Regulations," serve as the governing regulations for the recruitment industry in the United Kingdom.
These regulations are meticulously crafted to offer safeguards to temporary workers, encompassing not only individual human workers but also corporate entities such as personal service companies (PSCs) and individuals employed by umbrella companies.
The primary objective of the Conduct Regulations is to protect workers by imposing specific obligations and limitations on Employment Businesses, often referred to as recruitment agencies.
Notably, PSCs and workers employed through umbrella companies have the option to "opt out" of the Conduct Regulations, provided they choose to do so. However, it's essential to note that if a worker's assignment involves working with vulnerable individuals, they are ineligible to opt out of these regulations.
Safeguards for Workers Under the Conduct Regulations
The Conduct Regulations encompass several prohibitions for Employment Businesses, including:
Charging fees to work-seekers in exchange for finding them employment.
Attempting to restrict a worker from seeking employment elsewhere, including with the end client.
Subjecting a worker to any form of disadvantage or harm if they opt to pursue employment with another entity.
Withholding payments or wages owed to temporary workers based on factors such as the Employment Business not receiving payment from the end client or a lack of a signed timesheet from the end client.
Advantages and Disadvantages of Opting Out of the Conduct Regulations
If a worker chooses to opt out of the Conduct Regulations, their Employment Business gains the authority to withhold the worker's wages until payment is received from the end client or make payment contingent on the worker presenting a signed timesheet.
Moreover, the Conduct Regulations limit an Employment Business's ability to hinder a worker from securing direct employment with the end client. However, if a worker opts out of these regulations, this restriction no longer applies, potentially allowing the Employment Business to prevent the worker from being directly employed by the end client for a specified duration after their assignment concludes.
Some contractors, particularly those operating through their own PSCs, may believe that they do not require the protections afforded by the Conduct Regulations. This choice to remain within or opt out of the Conduct Regulations could also factor into considerations related to IR35.
It's crucial to emphasize that a worker cannot selectively opt out of specific sections of the Conduct Regulations; it's an all-or-nothing decision.
Opting Out Procedure
By default, the Conduct Regulations apply to all work-seekers. However, individuals working through a Limited Company or an Umbrella company can choose to opt out of these regulations, provided their work does not involve vulnerable individuals—those under eighteen or individuals requiring care or attention due to age, infirmity, illness, disability, or other circumstances.
To opt out, both the work-seeker and their Limited Company/Umbrella company must jointly agree before the assignment commences. Opting out becomes ineffective if only one party opts out, or if the worker opts out after the assignment has begun. The Limited Company/Umbrella company must inform the Employment Business of the opt-out, and the Employment Business, in turn, must notify the end client.
Workers retain the freedom to change their Conduct Regulations status by opting in or out at a later date, provided they give notice to their PSC/Umbrella company, which, in turn, must notify the Employment Business. However, this change can only occur once their current assignment has concluded; it's not possible to modify Conduct Regulations status mid-assignment.
Ultimately, the decision to opt out of the Conduct Regulations rests with the worker. Employment Businesses are prohibited from making their services conditional upon a worker's decision to opt out of these regulations.
At Borderless, we advise all companies we deal with that workers rights should be at the forefront of their decisions. Looking after your staff is paramount to the image and growth of your business. We take employees rights, all rules and regulations, codes of conduct and employment and payroll laws very seriously... So should you!
About the author
Lyndsey operates a small team of both internal and external compliance experts to ensure our local regulation knowledge is top of the game.