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Recruiters - five things to watch out for

Thursday, 26 February 2015

Whether you are new to the recruitment industry or are well established, it is worth re-visiting some essential points regarding your terms and conditions of business.

An agency is, broadly speaking, a business which arranges for other businesses or individuals to work together. An agency which supplies workers on a temporary basis is an employment business, whereas an agency which supplies persons to work for businesses permanently is an employment agent.

Employment agencies and employment businesses are regulated by two main pieces of legislation: the Employment Agencies Act 1973 (the Act) and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Regs). Together, this framework attempts to protect the worker and imposes certain restrictions on what employment agencies and businesses can and can’t do.

1. The contract with the worker

You should ensure that the terms of the engagement with the worker are clear before you have provided them with services. The terms which will apply to the worker should preferably be set out in a single document and should include such provisions as what the rate of pay is and when it is paid and the length of notice the business must give to the worker to terminate the engagement.

2. Withholding payment

Employment business and agencies are precluded from withholding payment to the worker for work they have carried out where, for example, the business has not received the corresponding payment from the client or hirer of the worker. In addition, the business cannot withhold payment if the worker has failed to work a minimum number of hours. It is important, therefore, to ensure that the terms of payment with the client and number of hours are clearly stated within the contract between the business and client.

3. Confidentiality

The information your business obtains about a worker or potential worker is confidential to that worker and other than using the information to assist the worker in finding work, and limited other exceptions, the information must be kept confidential. In addition, it is good practice to gain the consent of the worker each time you release their details to a potential employer.

4. Charging fees to hirers who employ workers

It can be frustrating when you provide a client with a potential worker’s details and after hiring the worker for a limited period, the client employs the worker direct. In that situation, provided you have detailed terms in your contract with the client, you may be able to charge the client a finders, or “transfer”, fee. Your contract will need to include terms setting out an option to extend the hire period of the worker and how the fee is calculated in the event that a fee becomes payable. It is crucial to ensure that these terms are compliant with the Regs to avoid situations where you have committed resources to a client and then lose out due to the client’s actions.

5. Vulnerable persons

In situations where the worker is going to be working with vulnerable persons, the employment agency or business must ensure that they have obtained a copy of all the relevant qualifications of the worker and two references from individuals unrelated to the worker.

It is important to ensure that your employment business or agency complies with the legal framework. One way of ensuring this is to have in place terms and conditions with clients and workers setting out clearly what each parties, rights, obligations and responsibilities are.

Rollingsons currently represent employment business and agencies in a range of industries. Do get in contact by email ( or telephone (020 7611 4848) if you have any queries about your employment business or agency.

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