Agency rules 'opt-out' must stay, say contractors

Limited company contractors are 'concerned' and 'frustrated' at the government's decision to consider banning the 'opt-out' of the agency conduct regulations.

In a survey of contractors using personal service companies, more than 99 per cent said their effectiveness as a freelancer would suffer if the exemption was removed.

Cancelling the 'opt-out' from the 2003 rules, introduced to protect vulnerable workers, is under consideration for fear recruiters are using it to avoid their responsibilities.

Concerns it may be benefiting agents, at the expense of the lower-skilled workers it was intended for, could also see the opt-out removed from some of the regulations.

More positively for those surveyed, a government consultation also proposed retaining the opt-out for limited company contractors, but removing it for those in umbrella companies.

"The original purpose of the Conduct Regulations was to protect the vulnerable and we support that," said 1st Option, an accountancy firm, which ran the survey.

"However, without retaining an 'opt-out' for high-end freelancers operating through their own personal service company, government would increase administration and bureaucracy for professional freelancers, and ultimately damage the economy."

David Mount, the firm's director, added: "These findings show overwhelmingly how UK freelance professionals feel about the potential removal of the "opt out" from them. In short it would do great harm."

The Conduct of Employment Agencies and Employment Business Regulations were introduced to protect workers from unscrupulous recruiters by setting minimum standards for their operations.

The opt-out arrangement was included for career freelancers to ensure they were not unduly affected, as, Mr Mount said, almost all of them would find the rules "cumbersome and impractical".