Contractors to keep Agency Regulations opt-out

The opt-out from the Agency Conduct Regulations will be kept in place for limited company contractors who engage recruiters in business-to-business relationships, the government has announced.

In its response to a 12-week consultation on reforming the recruitment sector’s legal framework, the government said it would replace it with a simpler alternative, but would still retain the opt-out from the 2003 rules.

Reflecting on the “huge win” for limited company contractors, a staffing body claimed that it was instrumental in safeguarding the opt-out, arguing that, without their lobbying, it was “very likely” that the state would have abolished it.

APSCo, one of nine industry groups that replied to the consultation – which was overwhelmingly responded to by individuals and limited company workers, added that it was “thrilled” with the state’s decision to leave the opt-out in place.

Another industry group, the Recruitment & Employment Confederation, preferred that the government’s willingness not to interfere with the opt-out was merely a “sensible” decision.

But the confederation’s Tom Hadley expressed disappointment that the government – and the minister responsible – has ignored the REC’s call to bring payroll and umbrella companies within the proposals for overhauling the overall framework for the staffing sector.

“Jo Swinson has missed a real opportunity by failing to update legislation to reflect the contemporary recruitment industry in which umbrella companies and other employment intermediaries are now significant actors,” he said.

“The recruitment market has changed dramatically over recent years and it is just plain wrong that the burden of new red tape still falls solely on recruitment agencies.”

Elaborating, Mr Hadley said that unlike the recruitment sector, where self-regulation has been adopted by the majority, the umbrella and intermediary market “continues to operate without any regulatory oversight” despite, he claimed, “significant levels of non-compliance.”

In its response to the consultation, the government does acknowledge umbrella companies – but only in so far as saying some respondents wanted provisions around defining who is responsible for paying temporary workers to take account of “complex supply chains”.

Also in the government’s document (at chap 13.4), it proposes that the new legislation for the recruitment sector could amend the current definition of ‘employment agency’ to remove job boards from the scope of the Agency Conduct Regulations.

Officials at the Department for Business, Innovation & Skills stated: “[We] acknowledge that clarity around which businesses the definition applies to is key to effective regulation in the sector. We would carry out a further short consultation on draft legislation, including the new definition of ‘employment agency’, after it has been prepared.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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