Staff agency legal issues

A group of recruitment consultants holding up a job search bannerThe following is an outline of some of the areas in which legislation may be particularly relevant to your recruitment business.

What licences does a staff agency need?

Most types of recruitment businesses do not need to obtain a licence or register with any licensing authority. However, all recruitment agencies must comply with special legislation covering employment agencies and businesses. Under this legislation, the Employment Agency Standards Inspectorate (part of the Department for Business, Energy & Industrial Strategy) can ban an individual from running - or being involved in running - an employment agency or employment business because of their misconduct or unsuitability. A ban can last for up to 10 years. You can find out more on the Gov.uk website.

Nurses' and domiciliary care agencies

Specialist nurses' agencies and domiciliary care agencies in England must register with the Care Quality Commission (CQC) if they carry out 'regulated activities', such as treatment of disease or disorder, themselves. Agencies that just provide staff to other registered providers do not need to register with the CQC.

Elsewhere in the UK, nurses' agencies and domiciliary care agencies ('care at home' providers) normally need to register with:

  • Northern Ireland - the Regulation and Quality Improvement Authority (RQIA)
  • Scotland - the Care Inspectorate
  • Wales - Care Inspectorate Wales (CIW)

There is a fee for registration. To obtain a licence to operate a nurses' or domiciliary care agency, you will have to meet certain requirements. For example, the agency will need to be run by a suitable person. Licences are usually reviewed annually.

Gangmasters

Gangmasters - employment businesses that act as basic labour providers - who work in the agriculture, horticulture, forestry, food processing and packaging, and shellfish industries must register with the Gangmasters and Labour Abuse Authority (previously called the Gangmasters Licensing Authority - GLA), and must comply with a set of licensing conditions. More information about gangmaster licensing is available on the Gangmasters and Labour Abuse Authority website. The Gangmasters Licensing Act requires gangmasters - employment businesses that act as basic labour providers - who work in the agriculture, horticulture, forestry, food processing and shellfish industries to register with the Gangmasters and Labour Abuse Authority (previously called the Gangmasters Licensing Authority - GLA) and to comply with the terms of their licence. The legislation aims to protect workers from exploitation and to ensure that they have reasonable working conditions. You can find out more about gangmaster legislation and licensing on the Gangmasters and Labour Abuse Authority website.

Agency workers who work with asbestos

If you supply temporary workers who do licensable work with asbestos then you will need to obtain an asbestos licence from the Health and Safety Executive (HSE) Asbestos Licensing Unit or from the Health and Safety Executive Northern Ireland (HSENI). There is a charge for this licence, which lasts for either one or three years. Further details are available from the HSE.

Data protection

As you will be keeping comprehensive records - almost certainly computerised - of your temps and of all permanent jobseekers on your books you will need to register as a data user with the Information Commissioner's Office (ICO), for which there is a small fee. From May 2018 the General Data Protection Regulation has introduced additional protection for personal data. You can find out more on the ICO website.

Employment Agencies Act and regulations

The main pieces of legislation that affect your business are the Employment Agencies Act (and equivalent legislation in Northern Ireland) and the Conduct of Employment Agencies and Employment Business Regulations - and amendments. The legislation applies to any UK business involved in supplying either temporary or permanent recruitment services. They cover a wide range of issues, including record keeping, workers' rights and the general conduct of recruitment businesses. You can read guidance on special legislation for employment agencies and businesses on the Gov.uk website.

Note that nurses' agencies come within the scope of the Employment Agencies Act and Regulations and must also comply with the requirements of separate regulations specifically for care providers. Similar regulatory provision is also made for domiciliary care agencies.

You should ensure that you are familiar with all of the requirements of the current legislation for employment agencies before you begin trading.

Workers in frequent contact with children and vulnerable adults

You can only place agency workers into 'regulated activity' positions if they have not been barred by the Disclosure and Barring Service (DBS). Jobs such as care work and teaching that involve frequent or intensive contact with children and vulnerable adults are regulated activities. You must also pass on any relevant information you have about an individual worker in a regulated activity - for example following a disciplinary procedure - to the DBS. You can find out more on the DBS section of the Gov.uk website.

Health & safety, fire

You must also make sure that you comply with workplace health and safety and fire safety legislation.

General employment matters and agency workers

Anyone employing staff must comply with employment legislation. Important areas of legislation include:

Recruitment and employment contracts

Pay and pensions

Working time: hours, leave, flexible working

Employment policies

Sickness and sick pay

Maternity, paternity and adoption

Discrimination

Managing home workers, remote workers, lone workers

Discipline and grievance

Dismissals and redundancies

Employment tribunals

Pay particular attention to ensuring that your business complies at all times with equality and anti-discrimination legislation. It is your responsibility to ensure that no discrimination occurs, even if your clients make requests of you that are discriminatory.

Note that the Agency Workers Regulations give agency works equal rights to their permanent colleagues after an initial period in a placement.

Illegal workers

It's your responsibility to check that your temps are entitled to work in the UK. There are fines for employers who employ illegal workers because they've failed to make the necessary checks. You can read more about preventing illegal working on the Gov.uk website.

Other matters

There are various other areas where legislation is likely to apply to your business. These include, for example, data protection laws, privacy regulations, and rules covering fairness and honesty when dealing with clients (including business clients). You should also give considerations to legal matters which apply to the contracts you enter into with work seekers and engagers.

Where to get advice and information

The Recruitment and Employment Confederation (REC) offers help, advice and compliance testing to members - including gangmasters - on all aspects of both employment law and industry specific legislation. You can find out more about this and other membership benefits on the REC website.

More information about employment agency regulations is available on the Gov.uk website.

Information for businesses in Northern Ireland is available on the Department for the Economy website. Helpful publications for employment agencies include Guidance on the Conduct of Employment Agencies and Employment Businesses Regulations (Northern Ireland) 2005.

The Gangmasters and Labour Abuse Authority has information on legal requirements for gangmasters on its website.

The employing people section of the Gov.uk website includes information and guidance on all aspects of general employment legislation. Information for businesses in Northern Ireland is available on the NI Business Info website.

Further information and guidance leaflets on all aspects of health and safety are available on the Health and Safety Executive (HSE) and Health and Safety Executive Northern Ireland (HSENI) websites, and from your local authority environmental health department.

Insurance for a staff agency

When you start up in business you will need insurance cover. Contact an insurer and explain exactly how the business will operate. They will then recommend what cover you should have, which might include:

  • employer's liability
  • public liability
  • professional indemnity
  • malpractice
  • legal expenses
  • technology risks
  • fidelity bonding
  • premises, premises contents
  • drivers' negligence
  • motor insurance (for business vehicles)
  • loss of earnings

If you and/or your employees are going to use their own vehicles to travel to clients' premises, make sure that your and/or their motor insurance cover reflects this.

The Recruitment and Employment Consortium (REC) has negotiated special deals on bespoke business insurance packages for its members.

Specialist insurance packages and policies for recruitment agencies are also available from various other providers.

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