Proposed changes for employment agencies and employment businesses

For anybody who has ever attempted to read the Conduct of Employment Agencies and Employment Businesses Regulations 2003 – whether as a bet, or simply out of morbid curiosity – this November brought some apparently welcome news, with the announcement of proposed amendments to that most poorly-drafted of pieces of legislation. The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007 (currently a draft, but intended to come into effect from 1 April 2008) come in the wake of a consultation document that was published by the government in February, the intended effect of which, according to Pat McFadden, the Minister for Employment Relations and Postal Affairs, was to increase protection for vulnerable agency workers, to “reduce certain regulatory burdens on employment businesses and also make minor clarifications to the 2003 regulations”.

At the time of the consultation, commentators remarked that the proposals did not go as far as many had wished as regards protecting workers; not least because there was no attempt to address the issue of agency workers receiving lower pay than permanent workers for doing the same work. It had been hoped that there would have been some attempt to emulate the effect of legislation protecting part-time workers’ rights, but it was not to be. As it turns out, the amendment regulations do not even reach the limited level of the consultation document and, with many of the amendments being little more than minor corrections and clarifications to the drafting of the original regulations, it may well be said that the amendments merely amount to cosmetic alterations to the original legislation.

For most employment agencies and businesses, the main changes of importance relate to situations where employment agencies and employment businesses provide work-seekers with “additional services” (e.g. transport or accommodation) and where the worker in question will only be on an assignment of five days’ duration, or fewer. Another reasonably substantive change mooted by the amendment regulations relates to situations where employment agencies propose to include information about a work-seeker in a publication, and to charge the work-seeker fees for doing so. The proposed amendments to the regulations would prohibit the agency taking any fees at the date of the agency and work-seeker entering into a contract and introduce, in effect, a “cooling-off” period of seven days before any fee need be paid (or contract cancelled without penalty). As this relates mainly to the relatively specific field of agencies for actors, models, etc, we will not be looking into this element in any more detail in this article.

In relation to the first point, the current regulations state that, “Neither an agency nor an employment business may make the provision to a work-seeker of work-finding services conditional upon the work-seeker (a) using other services for which the Act does not prohibit the charging of a fee, or (b) hiring or purchasing goods, whether provided by the agency or the employment business or by any person with whom the agency or employment business is connected” (Regulation 5). The proposed amendment would apply in circumstances where the work-seeker uses services for which the Act does not prohibit the charging of a fee, and would require an agency or employment business to ensure that the work-seeker is able to cancel or withdraw from those services at any time without incurring any detriment or penalty. The only condition is that the work-seeker would have to give the provider of those services five business days’ written notice, or ten business days’ notice for services relating to the provision of living accommodation.

The second change of importance, and arguably the one that will be of most interest to employment agencies and businesses, relates to the information that such entities are obliged to provide to both the hirer and the work-seeker, where the assignment is of only five (or fewer) days’ length. The Amendment Regulations propose that, in such situations, employment agencies and employment businesses will not have to provide the usual level of detailed information to the hirer or the work-seeker. The hirer will only need to be provided with (orally or otherwise) the name of the work-seeker, and a written confirmation that the agency or business has obtained confirmation of the identity of the work-seeker; that the work-seeker has the requisite experience, training, qualifications and authorisation to work in the position which the hirer seeks to fill; and that the work-seeker is willing to work in that position. It will no longer be necessary to provide all of this information to the hirer, but merely to confirm that the agency or business has obtained it.

For work-seekers, the agency or business will still need to provide usual information about the hirer and the hirer’s requirements, but if it has already done so on a previous occasion, it will no longer have to provide all of this information again. All that will be necessary is for the agency or business to inform the work-seeker of the hirer’s identity and, if applicable, the nature of the hirer's business; and the date on which the hirer requires a work-seeker to commence work and the duration, or likely duration, of the work. Where an assignment of five days or fewer is extended beyond five business days, then the normally required information, which has not already been provided, will have to be provided in paper form or by electronic means by the end of the eighth business day of the assignment, or by the end of the assignment if sooner.

Despite this last point, it is intended that the new provisions should ease a little of the administrative burden on all parties in such situations, and should make the business of arranging short assignments more efficient. The question of agency workers receiving different rates of pay from permanent workers doing the same work remains unresolved, however, and is unlikely to go away. Apart from discussion surrounding the consultation document, this year, for example, has seen a private members’ bill, the Temporary and Agency Workers (Prevention of Less Favourable Treatment) Bill, (which was published, although ultimately dropped for lack of time) and recent (temporarily postponed) discussions of a new EU directive. Perhaps predictably, business leaders have opposed the idea of agency workers acquiring similar employment rights to others, arguing that the cost and added obligations would make employers less keen to hire agency workers, whilst employee representatives, such as unions, argue that changes are enquired to correct what is currently an unfair situation.

In the meantime, if you would like any further information on how the changes may affect your business, or any other employment agency or employment business-related matters, please do not hesitate to contact us.

Caroline Walker Partner / Head of Employment Law 020 7544 5625 carolinew@sghlaw.com

Emma Shipp Partner 020 7544 5550 emmas@sghlaw.com

David Sprecher Partner 020 7544 5556 davids@sghlaw.com

Neil Emery Associate Solicitor 020 7544 5612 neile@sghlaw.com