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The Conduct Regulations
Conduct of Employment Agencies and Employment Business Regulations 2003
The Conduct Regulations were designed to raise standards within the recruitment industry. The Conduct Regulations stipulate how recruitment businesses should operate, providing added protection for work seekers and companies using the services of recruiters. While the legislation was being discussed it was argued that Limited Company Contractors (LCCs) did not want to be treated as PAYE workers under the Conduct Regulations, as it was considered that such legal formalities would significantly jeopardise a LCCs tax position and as a result of this an "opt out agreement" was incorporated into the legislation.
Can I opt out of the conduct regulations?
Yes, provision now enables LCCs to opt out of the protection of the Conduct Regulations, so that LCCs may continue to enjoy the tax benefits of supplying their services through the limited company.
Do I have to opt out or can I decide to be bound by the regulations?
You do not have to opt out. If you remain within the Conduct of
the Regulations, a recruiter will owe you and the client a range of
obligations.
Some of the obligations the recruiter will be required to follow
are;
- A recruiter must confirm on what basis they are to offer work finding services, the type of work the recruiter is seeking for you and the terms which apply between you.
- Before you start an assignment or position by the recruiter you
must be given information about the proposed position
including;
The identity of the hirer, start date, likely duration of the work, type of work, location, hours, any risks to health and safety and steps the hirer has taken to prevent or control such risks, the experience, training and qualifications required for the role, any expenses applicable and the actual rate of remuneration to be paid. - Employment businesses are no longer allowed to withhold payment regardless of if they have received a signed timesheet or not. The employment business is however allowed to delay payment for a reasonable period of time to check whether you have worked the hours claimed.
- The 6 month restriction clause, which was commonly found in terms and conditions and prevented a work seeker from working for the client for 6 months after the end of assignment is void as the EAA Regulations stipulate that an Employment Business/ Agency cannot prevent a work-seeker from finding permanent employment. Therefore, a work seeker is entitled to agree a transfer to work direct for the client within the relevant period (first 14 weeks of the contract period or first 8 weeks from the day the contract ended).
Why Opt Out ?
For those workers working for Sprite's Umbrella company there is little reason why a contractor would not wish to opt out. For those who are self-employed the situation is slightly more complicated. If an LCC decides that they wish to enjoy the legal protections of the Conduct Regulations and be treated akin to a PAYE worker, then the obligations owed to them by the recruiter may affect the assessment of their status for tax purposes under HMRC tests of self-employment. If they are genuinely self-employed then they may wish to consider Opting Out so to maintain their tax advantages.
How to Opt Out
Included with your welcome pack you will find an opt-out declaration that must be signed by you and us before you start work. If you are undecided about opting out of these regulations we recommend you seek independent legal advice.
