Reform of employment agency regulations (UK)

1 February 2000 - Over half a million temporary workers in the UK should benefit from changes to employment rules. Staff supplied by employment agencies on a temporary basis, including office staff, models and actors will receive greater employment protection rights. These include easier transition from temporary to permanent work.

The new regulations replace the Conduct of Employment Agencies and Employment Business Regulations 1976, the Employment Agencies Act 1973 (Charging Fees to Workers) Regulations 1976 and the Employment Agencies Act 1973 (Charging Fees to Au Pairs) Regulations 1981.

With a turnover in excess of £20 billion a year, the private recruitment industry is a major player in the flexible employment market. The industry grew by 20% last year and had a major role in several economic sectors, including entertainment, construction, IT and caring and medical support.

The first changes in this area for 20 years. Main points:

* Ban the practice of agencies charging models and entertainers before arranging work for them;

* Ensure that agents use properly controlled client accounts when dealing with the earnings of the workers they supply;

* Provide a new hiring extension option as an alternative to employers having to pay agencies a fee when offering permanent positions to temporary staff. This should give more flexibility alround yet ensuring that agencies get a reasonable return.

* Introduction of revised contracts which make it clearer that temporary staff know they are engaged by their agency. This should stop confusing arrangements and prevent cases where elderly and vulnerable people find themselves responsible for ensuring that a carer's contract complies with national minimum wage or other regulations.

* Stronger protection for parents using nanny agencies. Nanny agencies will be required to take all reasonably practicable steps to confirm a work-seeker is not unsuitable and must offer parents copies of at least two references obtained.

* Protection for employees from indiscrminate circulation of their CV's on the Internet or through other means.

* Provision of tougher controls on bogus print or internet advertisements, e.g. those advertising jobs that do not actually exist.

Industry Minister Alan Johnson said:

"Temporary workers play an important part in our economy, working both in and out of the public eye. These reforms will curb the activities of agencies that prey on vulnerable work-seekers, as well giving more flexibility and contracting three separate sets of rules into one.

"These measures provide a clear legal framework which give a further competitive boost to a thriving industry. I'm sure the industry will welcome these much needed reforms, they know that a disreputable minority can smear the entire industry.

He added:

"There is evidence that some agencies have used transfer fees as a means of blocking entry into permanent employment. The new regulations will help hirers and workers without damaging the legitimate concerns of agencies who need to ensure that they are not being used as a recruitment service.

"Where a hiring has lasted more than 6 weeks before finishing, an agency will not be able to charge a transfer fee if the worker is employed permanently by that employer, more than 8 weeks after the original hiring ceased.

"Customs & Excise plan to introduce a concession, to coincide with these changes, so that those who buy care in their own home, those least able to look after themselves do not suffer any increased VAT burden as a result of the clarification of carers' contracts."

According to Employment Minister Margaret Hodge:

"This is excellent news for parents. Agencies will have to take all reasonable steps to ensure nannies are suitable for working with children. They will have to offer parents copies of at least two references. To complement the regulations, the DfEE will issue a new code for nanny agencies."

Tim Nicholson, Chief Executive of the Recruitment and Employment Confederation supported the revisions:

"We welcome the Government's announcement on temp-to-perm. It is a significant step forward from the original proposal of four weeks. It demonstrates that good working relationships have developed between the REC and government, and that the industry's case has received careful attention."

The new regulations are expected to come into force in summer 2001.