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Agency Conduct Regulations: A lesson from history

Agency Conduct Regulations: A lesson from history

“If it ain’t broke don’t fix it”.  That was the view of an agency director at a recent seminar examining the government’s current Consultation into the agency regulatory framework.

It is a view echoed by numerous others across the recruitment industry as there seems to be no urgent need or reason to make big changes to the current structure and certainly no appetite for self-regulation.

Ahead of his third meeting with the Department for Business, Skills and Innovation (BIS), we sat down with Adrian Marlowe, MD at recruitment law experts Lawspeed, to find out more about the history of the Conduct Regulations and try to make sense of the current situation.

Q. Lawspeed was involved in various consultations with the Blair government between 1999 and 2003, what was the result back then?

Adrian Marlowe: Three years of wrangling and two Consultations (whose objective was “to remove unnecessary regulation” and provide “simpler and clearer” rules) resulted in the Conduct of Employment Agencies and Employment Businesses Regulations 2003. Lawspeed had argued that the regulations should be as practical as possible and, on the whole, the final legislation reflects good business practice.

Some areas are overworked, e.g. the requirement to obtain information on “any risks to health and safety know to the hirer”, something we have always said is impossible to comply with (how can an agency obtain what the hirer doesn’t tell it?). Overall however, areas of friction were overcome how to deal with limited company contractors (solved by our opt-out suggestion), online job boards (not allowed to charge fees) and transfer fee issues. I believe that reasonable compromises were made and the rules are workable.

Q. So the Regulations were welcomed ten years ago?

Adrian Marlowe: Well, there was a collective sigh of relief when the final regulations were announced – the process was finally over and they weren’t as bad as all that, but there is no doubt that significant cost was incurred by agencies in & lsquo;tooling up’ to deal with the new compliance.

Q. And those are the same Regulations we all use today?

Adrian Marlowe: There have been several reviews of aspects of these regulations since 2004 and as a result some rules applicable to employment agencies have been removed.  The government also proposed that the transfer fees rules to be changed so that only “reasonable” fees could be charged – a suggestion that was opposed by everyone on behalf of agencies. We argued that it would be a charter for abuse by clients who would always be able to argue that charges were not reasonable, thus leading to a frenzy of litigation and sensibly the government abandoned the idea.

Q. So why exactly is there another government Consultation taking place now?

Adrian Marlowe: Good question. All the same issues appear to be back on the agenda, with the added twist that it may be a good thing for the recruitment industry to self regulate and for workers to be able to pursue claims through the Employment Tribunal rather than the Employment Agency Standards Inspectorate (EAS).

Standards have risen since 2003 and the EAS has worked well so I do not understand the driver for such sweeping changes.  I don’t think it will save the government money in the long term and The Red Tape Challenge was set up to look at unnecessary regulation hindering business – I don’t believe these to be either unnecessary or a hindrance to our industry.  Some adjustments and improvements could certainly be made but to tear up the copy book and start all over again seems like a strange suggestion.

Q. A second Consultation is due in late summer, will this mean more time, effort and continuing uncertainty for everyone?

Adrian Marlowe: I think it will. I wish that I could at least explain to our clients the reason that they may once again have to change direction, incur more cost, waste time, reduce profitability, at a time when the economy is down and most are already hard pressed.  All they want to do is get on with their work and help businesses grow. Until then, I agree with our clients,  the best lesson to be learned from history is  - if it ain’t broke don’t fix it.

Q. But as the further Consultation is going ahead and you are meeting with BIS again on Friday 22nd March to promote the views of the recruitment industry. What do you hope the final outcome will be?

Adrian Marlowe: Consolidating all the rules into one place and removing the few genuinely unnecessary ones, which do not relate to professional standards, would be useful. Perhaps tidying up some of the language and carving out the Entertainment sector provisions would assist.

There is little case for including umbrella companies within the scope as they do not provide work-finding services and inclusion of new rules restricting RPO & lsquo;pay when paid’ clauses and other related practices which do damage the industry would be a very positive step.

We will continue to press for a constructive result.


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