Opting out of the conduct of employment agencies and employment businesses regulations 2003 (updated 2010)
The Conduct of Employment Agencies and Employment Businesses Regulations 2003, as amended, regulate the operation of our business. Full details of The Employment Agency Act can be found at http://www.legislation.gov.uk. If you would like further information on how this may affect you, BIS has also published a general advice guidance document, http://www.bis.gov.uk.
Effects of opting out of the Agency Regulations
A contractor who operates as a limited company contractor who has opted out of the regulations will not be required to comply with procedural requirements of the Agency Regulations. There will also be no procedural requirement upon the recruitment agency to obtain certain information from the client before placement of the limited company contractor. In addition, certain contractual amendments need not be applied to the contract documentation.
Why should a limited company contractor consider opting out of the Regulations?
Some limited company contractors take the view that operating under the Agency Regulations may place them at a disadvantage in securing a contract assignment with a particular client. In particular, the additional procedural requirements imposed upon the employment business and the client may delay the evaluation of that limited company contractor relative to a contractor who has opted-out of the Agency Regulations.
In addition, some clients appear to be concerned about the employment risk of limited company contractors seeking to opt in to the Agency Regulations, and becoming treated in law as permanent staff. There have been a number of recent court cases where contractors attempted to claim redundancy payments for example. Consequently, some clients, fearing that a limited company contractor could be considered more akin to a temporary employee rather than an independent contractor, may select only those contractors who have opted out of the Agency Regulations.
The Recruitment and Employment Confederation (REC) www.rec.uk.com provide information for limited company contractors regarding opting out of the regulations. The Professional Contractors Group, www.pcg.org.uk, have suggested that those limited company contractors seeking to legitimately challenge the application of IR35 to their services could be more likely to be assessed within IR35 if the limited company contractor is subject to the Agency Regulations. This is because some view the Agency Regulations as principally applying to protect the supply of individual workers who are similar to temporary employees, which would undermine any arguments of a limited company contractor seeking to challenge IR35.
What is IF Recruitment’s view on opting in or opting out of the Agency Regulations?
IF Recruitment offer all limited company contractors the choice of opting in or opting out of the Regulations.
How should a limited company contractor opt out of the Agency Regulations?
Limited company contractors who wish to exercise their right to opt out of the Agency Regulations are requested to confirm when responding to the authorisation email and if applicable by completing the Opt Out form sent to you along with all your contract documentation.
Disclaimer: This is the view of IF Recruitment Ltd, we would always advise that our contractors seek independent advise from legal advisers and/or account specialists.