The Conduct of Employment Agencies and Employment Businesses Regulations 2003 are the main governing regulations for recruitment organisations in England, Scotland and Wales. The Conduct of Employment Agencies and Employment Businesses Regulations (Northern Ireland) 2005 apply in Northern Ireland. The Employment Agency Standards Inspectorate (EAS) - part of the Department for Business, Energy and Industrial Strategy (BEIS), enforces the Conduct Regulations in England, Scotland and Wales. 

The Conduct Regulations place certain obligations on both employment agencies (introducing permanent candidates) and employment businesses (supplying temporary workers) in terms of their relationships with both hirers and work seekers. There are more obligations on employment businesses than on employment agencies. Employment business have additional obligations in relation to: 

• paying the workers

• providing a contract and detailed information about the role

• charging client fees within certain parameters 

• ensuring the worker is suitable for the role 

• steps to take to protect both worker and client 

• additional requirement when workers are working with vulnerable people and more 

Want to know more about how the Conduct Regulations impact your business? Sign up to our Understanding the Essentials course, covering key legislation in recruitment that you need to comply with, how to interpret the law and mitigate your risks. 

The Agency Workers Regulations 2010 apply in England, Scotland and Wales. The Agency Workers (Northern Ireland) Regulations 2011 apply in Northern Ireland. We use the term 'AWR' to cover both sets of regulations. The AWR provide certain rights to agency workers from day one of their assignment, as well as additional rights after they have completed a qualifying period where they have worked in the same assignment with the same client for 12 continuous weeks which are: 

• pay (some elements of pay are specifically included whilst some are specifically excluded) 

• the duration of working time 

• night work  

• rest periods 

• rest breaks 

• annual leave. 

Pregnant agency workers also have additional rights under the AWR.  

The Day one rights that must be provided by the hirer are access to information on job vacancies and access to collective facilities such as car parking, canteen, toilets/shower facilities and so on. 

Operating a temp recruitment desk? Join our Agency Worker Regulations training course to learn who and what falls in scope of AWR and how the rules apply to your business to remain compliant.  

A perm agency may check an individual’s right to work in the UK to ensure that it does not introduce someone who does not have that right or at least to alert the client to possible restrictions. However, the employing client is legally responsible for ensuring that their employee has the right to work in the UK and not the introducing agency.  

An employment business supplying agency workers, will be deemed to be the ‘employer’ for the purposes of the Immigration, Asylum and Nationality Act 2006, not the client. This means that you are legally responsible for checking that the agency worker is eligible to work in the UK before supplying them for work. If you do not carry out the correct checks and keep a record of having carried out the correct checks before supplying a temporary worker, your business risks a substantial fine from the Home Office (currently £20,000 per illegal worker).

Safeguarding and criminal records check must be carried out by Employment businesses to ensure that the temporary workers they supply are suitable for the assignments they take. When working with vulnerable people this includes making the appropriate safeguarding checks under the Disclosure and Barring Service. Some sectors, e.g., financial, may also require criminal records checks before individuals can take up certain roles. Additionally, some clients may want you to conduct a general criminal record check before supplying a temporary worker. Importantly, criminal records are a special category of personal data and so are subject to additional protections both under data protection legislation but also the relevant safeguarding legislation, and Rehabilitation of Offenders Act 2014. 

All workers are entitled to the national minimum wage (NMW). There are different bands of NMW according to age. This is the gross minimum someone must earn subject to tax, national insurance and pensions auto-enrolment. You cannot make other deductions which would bring the worker's pay below NMW, except in certain limited circumstances.  

Want to know more about NMW? Visit our Legal Guide for more information.  

The obligation to deduct tax and national insurance (NICs) from temporary workers' pay and to report on earnings and deductions to HMRC is determined by who engages the temporary worker. Employment businesses engage contractors who work through an intermediary. The Off-pay roll rules apply to some arrangements. On 6 April, the off-payroll rules for the private sector changed to mirror the rules that have applied in the public sector since April 2017. So, clients who are medium and large organisations in the private sector, are now legally required under the Income Tax (Earnings and Pensions) Act 2003 (ITEPA). It is important for the employment business to ensure that when an assessment is done and the engagement is inside IR35, the appropriate tax and national insurance is deducted and paid to HMRC. 

All workers, including temporary workers, are entitled to receive an itemised statement of their pay. It can either be a hard copy or an electronic copy that they can print. This should be given to the worker before or at the time they are paid. 

The payslip should state: 

• The gross amount of the wages or salary.  

• The amounts of any variable, and any fixed deductions from that gross amount and why the 

• deductions are made. 

• The net amount of wages or salary due. 

• Where different parts of the net amount are paid in different ways, the amount and the method 

• of payment should be included.  

• Where the amount of wages or salary varies according to time worked, the total number of 

• hours worked and paid for. This also includes any overtime worked. Any other hours do not 

• need to be shown, although you may wish to do so if it would be helpful to present this 

• additional information. 

• The hours can be shown either as a single total of all such hours in the pay period, or they can be 

• broken down into separate figures for different types of work or different rates of pay.  

The hours that must be shown on a payslip are a separate matter from the number of hours worked for National Minimum Wage (NMW) purposes; though workers who are paid by the hour may well have the same figures. 

If the worker works through an umbrella company, then the umbrella company must provide the payslip. If a worker does not receive their itemised statement, they can make a claim to the Employment Tribunal. 

This applies to employment businesses that supply workers via intermediaries. When a business pays workers via PAYE, it must report on those payments via RTI. However, if an employment business engages workers through intermediaries, such as umbrella companies, personal service companies or CIS intermediaries, the employment business does not pay them and therefore does not submit an RTI report on those workers. Instead, employment businesses must submit quarterly reports on all workers they supplied during that quarter through those intermediaries but also through partnerships or acting as sole traders. The reports require significant due diligence on the part of the supplying employment business to ensure that payment intermediaries within the supply chain act correctly. Reports are due on a quarterly basis. 

All employers with a PAYE pay bill of more than £3 million per year must pay the apprenticeship levy. For employment businesses, their PAYE pay bill includes the pay of all temporary workers they pay directly and personal service companies for whom they deduct income tax and national insurance - not just their direct employees. So, recruitment businesses must factor the apprenticeship levy charge into their margin or as an additional charge to the client. If you are considering moving into the construction sector, you may also have to pay the CITB levy. 

All employers must automatically enrol eligible workers into a qualifying pension scheme. You must know therefore who meets the definition of ‘worker’ in the legislation. The employer is the person who engages the worker on a contract of employment or a 'contract under which they provide services personally'. So, if you engage workers directly under a contract of employment or a contract for services, you will need to consider them for automatic enrolment. If the individual works through an umbrella company or personal service company, they will be the employer for pensions purposes. 

Employers must: 

• automatically enrol eligible workers into a qualifying pension scheme 

• manage opt outs for workers who choose to opt out 

• facilitate opt in for qualifying workers 

• contribute to the scheme for eligible workers  

• provide specific information to different categories of workers. 

You cannot require or encourage a worker to opt out of their pension entitlement, e.g., by offering higher pay for those who opt out. If they do not opt out, then you must deduct the worker's own pension contribution from their pay and also pay the employer's contribution. 

Current minimum contributions for pensions 

• Jobholder contribution 5%  

• Employer contribution 3% 

You will need to cover the cost of the employer contribution in your margin or charge it to the client 

Under the Working Time Regulations 1998 (WTR) all workers are entitled to a minimum of 5.6 weeks (or 28 days) annual leave each year. This is the statutory minimum and can be stated either as 28 days or 20 days plus public holiday.  

When you engage a temporary worker directly, whether on a contract for services or a contract of employment, you are the employer for the purposes of the WTR and so must manage their annual leave entitlement. You should not roll up their holiday pay and instead pay them their holiday pay when they take holiday leave. If the temporary worker works through an intermediary, such as an umbrella company, that intermediary is responsible for their annual leave. 

Agency workers may be entitled to other statutory benefits such as statutory sick pay and statutory maternity/paternity/adoption pay/shared parental leave and bereavement leave,F subject to meeting the qualifying criteria for those benefits.