Which laws apply to employment agencies and employment businesses?

Which laws apply to employment agencies and employment businesses?

Employment agencies and employment businesses are regulated by the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003, as amended by the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007. 

For the purpose of the legislation an “employment agency” ordinarily puts forward candidates for permanent vacancies and an “employment business” ordinarily supplies temporary workers. However, in reality many companies provide both services and will, therefore, fall under both definitions.

Is an agency or employment business allowed to charge work-seekers for their services?

As a general rule agencies and employment businesses are prohibited from charging or seeking to charge work-seekers for the service of finding or seeking to find employment for them. There are certain exceptions to this general rule which are set out in the Conduct of Employment Agencies and Employment Businesses Regulations 2003. 

Agencies and employment businesses are restricted from requiring work-seekers to use services for which they are entitled to charge as condition of providing work-finding services. 

Can an employment business legitimately withhold payment to a temporary worker?

Employment businesses are, in a number of circumstances specified by the Conduct of Employment Agencies and Employment Businesses Regulations 2003, prohibited from with-holding payment to the work-seekers whom they supply. The fact that the hirer has not paid the employment business is not a legitimate ground for withholding payment to the worker.

What other things are agencies and employment businesses restricted from doing?

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 places a number of other restrictions on agencies and employment businesses. For example, agencies and employment businesses are prohibited from subjecting or threatening to subject work-seekers to any detriment where a work-seeker works or seeks to work other than through that agency or employment business. Employment businesses are also ordinarily restricted from providing work-seekers in industrial disputes and restrictions are placed on their ability to charge “temp to perm” fees.

What requirements does an agency or employment business have to satisfy before it can provide services?

Agencies and employment businesses are required to provide details to both work-seekers and hirers of any charges they seek to charge. They are also required to agree with both work-seekers and hirers the terms on which they will provide their services. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 sets out specific requirements as to what terms must be agreed.

What requirements does an agency or employment business have to satisfy when it introduces or supplies a work-seeker to a hirer?

Agencies and employment businesses are required to ensure that they obtain sufficient information from a hirer to select a suitable work-seeker for the position. Similarly they are required to obtain sufficient information from a work-seeker to ensure that they are suitable for the position. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 sets out specific requirements as to what information must be obtained.  

Where an employment business receives or obtains information, which gives it reasonable grounds to believe that a work-seeker is unsuitable for the position it is required to inform the hirer without delay and end the supply of that work-seeker to the hirer. If an employment business receives or obtains information which merely indicates that a work-seeker may be unsuitable it is required, without delay, to inform the hirer and make further enquiries. If as a result of those enquiries the employment business has reasonable grounds to believe that the work-seeker is unsuitable it is required to inform the hirer without delay and end the supply of that work-seeker to the hirer. This is an ongoing requirement which lasts for the first 3 months of the supply of the work-seeker. 

Agencies and employment businesses are also required to provide certain information to both work-seekers and hirers. A hirer is entitled to certain information from which he can judge that the work-seeker is suitable for the position. A work-seeker is entitled to certain information from which he can ascertain what the role involves. Again, the Conduct of Employment Agencies and Employment Businesses Regulations 2003 sets out specific requirements as to what information must be provided.

Are there any other obligations, restrictions or rules?

There are specific rules relating to situations where more than one agency or employment business is involved, where work-seekers are provided with travel and where work-seekers are required to live away from home. There are also specific rules relating to advertising, confidentiality, client accounts, and the keeping of records.

What if an employment agency or employment business fails to comply with the law?

Under the Employment Agencies Act 1973 an employment tribunal has the power, in cases of misconduct or where there is any other sufficient reason, to prohibit a person from carrying on an employment agency or employment business or specify conditions under which such a person must operate. This is known as a “prohibition order”. Failure to comply, without reasonable excuse, with a prohibition order is a criminal offence, punishable by a fine.  

Where an employment agency or employment business fails to comply with a regulation, for example, a regulation contained in the Conduct of Employment Agencies and Employment Businesses Regulations 2003, they commit a criminal offence, which is punishable by a fine. This includes situations where an employment agency or employment business unlawfully charges or seeks to charge a candidate or temporary worker. 

The Secretary of State has the power to inspect the premises of an employment agency or employment business and any records or other documents kept in accordance with the regulations. The Secretary of State can also require any person on the premises to provide them with information for the purpose of ensuring that the regulations are being complied with.  Obstructing such an inspection is a criminal offence, punishable by a fine, and where an offence is committed the Secretary of State is entitled its costs of carrying out the investigation.