Conduct Regulations review: what lies ahead?

Jo Faragher

With just under a month until recruiters and trade bodies submit their views on the reform of legislation governing the sector, what are their key concerns?

It’s been a busy few months for the various trade bodies that represent recruiters. By the middle of next month, representatives from the staffing industry have been asked to submit their opinions to the Department for Business, Innovation and Skills (BIS) on its proposals to completely revise the current legislation that governs the sector.

As part of its Red Tape Challenge, which it launched in 2010, the Government aims to revoke any ‘surplus’ legislation unless there is a reason for it to remain. Consequently, BIS is now reviewing two key pieces of legislation that recruiters have governed by for years: the Conduct of Employment Agencies and Employment Business Regulations (2003), and the Employment Agencies Act 1973. 

BIS has outlined four key objectives that it would like new legislation to achieve, which include restricting agencies from charging fees to jobseekers, clarity on who pays temporary workers, that contracts people have with recruitment companies don’t hinder their movement between jobs, and that jobseekers have confidence in the industry. In the consultation document, BIS sets out its aims like this: “The Government proposes to free employment agencies from unnecessary regulation and allow them more scope to operate in the way that is best for them.” 

Tom Hadley, REC

But while many agencies will welcome a reduction in form-filling and bureaucracy, concerns have been voiced by a number of different groups that, in stripping out the old legislation and introducing a new, streamlined set of regulations, the Government may run the risk of losing some vital points of the existing legislation that ensure high standards are met and candidates are protected.

Tom Hadley, head of policy at the REC, explains: “There’s a perception that businesses want to scrap bureaucracy but in reality the industry is passionate about standards and compliance and ensuring that dubious activities are addressed.” REC members, as well as representatives from individual agencies and other trade bodies, are keen to point out to BIS that many of the clauses relating to statutory requirements (such as checking eligibility to work in the UK) are maintained in any new legislation.

But Adrian Marlowe, chairman of the Association of Recruitment Consultancies, questions the very motives behind reviewing the regulations in the first place. “The idea behind the Red Tape Challenge is to remove any unnecessary regulation that hinders business. If that’s the driving force, we’d need to understand why the current regulations are unnecessary, and in what respect they’re hindering business. There is nothing wrong with a consolidation of all the past changes, and a review to make some important adjustments, but a wholesale removal of the standards is something else. 

“We are worried that the government is responding to pressure from self interested parties with specific agendas for their own benefit, for example job boards who want to be excluded from restriction on charging candidates, but not looking at the big picture.”

He adds: “If there are no regulations, there’s a risk that some agencies might make shortcuts so that they can get their candidate in front of the client first. A good quality agency will may still take most of these steps as it’s as best practice, but this is a sales driven industry. The removal of the regulations could drag good standards down to the lowest common denominator. Even the best firms will react if they’re out-manouevered and lose placements to those willing to cut corners.” 

The Government’s argument is that many of the statutory requirements included in the 2003 Conduct Regulations, such as checking identity or suitability to work with children or vulnerable adults, is covered elsewhere in other legislation. Marlowe argues, however, that some of these regulations are not as stringent or specific to the staffing sector as the current Conduct Regulations that BIS is looking to overhaul.

One of the key concerns for agencies is the proposal to change the current enforcement regime, removing the Employment Agency Standards Inspectorate (EAS) so that jobseekers’ only form of redress for mistreatment will be through the employment tribunal service. Many recruiters believe the EAS does an effective job in policing the industry, and that addressing wrongdoings through the tribunal system would be costly in both time and money. “I think it would be a retrograde step to get rid of the EAS,” says Hadley at the REC. “It’s crucial we don’t do anything to take the compliance agenda away. There’s unlikely to be extra funding available, so there’s an argument for keeping the EAS and focusing its activities on the real rogue agencies who operate outside trade bodies.”

And while arguably those most affected by a review of the regulations will be employment businesses, who deal with temporary workers, it will also impact agencies that place permanent staff and those who represent professional contractors. Members of APSCo, the Association of Professional Staffing Companies, welcome a review of the current legislation but are keen to ensure that BIS appreciates the difference between businesses placing large volumes of temporary (and generally lower-paid) workers and professional contractors, many of whom work through limited or umbrella companies. Samantha Hurley, APSCo’s head of external affairs, says: “We believe the current regulations are cumbersome. The Government wants to remove barriers to entry and we support that. Generally speaking, our members support deregulation of the current regulations. That said, we want to see the vulnerable protected, so there should be regulation where appropriate to ensure this.”

Robert Bowyer, a director at Venn Group, which specialises in temporary professional recruitment, agrees that the current regulations should be reviewed. “Our overall concerns with the [current] regulations are that they haven’t kept pace with the market,” he says. “Areas such as the opt-out (clause 32, where limited company contractors can ‘opt-out’ of employment protections) need to be made relevant to the market today, instead of adding to our existing audit and compliance responsibilities.”

Samantha Hurley, APSCo

And while the Government is keen to strip away red tape, one of the proposals included in the consultation is that agencies publish specific information on their websites such as feedback from jobseekers or the length of time it takes to fill a vacant post, for the sake of transparency. Both the REC and ARC believe this will simply add another layer of bureaucracy.

One thing is certain, that should the existing legislation be streamlined to such a point where agencies move towards a more self-regulated environment, there will be a bigger role for trade bodies in upholding standards. “You can’t force agencies to become a member of a professional body, but I think we will start to see it as a commercial differentiator,” says Hurley at APSCo. “If self-regulation is the way it goes, they will need to differentiate, and being part of a reputable trade association is a way they can do it.”

It’s unlikely the true outcome of the review will become clear until after the second consultation, which will happen later this year. Up to now though, there’s a belief that BIS is keen to listen. “There’s a will to get this right, and get legislation that is fit for purpose and that doesn’t overburden companies,” adds Hurley. “What we will get will be better than what we have, I think.”

* The consultation closes on 11 April. Have your say here or share your views with us editorial@recruitmentagencynow.com