employment agencies

(updated July 2023)

It’s a long title, but these Employment Agencies and Employment Businesses Regulations are important for Limited Company Contractors (or Personal Service Companies) and agency temps.

These regulations were introduced in April 2004 (2005 in Northern Ireland) and were updated in 2010. They provide a framework of minimum standards that govern the conduct of the private recruitment industry in the UK (and supplement the 1973 Employment Agencies Act 1973).

Here we look at what they mean and why they are important.

They essentially provide protection for what is known as ‘work-seekers’ – those looking for either temporary or permanent employment. Any breach of the regulations is a criminal offence.

They cover Agencies and Employment Businesses which provide temporary and permanent staff to end-hiring companies (but entertainment and modelling agencies / businesses have their own separate rules; local councils, certain educational institutions, trade unions, certain professional members bodies, charities and services provided for ex-members of HM forces or for people released from prisons and other institutions are not covered by these Regulations).

Employment Agencies are defined as:

Companies that find permanent work for work-seekers who are employed and paid directly by the employer – they have permanent employment with the end company (or a fixed term PAYE contract).

Employment Businesses are defined as:

Companies that provide temps to organisations. The Employment business engages a work-seeker under a contract with them, and the temp then works under the supervision of someone else at a hiring organisation. Temps are paid by the employment business, not the company they’re supplied to.

2022 update:

The original 2002 regulations prohibits Employment Businesses from supplying temporary workers to cover:

  • the duties normally performed by an employee who is taking part in a strike or other industrial action
  • the work of an employee who is covering the duties of an employee taking part in a strike or other industrial action.

After a series of Rail (and other strikes) in summer 2022, the Government got very annoyed and revoked this part of the legislation (by the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022, on 21st July 2022.  The Government said this would allow those business most impacted by industrial action to fill vital roles with temporary skilled workers.  Most commentators laughed, describing it is a political gimmick that would have very little practical impact, as the temporary skilled workers needed would not actually exist.  Obviously, various Trade Unions and the TUC spoke out against the legislation, but also against the legislation was the House of Lords and the Recruitment and Employment Conferedation, who said the changes was “unworkable”.  There may be a judicial review…. And then in July 2023 the High Court, following a legal challenge by 13 trade unions, declared that these amendments were unlawful; so the existing regulations are re-applied – so Employers can no longer engage agency staff to cover striking workers; and employment agencies will commit a criminal offence if they supply staff to cover for striking workers.  The Government can appeal this if they can persuade the Court of Appeal they have reasonable grounds to do so.