The long-awaited review of the Employment Agencies Regulations came into force on 6 April 2004 as the 'Conduct of Employment Agencies / Business Regulations 2003'. These are intended to update the regulation of the recruitment industry in the UK - Manpower however already operates to levels well beyond the statutory minimum so these changes will have little impact on Manpower clients.

Definitions

The regulations aim to legislate for different types of business - Employment Agencies and Employment Businesses. 'Employment Businesses' are suppliers of temporary/casual workers to third party hirers; whilst 'Employment Agencies' introduce workers to hirers for direct employment by the hirer, sometimes referred to as head-hunters. Key Provisions of the Regulations

The main impacts of the Regulations are as follows:

• Employment Businesses are restricted (not prevented) on the charging of 'transfer fees' - eg 'temp-to-perm', 'temp-to-temp' and 'temp-to-third party'
• Payment to workers may not be withheld on the basis of there being no signed time sheet or if the Employment Business has not been paid by the hirer. (The Employment Business may delay payment whilst making reasonable enquiries to verify the time of work).
• Employment Businesses may not supply temporary workers to replace employees engaged in official industrial action.
  Manpower already operates this policy - it is now enforced by law for all Employment Businesses.
• Employment Businesses and Employment Agencies must provide greater clarity in terms of the capacity in which they act - ie whether the work provided is of a permanent or temporary nature.
  As an Employment Business and Employment Agency Manpower provides both permanent and temporary placements and already operates a policy advising clients and work-seekers so.
• Employment Businesses have increased obligations in terms of clarity and content of written contracts and information provided to workers and hirers. Manpower employs field staff on a full contract of employment, so already meets the requirement to provide written contracts to workers.
• Employment Businesses and Employment Agencies have increased obligations to obtain sufficient information on both the position to be filled and the worker, before supplying workers. This includes the nature of the work as well as appropriate training for the worker and details of qualifications etc. This is already Manpower's standard practice.
• Once placed, the Employment Business must advise hirers if additional relevant information comes to light which gives reasonable grounds to believe the worker is unsuitable, and in some cases withdraw the worker from the assignment.

Implications

The private recruitment industry is substantial in the UK with an estimated turnover of £12-18 billion. The Government's aim is to promote labour flexibility with the protection of workers, while reducing bad practice. The Regulations are intended to provide greater clarity, though also bring some additional burdens and complexities to the private recruitment industry and to businesses using their services. All businesses need to review their practices, procedures and documentation in the light of the Regulations.

Many of the Regulations also apply to workers supplied by Limited Company Contractors but there is, however, an ability for LCCs to opt out of certain parts of the Regulations.

For Manpower, many of the new Regulations simply confirm our existing policies and practices and therefore will not require significant change on our part, unlike much of the competition which will find them more onerous.

*Temp to Perm Fees
Transfer fees is an area of the Regulations causing concern - Temp to Perm, Temp to Temp and Temp to Third Party (defined below).

The Regulations do create restrictions on how transfer fees might be used, but do not prevent the charging of transfer fees.

The request to alter temporary to permanent employment is most likely to occur once a field staff is carrying out an assignment with a client. However, the Regulations also allow the client to specify before an assignment begins that they will want to make the individual permanent. In this case, the length of time and terms of temporary supply without a transfer fee being charged must be agreed in advance in a written contract.

Where the charge of transfer fees is possible, there are now three main options:

1. If the hirer wants to take on an individual permanently, transfer fees may then be charged, as agreed at the start of the contract between the hirer and the Employment Business.
2. The hirer must also be offered the alternative of extending the hire period rather than pay the transfer fee. This 'extended supply' would be for an agreed period on no less favourable terms than the existing supply (i.e. a rate increase cannot automatically be applied during this extended period).
3. The hirer can avoid the transfer fee if 'a relevant period' of time passes between the end of the assignment and the hirer employing the individual. This 'relevant period' (sometimes referred to as a 'quarantine period') can be defined in two ways:-

• 8 weeks after the field staff last worked for the client on assignment from Manpower, (i.e. 8 weeks from the end of that assignment), or
• 14 weeks after the field staff first worked for that client on assignment from Manpower, (i.e. 14 weeks from the beginning of that assignment)
  whichever of these is the later.
  
  NB:
• Where a member of field staff works intermittently for a client, the 14 week period is treated as continuous from the first date of the first assignment unless assignments have been separated by at least 6 weeks, in which case the 14 weeks can start again.

Transitional Arrangements

Although the new Regulations came into force on 6th April, there is a timescale built in to allow a smooth transition into current business practice and existing contracts.

Any existing contracts with clients, i.e. contracts or supply of field staff that began before 6th April 2004, which include transfer fee clauses (i.e. temp to perm or temp to temp fees) but do not include the alternative of an extended period of supply instead of the transfer fee, remain valid until 5th July 2004. After 5th July, the extended supply alternative will be effectively implied into all contracts.

In other words, you can continue to charge a temp to perm (or temp to temp) fee without having to offer the alternative of extended supply for any booking that began before 6th April but only if the transfer then takes place before 5th July. After 5th July the new Regulations must be adhered to totally as laid out above.

Definitions of transfer fees

• 'Temp to perm' - where a member of field staff is directly recruited by the client;
• 'Temp to temp' - where the client changes agency and requires our field staff to move to another agency to continue working for him (this may or may not involve a TUPE transfer, which is a separate issue);
• 'Temp to third party' - where our client introduces a member of our field staff who has been supplied to him to another employer which then recruits that field staff as a direct employee (Manpower).