Conduct Regulations

The Conduct of Employment Agencies and Employment Businesses 2003 (“Conduct Regulations”) are regulations which govern the recruitment industry in the UK.

The Conduct Regulations are designed to provide protection to temporary workers. Temporary workers can include not only a human person but also a corporate worker, such as personal service companies (PSCs) as well as workers who are employed by umbrella companies.

The Conduct Regulations protect workers by putting certain obligations and restrictions on Employment Businesses (a.k.a recruitment agencies).

PSCs and workers who are employed through an umbrella company do have the option to ‘opt out’ of the Conduct Regulations if they wish.  However, if the worker’s assignment will involve them working with vulnerable people, they are not eligible to opt out of the Conduct Regulations.

Protections for workers under the Conduct Regulations

Under the Conduct Regulations, an Employment Business is prohibited, amongst other things, from:

  • Charging a fee to a work-seeker to find them work.
  • Trying to prevent the worker from working somewhere else (including for the end client).
  • Subjecting a worker to a ‘detriment’ if they decide to take up work with someone else.
  • Withholding payments or wages due to temporary workers on the grounds that the Employment Business has not been paid by the end client or because the end client has not signed the worker’s timesheet.

What are some of the advantages & disadvantages of opting-out of the Conduct Regulations?

  • If a worker opts out of the Conduct Regulations, then their Employment Business can withhold the worker’s wages until the Employment Business has been paid by the end client, or make it a condition of payment that the worker has a signed timesheet.
  • The Conduct Regulations limit the ability of an Employment Business to restrict a worker from taking up direct employment with the end-client. However, if a worker opts out of the Conduction Regulations, this limitation does not apply, so the Employment Business may seek to prevent the worker from being employed directly by the end client for a certain period of time after the end of their assignment.
  • Some contractors, particularly those operating through their own PSC, may feel that they do not require the protection of the Conduct Regulations, and opting to remain with the protection of the Conduct Regulations could be a relevant factor when considering IR35.
  • A worker cannot cherry pick which parts of the Conduct Regulations to opt out of; an individual would have to opt-out of all the Conduct Regulations or none at all.

Opting Out

The Conduct Regulations apply to all work-seekers by default. However, individuals working through a Limited/Umbrella company can opt out the Conduct Regulation if the wish, as long as they will not be working vulnerable people. Vulnerable people are defined as those under the age of eighteen or those who “by reason of age, infirmity, illness, disability or any other circumstance is in need of care or attention”. This means that if the worker is a teacher or nurse, for example, they will not be allowed to opt out of the Conduct Regulations.

If a worker chooses to opt out of the Conduct Regulations, they must agree to do so before their assignment starts. Both the work-seeker and their Limited/Umbrella company must opt-out of the regulations together. The opt-out is ineffective if only one party opts out or if the worker opts out after their assignment has begun. The Limited/Umbrella company must notify the Employment Business of the opt-out, and the Employment Business must notify the end client.

Workers are free to change their Conduct Regulations status by opting out of the Conduct Regulations at a later date (or opting back in, if they have already opted out), but they must give notice to their PSC/Umbrella (which in turn must give notice to the Employment Business) and they will only be able to change their status after their existing assignment has come to an end; a worker cannot change their Conduct Regulations status part way through an assignment

It is the worker’s choice whether or not to opt out of the Conduct Regulations. Employment Businesses must not make the provision of their services conditional on the worker opting out of the Conduct Regulations.

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