Recruitment law is an entirely different discipline or subject from employment law. It is widely regarded that it was our MD, Adrian Marlowe, who first coined the phrase “recruitment law” over 10 years ago - referring to the body of laws that governs those in the staff supply chain. Since 1997, Lawspeed has led the way in recruitment law services for employment agencies, employment businesses, umbrella companies and others in the industry. Until then, recruitment law was the domain of employment law generalists, but Lawspeed filled the gap with a combination of direct hands-on experience of working with recruiters and an in-depth knowledge of the law and the commercial issues affecting them. Our services include strong contracts for all aspects of recruitment, a legal help-desk, contract reviews, on-site auditing, process development and seminars and workshops. We advise literally hundreds of recruitment agencies. Since then there have been a number of significant developments in recruitment law. Here we present four crucial legislative developments in recruitment law over the last decade.
4 Developments in Recruitment Law
The First Development: IR35
The tax law commonly known as IR35 empowers HMRC to ‘look through’ sham self-employment arrangements and claim from a contractor an amount equivalent to the PAYE and NI deductions that would have been made had the contractor been directly employed by the hirer. IR35 is an area that principally concerns contractors rather than agencies. However, a recruiter can gain a competitive edge by offering a contractor an IR35 friendly contract. Lawspeed have been assisting contractors in this area and have been providing our agency clients with IR35 friendly contracts since before the rules came into force. Indeed we were the first to provide a suitable contract template for use with contractors outside of IR35.
Find out more about: IR35 friendly agreements for agencies
Find out more about: IR35 services for contractors
The Second Development: The Conduct of Employment Agencies and Employment Business Regulations 2003
As the name suggests, these regulations govern the conduct of employment agencies and employment businesses. There are a number of procedural and contractual requirements and restrictions that a recruiter must be aware of. Failure to comply with these regulations can nullify transfer fees (temp-to-perm, temp-to-temp, and temp-to-3rd party) and can incur severe penalties.
The regulations allow contractor candidates to ‘opt-out’. It was Lawspeed who first proposed and campaigned for this opt-out, successfully reducing the administrative burden on recruiters, enabling contractors to take more control over their own affairs, and therefore saving the industry £millions.
All our contracts are compliant with the Agency Regulations where appropriate.
Find out more about: The Conduct of employment agencies and employment business regulations 2003.
The third development: The Managed Service Company Legislation
Commonly referred to as the “MSC legislation” or “Managed Service Company legislation” this branch of recruitment law is similar to IR35 in that it is a tax law designed to collect unpaid taxes from contractors. However, where the requirements of the Managed Service Company legislation are met, the tax-debt can be ‘transferred’ to other parties including, in some cases, the recruiter involved.
However, where the requirements of the Managed Service Company legislation are met, the tax-debt can be ‘transferred’ to other parties including, in some cases, the recruiter involved.
Find out more about: How we can help minimise Managed Service Company risk
The fourth development: The Agency Workers Directive
The Agency Workers Directive was passed by the EU in 2008 and, once UK law, will eventually entitle agency worker’s to equal treatment, that is equal to the permanent employees of the hirer, including in terms of pay and holiday entitlement.
In the UK, the implementing legislation is due to come into force towards the end of 2011, and is set to have perhaps the greatest impact of any development in recruitment law.
Our membership organisation, the Association of Recruitment Consultancies (ARC), is currently working tirelessly to represent the interests of the recruitment industry regarding the implementation of the Agency Workers Directive.
Find out more about: The Agency Workers Directive
Find out more about: The Association of Recruitment Consultancies (ARC)
Contact us now on 01273 236236 or info@lawspeed.com to see how we can help your business can benefit from our recruitment law expertise
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