Contractors' Questions: Is my Agency Conduct Regs opt-out still valid?

Contractor’s Question: I started IT contracting with a jobs agency in May via my umbrella company. In August, the umbrella sent me a form to opt-out of the Employment Agencies and Business Regulations 2003 which I signed. I assume that the opt-out is not valid because the umbrella and I have signed it months after I've signed my contract with the agency. 

However, I've set up my own limited company and have to sign a new contract to carry on working within the agency. Does it mean that the agreement I've signed already will legally be valid now? Or does it pertain only to me and the umbrella and so still won't be valid? Ideally I don't want to inform the agency as I would like the flexibility to work with their clients after ending the contract with the agency (which I understand the regulations restrict). 

Expert’s Answer: On the information you have provided, I agree it would seem that, on the face of it, the purported opt-out notice given in August was ineffective in relation to the services provided by you, via your then umbrella. I make this deduction on the basis that for an opt-out notice to be validly given, it would have to have been given by both by you and by the umbrella to the agency (and then by the agency to the client), before you as the individual were introduced or supplied to the client. This is provided for by regulation 32(9). If you started work in May but only gave the notice in August, it would seem that requirement cannot have been satisfied, at least in relation to you yourself, as the worker.

This does, however, presuppose that you had not, in the course of signing up with the umbrella, authorised them to notify the agency of a wish to opt-out at an earlier point (and at a point of time when notice might have been validly given). I make this point, because many umbrellas will seek such authority at the time of signing up a worker.

If such were the case here, then it could be that such a notice had been validly given after all. And if such a notice had been given in your case by your umbrella on your behalf, then I would not see such a position as having been altered by the fact that the agency sent and you signed a later (out of time, but effectively superfluous) opt-out notice.

For the purposes of the regulations, in the case of an individual working through a company (whether that company is an umbrella, or own company), it is the company that is the workseeker, not the individual. So a change of the company through which you may provide your services requires not only a whole new contract (because the contracting party that is providing your services is different), but also a full revisit to the position in relation to opting out (because the ‘workseeker’ is itself different).

So, as to the position in relation to your new company: for an opt-out to be valid, the same condition in regulation 32(9) applies – notice must be given by the company and by you to the agency (and by the agency to the client), before your new company is introduced or supplied to the client.

As you observe, notice was given by you in August; and such notice may continue to be effective, in relation to you yourself – unless (possibly) the wording of it suggests that it was linked only to the provision of your services through the umbrella.

Assuming it was not so expressly linked, then it seems that unless your own company also gives such a notice before it is introduced or supplied to the client (which it seems to me is likely to mean, before you start providing your services to the client under that new contract), there is likely to be no valid opt-out, in relation to the current contract.

It might of course be that the new contract itself contains a provision saying that your company has opted out – not in the form of a separate notice, but buried in the contract terms; you would be wise to check this. Notice given in this way, and given before the start of the new contract, could be effective.

So I will end with words of caution: the regulations themselves are less than clear; and where there is the kind of complicated history as we have here, to reach the kind of conclusion on which it may be safe to rely requires that all potentially relevant documents be carefully examined, and their implications and subtleties taken into account. What may appear to be small differences in the facts can have a significant effect on the end result.

Often it is wiser to be upfront, and (if you don’t want to opt-out) to say so. Do bear in mind that regulation 32(13) expressly provides that an agency may not make the provision of workfinding services conditional on a worker and the company opting out.

The expert was IT contract lawyer Roger Sinclair, legal consultant at egos.