New regulations for staffing companies

The DTI has issued a new draft of the Employment Agencies and Employment Businesses Regulations. Full guidance is being prepared by the DTI and will be available soon.

The move is part of a series of measures being introduced to update the regulation of employment agencies. The revised Conduct of Employment Agencies and Employment Businesses Regulations come into force on 6 April 2004 and will affect more than half a million people working through 17,000 agencies and employment businesses across Great Britain.

The measures include 'provisions to allow limited company contractors, who are often highly paid and highly skilled, to opt out of being covered by the regulations but which prevent vulnerable workers being forced to do so.'

The regulations will also mean suppliers of nurses and teachers will be obliged to carry out additional background checks; agencies will not be able to withhold payment purely on the basis that the worker has not supplied a timesheet and temp to perm fees will be limited.

Gerry Sutcliffe said: "In the future, everyone who uses the services provided by agencies and employment businesses can have greater confidence in them - both those companies that use them to supply staff as well as the agency workers themselves.

"Employment agencies play a valuable part in helping people to find their feet in the world of work, whether after a period of absence or unemployment or helping young people to take their first steps on the career ladder. The vast majority of agencies are well run but we are ensuring that they do not face unfair competition from those who abuse their workers."

On allowing contractors to opt out of the regulations, Tarlo Lyons, a London law firm commented:

"We are pleased to see this item having long lobbied for special treatment of relatively highly paid contract workers in sectors like IT, engineering and finance. We predict an increase in other sectors of the use of Personal Service Companies. Such structures will also help minimise the risk of employment rights accruing.

"We cannot believe that the DTI would be putting these Regulations forward unless they felt that the potentially inconsistent Temporary (Agency) Workers Directive was for the time being dead in the water in Brussels . This is good news for suppliers and users of temporary workers because that draft Directive proposed the granting of full employment rights to agency workers."