Anyone who runs a recruitment firm must exercise due diligence and consider relevant aspects of law to ensure that you are always compliant with legislation, regulation and statutory guidance.

While there are no official training requirements or qualifications to run your own recruitment business, being aware of certain legal aspects relating to good practice is highly recommended.

This will furnish you with knowledge as to how a recruitment agency should conduct itself both internally and externally. It will also familiarise your business with the rules relating to what information you are allowed to provide to the client and candidate and issues around discrimination, maternity leave and holiday pay, to name a few.

Here is our guide to the core tax and employment regulations that currently affect the daily operations of recruitment firms.

Agency Worker Regulations (AWR)

This legislation gives rights to temporary workers who are supplied through a temporary work agency to provide their services to a hirer. Agency workers are afforded rights from day one of an assignment, which includes access to facilities at the employer’s site, such as the canteen. Once the agency worker has completed a qualifying period of 12 weeks doing the same job as a permanent staff member, they are also entitled to equality of treatment. This is specifically in relation to working conditions and takes into consideration pay, working time, breaks and leave.

The Conduct Regulations

These can be found under The Conduct of Employment Agencies and Employment Businesses Regulations 2003. They establish a framework of minimum standards by which employment agencies and employment businesses should exercise in relation to candidates and clients. These standards include information to be obtained from the candidate and hirer, alongside rules around transfer fees. It is possible for individuals providing their services through an umbrella or PSC company to opt out of adopting these regulations.

The Agency Tax Rules

Here it is possible to refer to sections 44-47 Income Tax (Earnings and Pensions Act 2003). These tax rules stipulate that an agency holding a contract with a hirer for an individual’s services must pay the said person, subject to employment taxes including PAYE income tax and NICs. This is unless it can be shown that the way in which the individual provides the service is not subject to supervision, direction or control or that the employment taxes are paid by another party. The agency is liable for any taxes due, should it fail to adhere to these rules.

The Working Time Regulations (WTR)

The WTR evoke the EU Working Time Directive and detail the rights of a worker and obligations of an employer regarding time spent working. The regulations include the provision of rest breaks, including night shift work, and entitlement to annual leave. Self-employed people, those operating through a PSC and some sectors that are covered by their own specific regulations fall outside of the scope of the WTR.

The National Minimum Wage (NMW)

Twenty-years-old this year, the NMW stipulates the minimum pay per hour that workers are entitled to receive. The NMW encompasses different bands according to age and type of work conducted, for example, apprenticeships. Everyone over the age of 25 is afforded the top tier of NMW, currently £8.21 per hour as of April 2019, which is referred to as the National Living Wage.