Recruitment companies and the law – Part 2

This follows on from my previous article about recruitment companies and the laws that in my opinion are predominantly applicable to them. This article focuses on recruitment companies’ compliance with the law, and what happens when they do not.

The Employment Agency Standards Inspectorate (EAS) is a little-known division of the Department for Business, Energy and Industrial Strategy (BEIS), established to ensure compliance with The Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003. It has the power to investigate or inspect recruitment companies against whom a complaint or allegation of non-compliance has been made, and to take enforcement action if necessary.

What I find quite interesting is that whoever complains about a recruitment company to the EAS has the right to confidentiality, so an agency may never know by whom the complaint has been made.

The EAS has the power to physically inspect the recruitment company’s premises and the on-line job boards they use. These visits can be unannounced and are often part of a targeted operation based on information received about the recruitment company. The EAS can remove financial records and documents, and it is a criminal offence to refuse them entry or access. What they are looking for is proof that the recruitment company is legally compliant in the terms that they agree with clients and candidates, and in the payments they make to candidates – predominantly temporary workers. The EAS’ primary motivation is to ensure there is no abuse of workers in the context of modern slavery, immigration offences, non-payment of minimum wage, and HMRC.

Breaches are usually dealt with initially by a warning letter, and the recruitment company will have to show the EAS that they have remedied the breach. Sometimes the EAS will ask for an undertaking to prevent future non-compliance which can last for up to 2 years. If the recruitment company will not give an undertaking, or it gives one that it subsequently breaches, criminal proceedings can be brought against those running the company for which the maximum sentence is 2 years imprisonment and/or an unlimited fine. A recruitment company director can also be banned from running a recruitment company for up to 10 years. Worse still, there is a public list of all individuals who have been banned.

I hope that this serves as a small reminder that no recruitment company is above the law, although I am confident that any recruitment company owner who has bothered to read this article is totally compliant and has nothing to fear. That said, there is no excuse for non-compliance so if you think you may need to brush up on the law that applies to your company, I am always happy to chat things through.

Legal services for the Recruitment Industry