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What laws do I need to know about when running a recruitment company?

Recruitment companies and the law

Recruitment companies and the law

I am often asked what laws apply to recruitment companies? Or, what laws do I need to know about when running a recruitment company?

Much of it lies in contract and agency law, which is far too boring to blog about here. But there are some fundamental laws that every recruitment company needs to know about:

The Conduct of Employment Agencies and Employment Businesses Regulations

This is probably one of the most fundamental bits of statute that any recruitment needs to wrap their head around. Particularly, in my opinion, recruitment businesses who do contracting & temp recruitment. I’ve written about the Conduct Regulations before, and you can read that HERE. They’re not desperately easy to de-code, but they are hugely important, so it’s worth taking the time to get your head around them.

The Finance Act 2020

This relates to IR35 I’m afraid, and actually dates back to the Finance Act 2000. Although IR35 itself has been around since 1999, the Finance Act 2020 enshrined in law the Off-Payroll Legislation in the private sector. Again, a pretty technical piece of legislation, but for contract recruiters it’s crucial to get your head around the basics. I’ve written about IR35 plenty of times before and done lots of training on it for my clients, so please contact me if you need a bit of a refresher.

 The Agency Worker Regulations

The AWR are a pleasantly easier read than many I have had to endure. In essence they set out the rights for agency workers who are not actually employees but aren’t fully self-employed contractors either. If PAYE temps are your business, these are fundamental to your business. You can see an overview from a previous blog HERE.

The Bribery Act 2020

Perhaps a bit left-field this one, but more often than not incorporated into recruitment companies’ terms of business with clients. Bribery is offering someone something of value to influence them to your advantage to improperly perform some function or activity which should be performed in good faith or trust, or impartially.

It’s easy to think this just applies to corrupt politicians or sports match riggers, but there’s plenty of scope for it in recruitment I’m afraid. Think gifts, hospitality, kick backs like cash cards etc. And it doesn’t just apply to the briber or the acceptor of the bribe, it’s also an offence for a company not to prevent bribery within it.

The Modern Slavery Act 2015

A welcome piece of law designed to prevent human trafficking and modern slavery. I’m fairly confident that any of my clients reading this would baulk at being culpable in any way, but it goes to the heart of checking a candidate’s right to work; and the supply chain with which you are working. It’s also worth remembering that ignorance is no defence to an offence under this legislation.

The Criminal Finances Act 2017

This brought in new corporate criminal offences of failing to prevent UK and foreign tax evasion. Sometimes tax evasion can sound very remote, more the domain of oligarchs and professional footballers. But actually it can be very mundane, and applies to PAYE tax, NICs, IR35 and VAT, which pretty much all recruitment companies will be dealing with. And again, ignorance is no defence to an offence under this legislation.

Because I am a lawyer I could add to this list for quite some time, but everything listed above is what I think are critical for a recruitment company to know about. If you think you might need to brush up on any of them, I’m always happy to chat things through. Feel free to contact me on lucy.tarrant@cognitivelaw.co.uk

By Lucy Tarrant