After n hours over the weekend of digesting the subtleties of the new Agency regulations, I am left with the major intellectual challenge of trying to figure out exactly which planet those who drafted this subordinate legislation originated from. Zod might have be one possibility - though I strongly suspect that the only reason they find themselves on Earth is - well, let's just say it's illustrated by the sense and commercial relevance of the regulations. Not.
Be that as it may, here are the main points which directly affect Contractors who use their own companies as the trading vehicle:
1 The new regulations will apply to conventional (at least to the IT industry) hire-in and hire-on arrangements, provided that the Contractor will be working under the control of the Client. The 'control' test here is black-and-white however, and the eyes of most of us have been opened by IR35 to the fact that control has many facets - what is to be done, and when, where and how it is to be done - and so control is fact multi-shades of grey. It remains to be seen just how the Courts will interpret the 'control' test for the purposes of these regulations, and I suspect that sooner or later some suitably philanthropic organizations will kindly invest substantial sums in engaging lawyers to have the Courts clarify this potential uncertainty. Meanwhile the wise agency will probably assume that the regulations apply, and will act accordingly. But where it can be shown that the Contractor is not in fact working under the control of the Client, it is at least arguable that the new regulations will not in fact apply at all. What a pity that those who legislate do not at the least see fit to do so in a way that provides certainty.
2 Agency adverts must include the full name of the agency; must state whether or not the agency is acting as an 'Employment Agency' or as an 'Employment Business' (do you know the difference?); must not advertise positions unless authorised to do so by the Client; and where they state rates must also state nature and location of work, and qualifications etc required. Quite how this is to be squeezed into the existing space allowed for a Jobserve advert (which I am told is 244 characters) remains to be seen; agencies with short names may have a distinct competitive advantage!
3 A Contractor's agreement to a list of points must be obtained before the Agency may put the Contractor forward to a Client.
4 A host of records must be maintained by agencies, and Contractors will expect to see an increasing deluge of information confirmed to them in writing by agencies at various stages of the negotiating process. Doubtless the production of this will be automated, and its consideration by the recipient - well, let's say, abbreviated. A classic example of word processing à la Reader's Digest, which was in its early years once defined as the most effective means of passing information from the machine of the sender to the waste basket of the recipient, without having its passage impeded by the mind of either.
5 Fixed term contracts and contracts terminable by the Contractor on notice are permitted - provided the Agency undertakes to provide 'paid work' each week - but any other disincentive to a Contractor terminating early is prohibited, as are terms preventing the Contractor from going direct or through another agency. For existing contracts this will not come into effect until 3 months after the regulations come into force.
6 Agencies may not make payment conditional on they themselves being paid by the Client; so far as I can see most reputable agencies already comply with this in any event. Agencies also may not make payment conditional on the Client signing a timesheet; many will have to change their practices to accommodate this.
7 Curious and paternalistic provisions may apply where the Contractor has to live away from home - the agency is obliged to take all reasonable steps to ensure that 'suitable accommodation will be available', and that 'suitable travel arrangements have been made'. Contractor initiative is, it appears, no longer required. Where Agencies pay the fare out they must also pay for the return, and any loan or advance for expenses must not carry interest.
8 Restrictions in contracts with Clients against taking Contractors direct remain permissible, to a limited extent, and for a limited period (until the later of (1) 8 weeks from the day after the last day the workseeker was supplied to the Client, and (2) 14 weeks from the first such day, where (a) a break of 42 days or less still counts as part of the 14 weeks, and (b) a break of more than 42 days starts the 14 weeks running afresh), provided the Agency offers to continue the supply of the Contractor on no worse terms. After that period, no restrictions at all.
9 An Agency can be sued by anyone suffering loss as a result of any breach of the regulations.
These new regulations will come into force on as as-yet unspecified date during Summer 2001. They substantially replace the former 1976 regulations. They will be in force immediately for new contracts made after that date; for existing contracts there will be a three month transitional period, after which the new regulations will apply to them too.
4th
May 2001
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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