Employment Agency Regulations

You may well be asked by your Agency to opt out of the Employment Agency Regulations which became law in 2004. The Regulations are intended to regulate the Employment Business industry so that vulnerable ‘work seekers’ have legal protection. For the purpose of the Regulations both the individual contractor and his/her limited company (i.e. OrangeGenie) are considered work seekers and both are bound by the rules.

It is widely perceived that the Regulations are not appropriate for people working via a limited company because they have a business-to-business relationship. The Regulations are more appropriate for lower paid workers who have an employer-employee relationship.

You can therefore opt out of the Regulations with respect to any assignment that you are seeking.

• We expect most limited company contractors to opt out. The main reasons are:
• The Regulations increase the amount of administration that you and your Agency (the Employment Business) are required to do.
• Many of these formalities have to be done before your details are submitted to the end client. With contractor demand often requiring speed this may hinder your assignment opportunities unless you opt out.

The Regulations may prove costly for the Agency to implement and their margins may need to rise as a result, which could put downward pressure on contract rates. Opting out will alleviate this. End clients:

• Who do not want you working for one of their competitors when your assignment ends may demand only “opted out” contractors to allow the inclusion of a restricted covenant in your contract.
• Want services provided under business-to-business relationships not as disguised ‘employees’.

Please note that OrangeGenie is not an Employment Business under the terms of the Regulations.