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The laws and regulations recruiters absolutely need to know about

Need an introduction to recruitment agency regulations? Agency Central has you covered.

We know that legal jargon can be overwhelming, that’s why we’ve looked through all those little acts and addendums to help you out with the basics.

So take a look at our guide to agency laws and make sure your business is legally compliant. They vary by region as well, for example recruitment agency China would have different regulations.

Is the recruitment industry regulated?

One common misconception about the recruitment industry is that agencies have no real accountability – but this isn’t true.

Recruitment agencies are tightly regulated and must comply with a series of statutory rules. 

Do recruitment agencies need a licence?  

While the industry is regulated, most agencies won’t require a licence in order to operate – but there are some exceptions. 

If an agency provides workers to the agriculture, horticulture or food processing / packaging sectors, then it will need a licence from the Gangmaster and Labour Abuse Authority (GLAA)

The GLAA is an organisation that aims to improve health & safety and reduce the exploitation of workers. What are the recruitment agency regulations?
All recruitment agencies must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003.

Making up part of UK agency worker law, the Employment Agencies Act 1973 was originally introduced as a means of licensing businesses in the recruitment industry. 

While agencies are no longer required to have this licence (due to the Deregulation and Contracting Out Act 1994, later replaced by the Regulatory Reform Act 2001), the regulations still remain.

Employment legislation: some key points

While you should probably read the Employment Agencies Act to make sure you’re fully compliant, we’ve broken down some of the key points.

It is illegal to charge candidates for finding them work. Job seekers can only expect to pay a fee if they decide to use an additional service such as CV writing or career guidance. 

A written contract must be provided to agency workers. This must include details about pay, notice period, holiday entitlement and whether they’re working under a contract for services or a contract of employment. 

Pay for agency workers can’t be withheld. Even if the employer is unhappy with the worker or work provided, the dispute is between the employer and the agency. 

Agencies must check candidate suitability. This sounds obvious, but recruiters are legally obligated to screen candidates to make sure they have the skills and qualifications required for the role. 

It must be clear that it is a recruitment agency that’s advertising a vacancy. This informs the candidate that they’re not applying directly to the employer and is important for recruiters to remember when writing a job ad
What other laws do recruiters need to know about?

HMRC: The Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2015
When it comes to supplying staff, recruitment agencies are expected to report any payments made where they don’t operate PAYE. They also need to provide details of the workers and why PAYE wasn’t used. In other words, if you supply workers but don’t deal with income tax, then you need to report it. 

Agency Worker Regulations (AWR)
AWR applies to temporary agency workers and are designed to restrict discrimination in the workplace. These regulations ensure that temp workers are afforded the same pay, holiday and working conditions as permanent staff – although workers often have to work 12 weeks before receiving full rights. 


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