Open
letter to those who responded to the
consultation 
(390
Kb) exercise on revised regulations on the conduct of employment
agencies
21
February 2000
CONSULTATION
ON THE EMPLOYMENT AGENCY REGULATIONS
As
you know, the Government intends to update the regulations governing
the conduct of employment bureaux, and you responded to the consultation
exercise launched in May 1999, and/or expressed an interest in
keeping in touch with developments. The Government has just made
an initial response to the representations received, covering
the following;
Temp
to perm fees
Throughout
the consultation, the Government has made it clear that it believes
temporary to permanent placement to be an attractive means of
recruitment for both workers and hirers, and that it wishes to
encourage such moves. It also recognises that bureaux have legitimate
commercial interests, but remains concerned that transfer fees
and clauses can have the effect of deterring employers from taking
temporary workers on permanently when they might otherwise have
done so.
The
proposal in the consultation document was that bureaux would be
free to charge such fees, but only in circumstances where they
had given a commitment to the worker to provide them with work.
The rationale behind this approach was set out in the consultation
document. The Government has taken note of the industry's representations
that they could not retain even a proportion of their workforce
on the basis envisaged. It has also considered the representations
it has received about the restrictive effect of temp to perm clauses.
The
Government has therefore announced its intention to amend its
proposal, so that bureaux will still be free to charge temp to
perm fees, but only if they offer an alternative to hirers of
an extended hiring period for the worker in question, followed
by free transfer.
In
other words, bureaux and hirers will, as now, be free to agree
contractual terms at the start of an engagement. They could agree
that in the event of the hirer deciding to take the worker on
permanently, a temp
to perm fee would not be charged. However, where a temp to perm
fee was provided for, the hirer would be able to choose an alternative
of hiring the worker for an agreed further period through the
bureau. This proposal seeks to build on best practice in the industry,
and will allow bureaux to protect their commercial interests,
whilst ensuring hirers are not put off taking on workers permanently
simply because they do not want to pay or cannot afford a one-off
fee.
Further
details of this proposal will be circulated as soon as possible,
and published on the DTI website.
VAT on agency carers
Another proposal in the consultation document was that, except in limited
circumstances, a temporary worker's contractual relationship should
be with the bureau supplying him or her, rather than the hirer.
Concern was expressed that this would lead to extra VAT being
payable, particularly in respect of those buying care in their
own home.
HM Customs & Excise has announced that it intends to introduce a concession
so that the wages
element of care bought by those in need in their own home does
not attract VAT. This will ensure that the VAT burden on those
least able to look after themselves is not increased, and, for
those people who already pay VAT on the cost of their carer's
wages, it will go down.
Further
details will be provided by Customs in their Business
Brief, and on their website.
Entertainment and model agents
The draft new regulations already contain proposals to better safeguard
entertainment workers' money by the use of client accounts, but
concern continues to be expressed about the practice by some model
and entertainment agencies of demanding substantial 'up front'
registration fees from would-be actors and models, even when there
is little or no prospect of work resulting. The Government has
announced that it will be examining whether there is a practical
way of curbing such practices.
Responses
to other aspects of the proposed new regulations are under consideration.
The Government intends to make final proposals and draft guidance
on the new regulations available in the next few months, before
seeking the approval of Parliament. The new regulations, subject
to Parliamentary consideration, will then come into force later
this year, following a suitable implementation period.
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