Are Recruitment Agencies Regulated?

Recruitment agencies sometimes get a bad reputation. In fact, ‘recruitment agencies are rubbish’ is one of the first prompt that appear when you start to type ‘recruitment agencies’ into Google!

Therefore, “Are recruitment agencies regulated?” is not an uncommon question. It’s one I hear regularly about the recruitment sector, from businesses and job seekers alike.

All parties want reassurance that they are working with ethical providers. But the reality is that there are no legal requirements, licenses (for most recruitment sectors), or qualifications needed to set up a recruitment agency. Technically anyone could do it, and with 31,000 recruitment agencies in the UK, many do!

However, the sector is regulated by a number of laws, legislation, professional bodies and enforcement agencies. There are restrictions governing contracts and business practices, that all parties should be aware of to ensure they are working with a compliant and regulated recruitment agency.

Are recruitment agencies regulated? Key legislation

There are two core pieces of legislation directly govern how recruitment agencies can conduct business. They outline key guidelines and rules for how recruitment agencies should engage and act towards candidates and hiring businesses. This is to ensure candidates and companies aren’t being exploited or treated unfairly.

Employment Agencies Act 1973

This is the first piece of legislative action that was brought in to govern recruitment agencies and in particular how they conduct business. For example, this piece of legislation covers:

• What agencies can and cannot charge for
• What information they can disclose to the hiring business and worker
• Their obligations to check candidate suitability
• How to advertise roles
• Dealing with candidates under 18
• Dealing with candidates from abroad

The Employment Agencies Act was initially enforced as a means of licensing recruitment agencies, as well as setting out guides for how they can conduct business. Whilst agencies no longer need a license, recruitment agencies still have to comply with this legislation.

Under this legislation, agencies must check that candidates have the right qualifications and level of suitability for the role. This is to protect hiring businesses, and to ensure that only legitimate candidates are being shown to businesses.

We understand that hiring candidates is stressful for businesses and many place their trust and resources in recruiters to abide by the law and secure appropriate candidates. Recruitment agencies who don’t follow these guidelines not only damage the sector’s reputation but affect the businesses and candidates they work with as well.

The Conduct of Employment Agencies and Employment Businesses Regulation 2003

This is the most recent piece of legislation that regulates recruitment agencies and specifically targets agencies that use contractors. For IT recruitment agencies, like VIQU, such acts are imperative for how we engage and behave towards contractors and businesses. This act is supplemental to the 1973 legislation and covers:

• The information that can be relayed between contractors and hiring businesses
• The inclusion of contractual documentation and the information which must be contained within it
• Stipulations regarding how contractor payments cannot be withheld

Contractors who provide services through their limited companies and outside of IR35 can opt out of this regulation. However, many contractors who work inside of IR35 choose to opt in for the protections this regulation offers. For example, a contractor’s pay cannot be withheld, even if the business the contractor is working for does not pay, giving them an extra level of security.

Specialist recruitment agency regulations

For some recruitment agencies that hire staff in specific sectors, they may need a license or registration with certain professional bodies.

For instance, if an agency is recruiting staff in the care sector, they will need to register with the Care Quality Commission (CQC), whereas if they are recruiting staff for food processing, horticultural, or agricultural roles, they will need a license from the Gangmaster and Labour Abuse Authority.

This is to ensure that those within the care sector are hired legitimately and that workers hired in particular sectors such as food processing and agriculture are not exploited or victims of human trafficking, as unfortunately, these sectors can be hot spots for such activities.

Other regulations recruitment agencies must follow

The following are some of the general legislation that recruitment agencies need to adhere to. Often these apply to all businesses to ensure that private information is kept confidential and to remove discrimination. Confidentiality, fairness, and equality should be the mainstay of any business.

Data Protection Act 2018 (General Data Protection Regulations (GDPR) – the legislation in place to protect candidates’ and hiring businesses’ data and ensure it is stored and shared compliantly and correctly. Highly confidential information and data are often shared within recruitment which need to be protected. It is of the upmost importance that all agencies are doing what they can to make sure data is secured and used compliantly.

UK Code of Non-broadcast Advertising, Sales Promotion, and Direct Marketing (CAP code) – this establishes guidelines on businesses’ advertisements and marketing communications. For example, recruitment agencies need to show that their roles are genuine and not as bait to get more candidates. The agencies also need to include information on whether the role is temporary or permanent and correct contact details. It is shameful when agencies use underhand methods to entice candidates and build up their talent pool and database, doing a disservice to the sector.

The Equality Act of 2010– recruitment agencies and their clients are required to not discriminate against anyone based on protected characteristics such as age, gender, ethnicity, etc. Discriminatory actions by a recruitment agency could include during the writing of job adverts, candidate selection, or other discriminatory or harassing behaviour. This act is paramount in protecting individuals and ensuring that they are treated fairly and should be well understood by all recruitment agencies.

Recruitment agencies regulators: Employment Agency Standards Inspectorate (EAS)

The EAS is the start regulator for employment agencies, sitting in the Department for Business and Trade. The EAS investigates complaints and acts on information regarding recruitment agency conduct. They ensure that the agencies are working in line with the Employment Agencies Act (1973) as well as the Conduct of Employment Agencies and Employment Businesses Regulation (2003).

The latest publication of their Annual Report showed that in the year 2021-2022, the inspectorate received 2170 complaints, found 724 infringements, and recovered £169,230 for workers. Their aim is mainly to work with recruitment and employment agencies to ensure compliance but also can act and enforce the law. Between 2021 and 2022, there were 2 successful prosecutions.

The Inspectorate also has a budget of £1.525 million to carry out investigations and explore complaints. This means that non-legit recruitment agencies who carry out dodgy practices will be eventually identified and dealt with, ensuring the continuing trust in compliant agencies remain.

Recruitment professional bodies

One of the main professional bodies that ensure that recruitment agencies are regulated in some way is APSCo. Professional bodies can provide recruitment agencies with legal support, training, and legislative updates. In order to become a member, agencies need to provide evidence that they adhere to the APSCo strict code of practice and have independent references from clients and candidates.

Another professional organisation is the REC. They also provide legal advice, training and compliance, with their members having to pass a compliance exam every two years.

For employers, working with agencies that are members of a professional body or organisation will mean that you are working with an agency that has been vetted by trusted leading market organisations. This may help to alleviate the concerns employers may have about accidentally working with an unregulated rogue agency.

Overall, recruitment agencies are regulated through several pieces of legislation that target how agencies conduct business and treat candidates and organisations. Both of which is fully enforced through the EAS. As a legit recruitment agency, we comply with laws to protect candidates and businesses entirely and we would welcome more regulations to bring greater trust and confidence to the sector. We will have to see if this comes to pass in the future.

If you are looking for a legit recruitment agency for your IT hiring plans, VIQU is an award-winning IT recruitment agency. Please get in touch with our team here for tailored support and advice.