Agencies play a vital role in the temporary workforce sector; in fact, it could not have flourished like it has without them. They are heavily regulated and most do a fantastic job. The dilemma that some are faced with is the choice between the requirements of their clients (the end-hirer) and the contractors that they place; some unfortunately fall short of providing the contractors with the support and protection that they deserve.
Common and very worrying issues that we have come across over the years include –
- Forcing contractors to ‘opt-out’ of the Agency Conduct Regulations when it is not in their best interests.
- Paying less for an assignment than paid by the end-hirer.
- Forcing contractors to use an umbrella only because they receive a referral fee from it.
- Moving contractors from umbrella to umbrella to receive repeated referral fees.
- Failing to undertake due diligence on an umbrella which then causes financial losses to contractors such as the FCSA Holiday Pay issue.
- Withholding contractor’s pay until the end-client has paid.
So how does a contractor avoid being exploited by those agencies who do not have their interests at heart?
Unfortunately for contractors there is not much of a freedom of choice route here. Basically, unless an end- hirer is using multiple agencies for the role you want, you will have to sign-up with the agency that is filling that role. However, it is very rare that an end-hirer will rely on one agency to fill their roles, so find out directly from the end-hirer which agencies they post roles with.
Whether a role is with one or more agencies, it’s still vital that you undertake your own due diligence. Ask the agency for its complaints record and enquire of the Employment Agency Standards Inspectorate (EASI) to see if they have a record of complaints. It is also a good idea to ask the end-hirer why they work with the agencies that they choose.
Also, query why you are being asked to opt out of the Agency Conduct Regulations. Ask the agency whether it receives a financial incentive for recommending its preferred umbrellas to you and, if they do, what it is for and how much. There is no harm in asking to split the incentive. A lot of agencies have policies that govern the interaction between the agency and umbrellas, ensuring that consultants aren’t working to their own agenda at the cost of the contractor, but it may be best to validate what you’ve heard from your recruitment consultant with other members of their business.
Government regulation
Agencies are regulated by the EASI and it actually does take a proactive role in taking action and imposing some quite severe sanctions for wrongdoing by agencies. So, contractors should utilise the regulator if they are unhappy with their agency if a complaint cannot be satisfactorily resolved.
It’s worth noting that as of April 2020, all agencies are legally obliged to provide you with a Key Information Document (KID) that shows you how much money the agency receive from your end-hirer for the work you undertake, what deductions they take and what deductions the umbrella takes too – you can see exactly who is receiving what.
Change is coming for agency regulation but, as with umbrellas, it is likely to be a couple of years off. We will be keeping you updated with news on progress being made by the government over changing regulation.
If you have any comments in relations to an agency you are dealing with, submit them here.