Recruiting laws and regulations: what legislation do you need to know about?
Startups takes a look at recruitment business regulations from the Employment Agencies Act
- What is a recruitment business?
- Who is starting a recruitment business suited to?
- Rules and regulations on how to set up a recruitment agency
- How much does it cost to start a recruitment business?
- Tips, contacts, and advice on how to start a recruitment business
- Register your recruitment business name with our preferred company formation agent (external site, opens in new tab)
- See if you can get a Start Up Loan to help you start a recruitment business idea (external site, opens in new tab)
Rules and regulations on how to set up a recruitment agency
The main piece of legislation governing the recruitment industry is the Employment Agencies Act 1973. If you’re looking into how to set up a recruitment agency, then you should understand, and adhere to, this legislation.
The Employment Agencies Act covers:
- What you can and can’t charge for. You can’t, for example, charge a candidate for finding them work, except in the cases of ‘performers and certain other workers in the entertainment field and photographic or fashion models’, and au pairs working abroad.
- What information you can disclose to the client and worker.
- Your obligations to check:
* Whether the candidate is suitable for the position.
* Whether the worker has the necessary qualifications for the job.
* Whether the worker and employer are aware of any legal conditions such as work permits or visas that they must meet.
- How you advertise the job. You must make it clear you’re a recruitment agency.
- How your recruitment business deals with candidates under 18:
* You’re not allowed to introduce them to an employer if they are attending or have just left school unless they have ‘received vocational guidance from the local careers service’.
* You must obtain written consent from a parent or guardian.
* You must make sure the candidate has suitable accommodation.
* You must ensure arrangements have been made ‘to cover the possibility of the employment not beginning or of it finishing during the first 10 weeks’.
- How you deal with employing candidates abroad or candidates who are from abroad:
* If you use an employment agent abroad, you must make sure they are accredited in that country.
* You must make sure the employer you are arranging the employment with has premises in the UK, unless you have written confirmation it ‘will not be detrimental to the worker’s interests’.
* You must give the employer two character references for the worker from abroad.
* You must not arrange a job for a worker ‘if the rate of repayment of any advance of fare is one-eighth or more of the worker’s basic weekly pay, or the total amount to be repaid is more than three weeks’ pay in the job’.
* You must make sure the worker and employer both receive a written statement in a language they understand giving specific details about the employment or worker.
Other regulations governing the industry include the Employment Businesses Regulations 2003.
This puts an emphasis on the differences between an employment agency, which introduces workers to a ‘user’ or client who then enters into a contract with the worker, and an employment business, which enters into a direct contract with the worker and then contracts them out to employers.
Now take a look at how much it costs to start a recruitment business.
It may be worth considering seeing if you can get a Start Up Loan (external partner site, link opens in a new tab) to help you with financing, and mentoring to start this business idea. You'll also need to think about registering your business, either as a sole trader or as a company - if a company, then Smarta Formations (external partner site, link opens in a new tab) are an organisation that can help you set up.