Temp To Perm Fees And Opting Out Of The Conduct Regulations - What Does It All Mean?

One of the greatest skills Recruitment Consultants have to offer is the ability to find talent to fit the brief given by their client. These people can often be hard to find and Recruitment Agencies rightfully reap the financial benefits of placing temps.  However, do you know what the rules are when the perfect temp you have taken so long to find and place becomes a permanent staff member?

The Law

The rules concerning temp to perm fees are often overlooked by recruiters and can be easily confused. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 govern when a temp to perm fee can be charged and these circumstances are very strict.

Under Regulation 10 of these Regulations, a temp to perm fee can only be charged where the temporary worker takes up a permanent job with the client within either 14 weeks from the start of the assignment or within eight weeks after the end of the assignment, whichever is later.

Whilst it might appear unfair, strictly speaking your client could take your temp on as permanent any time after eight weeks of the end of the assignment without paying you a penny.

How can this be avoided?

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 are a fairly unique set of regulations in that workers who provide their services through a company (either their own Limited Company or an Umbrella company) can “opt out” of if they wish.

If a temporary worker “opts out” then the rules limiting temp to perm fees and other rules contained within the Regulations will not apply and you will be restricted only by your own terms of business.

What makes a valid “opt out”?

For an “opt out” to be considered valid, it must be voluntarily given by the contractor and Agencies cannot be seen to be coercing contractors to opt out. Additionally, an “opt out” will not be valid if the candidate works with children or vulnerable adults.

The “opt out” should be signed by the worker and the company they are providing their services through and, unlike some other types of contract, must be in writing.

It is also of note that the agency must notify their Client of the opt-out arrangement before the worker is supplied as if the Client is not informed, the “opt out” becomes invalid.

With these rules largely unknown to recruitment agencies, it is worthwhile studying the options you have. If you intend to provide your contractors with an “opt out” form, you should have a procedure in place for supplying this to them, and advising your client. For further guidance as to the Regulations and what should be included in your “opt out”, you can speak with our contracts department on 0845 881 1112.

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