Contractors automatically enjoy the protection of the ‘conduct regs’, unless they choose to opt out before being introduced to a client. But would a genuine contractor in a business undertaking really want the rights and protections the regulations provide?
The Conduct of Employment Agencies and Employment Businesses Regulations 2003 – better known to most as the ‘conduct regs’ – were introduced by the last government to provide workers and hirers with minimum standards they could expect from private-sector recruitment agencies and employment businesses.
There are advantages for contractors who choose not to expressly opt out of the regulations before being introduced to a client. For example, when a contractor is within the scope of the conduct regulations, the agency may not lawfully impose restrictions, such as restrictive covenants, and in such circumstances contractors may be able to circumvent poorly performing agencies and work direct for the client.
But, for most contractors, they generally opt out when requested to do so by their agency, even though it is the contractor’s choice whether or not to opt out, and not the agency’s. This is because contractors believe that agencies are unlikely to offer them contracts if they don’t opt out.
And even if the agency’s procedures are sloppy, and it does not secure the contractor’s opt out before introducing the contractor to the client, thus leaving the contractor in the scope of the regs for the duration of their relationship with the client, does this really mean anything? Is a genuine contractor in a business undertaking going to use legislation designed to protect vulnerable workers?
That said, if the agency was refusing to pay the contractor, claiming that it had not been paid by the client, being opted in is potentially an ace card for the contractor to be holding, because the conduct regs say the agency can’t withhold payment on these grounds. Or if the agency became greedy, or was simply performing poorly, the contractor is likely to be able to contract direct with the client, without fear of the agency using its restrictive covenant as a stick to beat the contractor with.
But will a contractor with a reputation for using the conduct regs against their agency find winning future contracts as easy? Will the same principle that says contractors need to opt out otherwise they won’t get work also apply to those contractors who choose to use the regs against their agencies?
Business-to-business service providers in other sectors don’t enjoy the benefits and rights potentially conveyed by the conduct regs on contractors. So, are contractors who expect to apply them really genuine businesses, or should they use them as a source of competitive advantage? Are you really a contractor if you don’t opt out?