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Contractor Doctor: Can my agent find me a contract before asking about conduct regs?

Dear Contractor Doctor,

I’ve been offered an interim executive assignment with a client via an agency I’ve not worked with before. The role has the potential to develop into a permanent position, which is really what I’m looking for.

However, being fairly new to the contracting game, until I read about the Conduct of Employment Regulations on Contractor Calculator, I didn’t know I had the choice of opting out.

Can my agent find and offer me a contract before asking me about the Conduct of Employment Regulations? And, can they then insist I opt-out when I sign my contract?



Contractor Doctor says:

The ‘conduct regs’, or to give the legislation its full title, The Conduct of Employment Agencies and Employment Businesses Regulations 2003, were introduced by the Department of Business, Innovation and Skills (BIS) to provide workers and hirers with minimum standards they could expect from private-sector recruitment agencies and employment businesses.

Roger Sinclair from contractor legal specialist Egos explains that all contractors are considered to be within the scope of the Conduct Regulations unless they have expressly opted out, and that the decision is the contractor’s, not the agency’s. “The regulations provide that the provision of work funding services by an agency may not be made conditional on the contractor opting out,” he says. “So long as the agency abides by the regulations, then a role can be offered without the contractor being actually asked whether or not they want to opt out.

“Where the contractor is considered to be within the scope of the conduct regs, those regulations require that the agency should not send the details of the contractor to a potential hirer without the contractor’s permission to submit the candidate for opportunities of the type of role agreed with the agency.”

The timing of opting out is also critical, because unless the contractor chooses to opt out of the regulations before being introduced to a client, then it is not possible to opt-out subsequently.

Timing of the opt out

The regulations state that, if there is to be an effective opt out, it has to be notified to the agency by the contractor and the contractor’s company, and by the agency to the client, before ‘introduction or supply’. Sinclair explains: “Assuming the contractor has already been introduced to the client, the contractor cannot then effectively opt out, even if they sign a piece of paper, such as a contract, saying that they do.”

This means that if an agency did not secure an opt out before introducing the contractor to the client and then, when offering an assignment, introduced a clause in the contractor’s contract saying the contractor has chosen to opt out, then even if the contractor signs the contract, the opt out provision should be of no legal effect.

Once the contractor has been introduced to a specific client by the agency, it is not possible for the contractor to opt out at a later stage.

Contractor permission and agreement

Because Olivia has not expressly opted out of the conduct regulations, she is considered to be within the scope of the conduct regulations, or ‘opted-in’, and the agency should ideally obtain permission before forwarding her details to a potential client.

Assuming the contractor has already been introduced to the client, the contractor cannot then effectively opt out, even if they sign a piece of paper, such as a contract, saying that they do

Roger Sinclair, Egos

“The conduct regulations are not definitive on the question of permission,” continues Sinclair, “but the agency does require the contractor’s confirmation that they are happy for the agency to put her CV forward for suitable positions, but not necessarily each specific assignment as it arises.”

However, Sinclair points out that there are other obligations for an agency placing an ‘opted-in’ contractor, such as confirming that the contractor has the appropriate skills and experience for the assignment and is actually willing to work on the contract.

Contractor dilemma – staying in or opting out

As Sinclair explains, the pressure on contractors to opt out of the conduct regulations is probably more for the benefit of agencies and not contractors. “Where the regulations apply, the agency cannot impose any sanction that will be detrimental to the contractor and which be or remain in effect once the assignment is completed, such as a restrictive covenant. In addition, the agency cannot legitimately withhold payment for time actually worked.”

And in Sinclair’s opinion, whether a contractor is within the scope of the conduct regulations or has opted out is unlikely to have any bearing on a contractor’s IR35 status. “The main benefit of opting out for professional contractors genuinely in business is the removal of the administrative burden, such as cooperating in identity checks and other “compliance” requirements.”

Contractors concerned that an agency may have flouted the rules should contact the Department of Business, Innovation and Skills (BIS), which is the body responsible for enforcing the conduct regulations.

Sinclair concludes: “The reality is that, although contractors are fully within their rights to remain within scope of the conduct regulations, in practice (human nature being as it is) many who do not opt out risk remaining at the bottom of the agent’s pile of applications as a result.”

Good luck with your contracting!

Contractor Doctor

Published: 15 November 2010

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