Many contractors will today welcome the news that those workers who use umbrella or limited companies will remain exempt from the agency conduct regulations. The Department of Business Innovation and Skills said there was “no significant evidence” to support the removal of this exemption. The state had worried that some agency workers were too vulnerable to remain exempt from the rules which were drawn up in 2003. There was fear that recruiters were actually advising their workers to opt out and thus those workers were losing the protection that the regulations provide.

The BIS said: “Once a worker has opted out they lose they protections afforded to them by the Conduct Regulations and may be vulnerable, for example, to non-payment of wages.”

BIS consulted with 350 individuals and businesses regarding this issue and found no “convincing evidence” of these concerns.

BIS stated: “Furthermore the evidence provided by the professional bodies that represent contractors and umbrella company providers is that any changes would have an adverse impact on legitimate contractors who actively choose their arrangements.”

It was also recognised that by including all contractors in the code of conduct would actually increase costs for contractors and add administration requirements with regards to the information that is required by recruiters under the regulations.

The Association of Professional Staffing Companies (APSCo) said: “The government has acknowledged that there is insufficient evidence of the opt-out being used to exploit vulnerable workers. This is an important victory for the recruitment industry. If the opt-out had been withdrawn, the red tape burden on recruiters and contractors of automatically having to comply with the Conduct Regulations would have imposed significant costs.”

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