The Department for Business, Innovation and Skills (BIS) has today published its official response to the ‘Reforming the regulatory framework for the recruitment sector’ consultation, and amongst the first to give a verdict on it is Tom Hadley, the REC’s director of policy.

Mr Hadley welcomed the preservation of the Employment Agency Standards Inspectorate (EAS) despite earlier proposals to disband it, but expressed concerns that it was being downscaled and having its duties divided between different departments – developments that, he said, raise questions about its future effectiveness.

Stressing the need for clear enforcement mechanisms, he added: “Businesses cannot bring employment tribunals and where an unscrupulous agency has failed to comply with the rules, they should be named, shamed and thrown out of our industry.”

Mr Hadley endorsed the retention of an opt-out for limited companies and supported the re-affirmation of the prohibition on charging fees to people seeking work; however, he noted that the precise meaning of ‘reasonable’ fees for temp-to-perm transfers had yet to be defined, and he warned against government intervention in business-to-business arrangements in the industry.

Mr Hadley was sharply critical of the government’s failure to update regulations to take account of the growing role of Umbrella Companies and other intermediaries in the industry, arguing that Jo Swinson, the minister for employment relations and consumer affairs in the BIS, had “missed a real opportunity” to update legislation in this area.

Mr Hadley went on to say that while recruiters had embraced self-regulation and were improving standards through membership of organisations such as the REC, the intermediary and Umbrella Company market remained largely unregulated.

Despite Mr Hadley’s remarks, most UK PAYE Umbrella Services are fully HMRC-compliant.

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