Your Guide to Opting In / Out

The Act is designed to safeguard both candidates and hirers, ensuring fair practices in recruitment. It offers additional protections for jobseekers and companies using recruitment services, while setting clear rules for how agencies must operate.

To comply, contractors are required to provide:

• Proof of Identification: Recruitment agencies are legally required to request proof of ID and, if necessary, evidence of qualifications or training relevant to specific roles.
• References: Agencies must obtain two referees or references, which can only be shared with potential employers with the candidate’s consent, in line with the Recruitment Employment Confederation (REC) guidelines.

The Regulations also provide important protections during assignments to ensure fair treatment. In particular, the Regulations seek to ensure that:

You are entitled to payment from the agency even if they do not receive payment from the end client. Additionally, the agency cannot restrict you from working directly with the end client after the contract ends. They are not allowed to withhold your pay under certain circumstances, and they must provide clear and specific details about the services they offer and the assignments they source for you.

Furthermore, agencies cannot charge you for finding work or require you to pay for additional services to secure assignments. These measures ensure transparency and fairness in the recruitment and assignment process.

This ensures transparency and professionalism throughout the recruitment process.

Informing the contractor of Health & Safety practices

As well as providing the candidate with factual and detailed information about a vacancy, the agency must share with you any Health & Safety documentation that the end employer has provided.

What is the conduct regulations ‘opt out’?

A candidate can choose to ‘opt out’ of the regulations. Whilst the regulations have been conceived to ensure greater legislative protection for candidates, there may be issues which conflict with the spirit of the IR35 rules. Agencies should offer and receive a signed opt-out before the candidate is introduced to the client, otherwise the opt-out could be invalid, leaving the agency in breach of the regulations, and also preventing the agency from putting restrictions on the candidate that have been requested by the client. To do this they must sign and return an EAA opt-out form.

Contractors should also expect to see a clause in the opt-out from the agency that clarifies that the regulations don’t apply and that the client does not control the contractor.

If a contractor is considered to be controlled by the client and does not opt out, then the agency is required to work through a series of steps. These include creating paperwork about the client’s requirements and contractor’s suitability for the role, possibly checking the contractor’s qualifications and completing a CRB (Criminal Record Bureau) check for certain roles.

The Regulations permit individuals to opt-out of the Regulations if they are:

• Working through a limited company; and
• Not working with people under the age of 18 or vulnerable adults.

What are the pros and cons of opting out?

Contractors do suffer some disadvantages from opting out. For example, the agency is required to pay workers who are covered by the regulations even if they have not been paid; contractors who have opted out lose this protection. Plus, the agency must agree terms with the contractor before introducing them to the client; this significantly reduces contractor flexibility in what is supposed to be a flexible, highly skilled labour resource. In addition, if a contractor has opted out, then the agency can use restrictive covenants that can potentially restrict the contractor from using a competing agency or going to a competitor of the client. There are other regulations relating to temporary-to-permanent fees, which can negatively impact on the client if they want to take the contractor on as an employee or a direct contractor.

What we do if a contractor notifies us that they wish to withdraw an Opt Out Notice.

We always ensure contractors fully understand the implications of an Opt-Out, using the information provided above. If you decide to withdraw your Opt-Out Notice, we will guide you through the process and will advise you as follows:

“You can also choose to opt back into the Regulations if you choose to do so at a later date upon giving notice in writing to both No Worries Red Umbrella and your recruitment business of your intention to do so. A signed and dated copy of the letter should be sent via email at hello@noworriesumbrella.co.uk.”

Once we receive your notice, we will promptly confirm your intention to the agency. We must also make it clear that when a contractor provides an Opt-Out, No Worries Red Umbrella Ltd also agrees to the Opt-Out.

Additional Notes:

The Regulations allow individuals to opt out if they are working through a limited company and are not working with individuals under the age of 18 or vulnerable adults. If these conditions are not met, such as in the case of someone working as a Social Worker, the Regulations will automatically apply to the assignment.