2003 Conduct Regulations
The Conduct of Employment Agencies and Employment Business Regulations were created in 2003 to protect vulnerable poorly paid agency workers from unscrupulous employment firms. It is broadly accepted that the regulations were not intended to legislate against highly skilled workers.
If you are a highly skilled worker you can opt for your assignment to be considered outside the Conduct Regulations (Opt-Out). In order to do this you must serve formal notice on the Recruitment Agency before you are introduced to a prospective client.
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Umbrella Company/Limited Company Opt Out
If you are an IT contractor you will normally either work via an Umbrella Company or run your own Contractor Limited Company. Where this occurs the Opt-Out must be served by both yourself (the worker) and the Umbrella Company / Limited Company prior to the assignment commencing.
At Commonwealth Contractors, our partners follow the industry practice of automatically opting out of any agreement meaning the final decision lies with you (the contractor). If you do not opt out then by default you are covered by the Conduct Regulations.
Reasons for opting out of the Conduct Regulations
- If you Opt-Out of the Conduct Regulations you will offer the Client / Agency an assurance that you will act in good faith
- Sometimes an Agency will not consider your CV for a role unless you Opt-Out. An agency cannot refuse to deal with you unless you opt out, but clients are allowed to make this restriction; often this occurs with clients in the Financial Services sector who require their contractors to agree to restrictions that limit the contractor’s freedom to work for competitors
- By opting out you may be able to take advantage of preferential rates or earlier payment dates that some agencies offer to contractors who opt out
- If you wish to escape IR35, your position could be weakened by anything seeming to suggest a close-to-employment relationship with the client.
Should I Opt in?
No – simply because it is never necessary for anyone to opt in. If an assignment falls within the remit of the Conduct Regulations, you are automatically covered unless you opt out.
Reasons for not opting out of the Conduct Regulations
- You will have a contract via a recruitment agency that you believe may not be reputable
- At intention to switch from ‘temp’ to ‘perm’ rapidly (if you want to do this, you should be up front with the agency)
Contracts where the Conduct Regulations do not apply
The Conduct Regulations only apply to the provision of manpower i.e. ‘bodyshop’ contracts.
They do not apply if the worker does not act for and ‘under the control’ of the end user. In the case of contracts outside IR35 in some cases the applicability of the Conduct Regulations is a moot point, but no one (other than, potentially, Lawyers) benefits from legal uncertainty, so we recommend that opt out documentation is completed for the sake of clarity.
In the case of Managed Projects, the conduct regulations clearly do not apply, but it is still often good housekeeping to have ‘opt out’ documentation on file.