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The Conduct of Employment Agencies and Business Regulations 2002
Sec 19 Neither an agency nor an employment business may introduce or supply a work-seeker to a hirer unless it has obtained confirmation –
(a) the identity of the work-seeker
(b) (b) the work seeker has the experience, training, qualifications and any authorisation which the hirer considers are necessary, OR WHICH ARE REQUIRED BY LAW or any professional body, to work in the position which the hirer seeks to fill…
Sec 20. (1) Neither an agency nor an employment business may introduce or supply a work-seeker to a hirer unless the agency or employment business has –
(a) taken all such steps, as are reasonably practicable, to ensure that the work seeker and the hirer are each aware of any requirements imposed by law, or any professional body, which must be satisfied by the hirer or the work-seeker to enable the work seeker to work for the hirer in the position which the hirer seeks to fill;
The 'Act' means The Employment Agencies Act 1973
Consequences of failure to comply with the regulations
There are several potential consequences of failure to comply with the regulations. Considered together, they are formidable – in short, the company and any responsible individuals may be prosecuted; orders may be made (against either) prohibiting the carrying on of future EA and EB business; terms of contracts may be unenforceable; and there may also be civil liability. Taken together, these consequences may be taken to represent a heavy sledgehammer.
Criminal
Under the terms of the Act itself (s5(2)), failure to comply with any regulation made under the Act is a criminal offence, and may be the subject of prosecution. The potential penalty is a substantial fine.
Additionally, the Act provides that where an offence committed by a company has been committed with the consent, connivance, or as a result of neglect on the part of a director, manager, (company) secretary or other officer, the individual is also liable to prosecution.
Prohibition
There are powers whereby proceedings may be brought to seek an order prohibiting a person from carrying on the business of EA or EB. The prohibition may last as long as 10 years.
Failing to comply with a prohibition order is also an offence.
Civil liability
Any failure to comply with the regulations may give rise to a civil claim by someone who has suffered loss as a result of that failure
Overall, it must be clear that it is essential for all those carrying on business in the field to ensure that all reasonable steps are taken to understand the regulations, and to ensure compliance.
It remains to be seen whether the regulations will have significant effects on either (a) willingness of insurers to offer professional indemnity cover – and of course, premiums; and (b) perhaps more seriously, the degree of risk perceived by those companies who offer financial support to EA/EBs (particularly to EBs, who may be wholly dependent on such support for their very survival in order to fund payment of work-seekers before they themselves receive payment from hirers), whether by factoring or otherwise – and the influence that may have on their willingness to continue to do so on no worse terms.
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