Legal Matters

Although the recruitment industry remains unregulated, over the past 10 years the Government has realised the need for tighter legislation and has subsequently introduced a number of laws, alongside increased resource to enforce standards and compliance.

The EAS enforces the Employment Agencies Act 1973, and the associated Conduct of Employment Agencies and Employment Businesses Regulations, across Great Britain. The Inspectorate has powers to tackle rogue employers through issuing warnings; seeking prosecutions; and prohibiting individuals from running an employment agency for up to 10 years.

We ensure we are fully abreast with forthcoming amendments to legislation which may affect employment and indeed the use of temporary agency labour, protecting our candidates and mitigating the risk of legal exposure to our clients.

Legal Timetable

New ‘owner-employee’ contracts

On 8 October 2012 the Government announced proposals for a new kind of employment contract called an owner-employee contract. In return for giving up certain employment rights, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax.

The law is stated as at 11 October 2012

On 8 October 2012 the Government announced proposals for a new kind of employment contract called an owner-employee contract.

Under the new contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In return they may be required to give up their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off to train and to give 16 weeks’ notice of their date of return from maternity leave, instead of the usual eight weeks.

Owner-employee status will be optional for existing employees, but both established companies and new start-ups will be able to choose to only offer this new contract to new employees. Companies of any size will be able to use this contract and also insert more generous employment conditions into the contract if they want to.

The Government is intending to legislate later in 2012 so that the new contracts can be used from April 2013. A consultation due in October 2012 will include the details of restrictions on forfeiture provisions to ensure that if an employee-owner leaves or is dismissed, the company is not able simply to take the shares back but is able to buy them back at a reasonable price.

Protection of Freedoms Act 2012

Royal Assent 1 May 2012. The Act implements changes to CRB checking and checking against barred lists and the setting up of a new Disclosure and Barring Service.

The Protection of Freedoms Act 2012 implements changes to CRB checking and checking against barred lists. The Criminal Records Bureau will also merge with the Independent Safeguarding Authority to form a new Disclosure and Barring Service (DBS) which will oversee a scaled-back barring scheme focusing only on roles working most closely with vulnerable groups.

On 10 September 2012 the following provisions came into force:

     A new definition of ‘regulated activity’
     The repeal of ‘controlled activity’.
     The repeal of registration and continuous monitoring.
     The minimum age at which a person can apply for a CRB check.

Legal Aid, Sentencing and Punishment of Offenders Act 2012

Royal Assent 1 May 2012. Enacts legal aid and litigation and funding reforms.

Part 1 of the The Legal Aid, Sentencing and Punishment of Offenders Act 2012 which deals with legal aid reforms and Part 2 which deals with litigation and funding will come into force in April 2013. Applies to England and Wales.

Part 2 will implement reforms recommended in the review of civil litigation costs and funding by Lord Jackson and the key proposals are:

     the losing party in any proceedings will not be able to recover conditional fee agreement success (CFA) fees,
     allowing the use of contingency fees or damages-based agreements (DBAs) in most civil litigation.

The period during which a conviction remains live, unspent and has to be declared to prospective employers will be shortened.

Pensions Act 2011

Royal Assent 3 November 2011. Brings forward an increase in the state pension age (SPA) to 66 by October 2020 and women's SPA to 65, in line with men’s SPA, by November 2018. Includes measures to help companies auto-enrol into a pensions scheme.

The law is stated as at 04 October 2012

Key provisions in the Pensions Act 2011 include:

     The state pension age will be increased to 66 by October 2010 and women’s state pension age will
       be increased to 65, in line with men’s state pension age, by November 2018.
     Companies will be allowed to defer automatic enrolment for up to three months.
     Simplifying the new scheme certification process for employers.
     A new higher earnings threshold for automatic enrolment will be introduced and reviewed each year.

The Act and explanatory memorandum are available on the legislation.gov.uk website.

The staged implementation of pensions auto-enrolment began on 1 October 2012.

Welfare Reform Act 2012

Royal Assent 8 March 2012. Aims to simplify the benefits system in order to improve work incentives by removing its complexity and reducing unnecessary administration. Introduces a new Universal Credit.

The law is stated as at 09 March 2012

The Welfare Reform Act 2012l aims to simplify the benefits system in order to improve work incentives by removing its complexity and reducing unnecessary administration. One of the key provisions is the implementation of a new Universal Credit.

Financial Services Act 2010

Royal Assent 8 April 2010. Aims to strengthen and reform financial regulation. Banking remuneration will be made more appropriate and transparent, with a better link between remuneration and effective risk management.

The law is stated as at 08 April 2010

The purpose of the Financial Services Act 2010 is to strengthen and reform financial regulation. Banking remuneration will be made more appropriate and transparent, with a better link between remuneration and effective risk management. Applies to the UK.

Identity Documents Act 2010

Identity cards will cease to be valid legal documents on 21 January 2011 and the National Identity Register will be destroyed by 21 February 2011.

Under the Act:

     identity cards will cease to be valid legal documents 21 January 2011
     the National Identity Register will be destroyed by 21 February 2011.

More information on the decommissioning of identity cards is available on the Identity and Passport Service (IPS) website. IPS website

Apprenticeships, Skills Children and Learning Act 2009

Royal Assent 12 November 2009. Brought in the right to request time off for training in 2010. Will establish the first statutory entitlement to apprenticeships from 2013.

The law is stated as at 21 March 2012

Main provisions of the Act include:

     The provision of a statutory basis for the apprenticeship programme.
     Creation of a new National Apprenticeships Service.
     Establishing the first statutory entitlement to apprenticeships for all suitably qualified young people from
       2013.
     Making the apprenticeship relationship a contract of service, not an apprenticeship, giving the apprentice
       greater legal protection.
     Strengthen workplace skills training by creating a right for employees to request from their employer time to undertake relevant training - see below.

Most of the provisions contained in the Act extend to England and Wales only

Key Legislation

National Minimum Wage

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. It doesn’t matter how small an employer is, they still have to pay the minimum wage. The minimum wage rate depends on a worker’s age and if they’re an apprentice.

The National Minimum Wage rates from 1st October 2012 are:
     £6.19 an hour for workers aged 21 and over
     £4.98 an hour for workers aged 18 to 20
     £3.68 an hour for workers aged 16 to 17
     £2.65 an hour for apprentice

Who gets the minimum wage

Workers must be school leaving age (usually 16) or over to get the minimum wage. Contracts for payments below the minimum wage are not legally binding. The worker is still entitled to the National Minimum Wage. Workers are also entitled to the minimum wage if they are:
     part-time
     casual labourers, eg someone hired for 1 day
     agency workers
     workers and homeworkers paid by the number of items the make
     apprentices in their first year or 19 and under
     trainees, workers on probation
     disabled workers
     agricultural workers
     foreign workers
     seafarers
     offshore workers

Who is not entitled to the minimum wage

The following types of workers aren’t entitled to the minimum wage:
     self-employed people
     company directors
     volunteers or voluntary workers
     workers on a government employment programme, eg the Work Programme
     family members of the employer living in the employer’s home
     workers younger than school leaving age (usually 16)
     higher and further education students on a work placement up to 1 year
     workers on government pre-apprenticeships schemes
     people on the following European Union programmes: Leonardo da Vinci, Youth in Action, Erasmus, Comenius
     people working in a Jobcentre Plus Work trial for 6 weeks
     members of the armed forces
     share fishermen
     prisoners
     people living and working in a religious community

You won’t get minimum wage if you’re:
     a student doing work experience as part of a higher education course
     of compulsory school age (usually 16)
     a volunteer or doing voluntary work
     on a government or European programme
     work shadowing

Voluntary work

You’re classed as doing voluntary work if you can only get certain limited benefits (eg reasonable travel or lunch expenses) and you’re working for a:
     charity
     voluntary organisation or associated fund-raising body
     statutory body