‘Opting Out’ of the Conduct Regulations – What’s in it for the Contractor?
The ‘Conduct of Employment Agencies & Employment Businesses Regulations 2003’ were introduced to protect vulnerable workers from exploitation, ensuring they are paid a living wage and have a clear understanding of the services that the staffing company provides. Realising however that the provisions of the regulations may be detrimental to professional contractors the government allowed such contractors to ‘opt out’ of the regulations, subject to safeguards.
The vast majority of the Contractors, Consultants and Interim Managers that work through Technology Resourcing however are highly skilled and well paid professionals who enter into ‘business to business’ or ‘service’ arrangements rather than contracts of employment.
Who Can ‘Opt Out’
Any contractor can ‘opt out’ of the regulations unless they work with children or vulnerable people.
Advantages of ‘Opting Out’
- Tax advantages – the regulations make reference to the e worker being under the ‘control’ of the client. If a Ltd Company Contractor is operating outside of IR35 legislation choosing to ‘opt out’ may help your tax position as this will allow a contract to be written with ‘business to business’ type clauses being used indicating a commercial relationship with the client.
These clauses are prohibited when ‘opting in’ under the regulations.
- Reduced administration – the administrative requirements of the regulations are burdensome. A contractor that chooses to ‘opt out’ of the regulations may avoid the requirement to provide documentary evidence as to their experience, training , qualifications and professional authorisations automatically required under the regulations.
- Client preference – some clients may specify that they only want contractors who have ‘opted out’ of the regulations because in simple terms, it allows them to reduce their administration, protect themselves against expensive employment rights claims and protect their legitimate confidential business interests.
It is important to note however, that we do not make our provision of work-finding services conditional upon an ‘opt out’ being exercised and if you are uncertain as to the effect of ‘opting out’, you should obtain independent, professional advice from an accountant or solicitor.
How Can I ‘Opt Out’
In order to ‘opt out’ of the regulations, a contractor and the limited company need to give notice to us, prior to starting an assignment, stating that they do not want the regulations to apply. Please note – a notice that is given during an assignment will not take effect until that assignment has ended. An ‘opt out’ notice can be withdrawn, although if withdrawn once the assignment has commenced, it will only take effect after that assignment has ended.
FAQs from Contractors:
Q. Do I have to opt-out for Technology Resourcing to find me assignments?
A. No, it is your choice.
Q. I’ve heard that if I don’t opt-out Technology Resourcing cannot impose restrictions on me going temp-to-perm or temp-to-temp, surely that’s a very good reason for me not to opt-out?
A. True, if you do not opt out of the Conduct Regulations Technology Resourcing cannot restrict you going temp-to-perm or temp-to-temp. However, most clients require Technology Resourcing to restrict contractors from taking up assignments, which may cause a conflict of interest with the assignment for that particular client. This means that Technology Resourcing would not be able to offer you assignments with those clients unless you have opted out, reducing the number of assignments open to you. In addition, if you opt out, Technology Resourcing only restricts you for the term of the assignment and for 3 months after expiry or termination of the assignment. After that you are free to provide services without restriction.
Q. Can I opt back in if I change my mind?
A. Yes, but not in relation to the assignment you are working on, only for the next assignment if it is a different “position”. You must opt out before supply commences. If you have opted out, but have not commenced supply of services, you can opt back in again, but Technology Resourcing would have to give you a different contract, and you may not be able to take up the assignment if it is an “opt-out only” assignment.
Q. What’s in it for Technology Resourcing if I opt-out?
A. It reduces Technology Resourcing’s administrative burden and record keeping requirements and means that Technology Resourcing has greater scope to charge clients temp-to-perm and temp-to temp fees and hence recover the loss of contractor revenue. From your point of view, you will always receive excellent service from Technology Resourcing whether or not you choose to opt-out.
Q. Can I agree to opt out by email?
A. Yes. Remember that agreement to opt out must be given by the limited company contractor and the consultant.