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The laws and regulations recruiters absolutely need to know about

Need an introduction to recruitment agency regulations? Agency Central has you covered.

We know that legal jargon can be overwhelming, that’s why we’ve looked through all those little acts and addendums to help you out with the basics.

So take a look at our guide to agency laws and make sure your business is legally compliant.

Is the recruitment industry regulated?

One common misconception about the recruitment industry is that agencies have no real accountability – but this isn’t true.

Recruitment agencies are tightly regulated and must comply with a series of statutory rules. 

Do recruitment agencies need a licence?  

While the industry is regulated, most agencies won’t require a licence in order to operate – but there are some exceptions. 

If an agency provides workers to the agriculture, horticulture or food processing / packaging sectors, then it will need a licence from the Gangmaster and Labour Abuse Authority (GLAA)

The GLAA is an organisation that aims to improve health & safety and reduce the exploitation of workers. 

“The REC is the leading professional body in the market and has more than 10,500 individual members – as well as 3,500 businesses.”

Another industry that may require a licence is care, specifically nursing. Agencies in this specialism may have to register with the Care Quality Commission (CQC)

What are the recruitment agency regulations?

All recruitment agencies must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003.

Making up part of UK agency worker law, the Employment Agencies Act 1973 was originally introduced as a means of licensing businesses in the recruitment industry. 

While agencies are no longer required to have this licence (due to the Deregulation and Contracting Out Act 1994, later replaced by the Regulatory Reform Act 2001), the regulations still remain.

Employment legislation: some key points

While you should probably read the Employment Agencies Act to make sure you’re fully compliant, we’ve broken down some of the key points.

It is illegal to charge candidates for finding them work. Job seekers can only expect to pay a fee if they decide to use an additional service such as CV writing or career guidance. 

A written contract must be provided to agency workers. This must include details about pay, notice period, holiday entitlement and whether they’re working under a contract for services or a contract of employment.   

Pay for agency workers can’t be withheld. Even if the employer is unhappy with the worker or work provided, the dispute is between the employer and the agency. 

Agencies must check candidate suitability. This sounds obvious, but recruiters are legally obligated to screen candidates to make sure they have the skills and qualifications required for the role. 

It must be clear that it is a recruitment agency that’s advertising a vacancy. This informs the candidate that they’re not applying directly to the employer and is important for recruiters to remember when writing a job ad

What other laws do recruiters need to know about?

HMRC: The Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2015

When it comes to supplying staff, recruitment agencies are expected to report any payments made where they don’t operate PAYE. They also need to provide details of the workers and why PAYE wasn’t used. In other words, if you supply workers but don’t deal with income tax, then you need to report it. 

Agency Worker Regulations (AWR)

AWR applies to temporary agency workers and are designed to restrict discrimination in the workplace. These regulations ensure that temp workers are afforded the same pay, holiday and working conditions as permanent staff – although workers often have to work 12 weeks before receiving full rights. 

Equality Act 2010

While this covers employment in general, the Equality Act 2010 also applies to recruitment. Employers and recruiters aren’t able to display any form of discrimination when it comes to hiring staff. Protected characteristics include age, sex, race, religion and marital status. Even if an employer outsources their hiring to an agency, they are still culpable if the recruiter breaks this law. 

One common misconception about the recruitment industry is that agencies have no real accountability – but this isn’t true. Recruitment agencies are tightly regulated and must comply with a series of statutory rules.

Data Protection Act 1998 (superseded by DPA 2018

Like any business that collects personal information, recruitment agencies are required to follow the Data Protection Act. In particular, a recruitment agency has to be careful of how it manages employer and candidate data. 


The General Data Protection Regulation was introduced by EU law and works alongside the UK Data Protection Act. GDPR means that candidates have to give consent for data to be collected and can choose to object. It also gives them the power to request for data to be deleted.  

UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code)

The CAP Code outlines rules in regards to advertising and marketing communications. In this instance, the CAP Code makes it clear to agencies and employers that job ads must be real, mustn’t be misleading and must make it explicit who is advertising it (i.e. is the role being marketed by an agency?).

Who are the recruitment regulatory bodies?

Recruitment industry regulations are enforced by the Employment Agencies Standards Inspectorate (EAS)

Part of the Business, Enterprise and Regulatory Reform, the EAS was set up to ensure that the provisions laid out in the Employment Agencies Act 1973 are being adhered to. 

Inspectors are obliged to investigate every relevant complaint and they even have the power to enter premises and prosecute agencies. 

While the EAS tend to deal with complaints, and can apply to prohibit people from running an agency, there are other bodies that help maintain high industry standards. 

Recruitment and Employment Confederation (REC) and the Associate of Professional Staffing Companies (APSCo)

There are a number of membership bodies for recruitment agencies but the two biggest are the Recruitment and Employment Confederation (REC) and the Associate of Professional Staffing Companies (APSCo).

These organisations offer support to agencies and ensure that high standards are maintained across the sector. 

The REC is the leading professional body in the market and has more than 10,500 individual members – as well as 3,500 businesses. 

Members must follow a Code of Professional Practice and agencies are required to pass a compliance test every two years. 

APSCo is a similar body to the REC and has its own Code of Conduct. All member agencies are expected to agree to this before joining. 

The REC and APSCo (as well as the other bodies) offer a range of benefits to their members. You can visit their websites to find out more. 

To end… 

Laws and regulations aren’t always the easiest thing to get your head around, but our quick guide will hopefully give you an insight into the main acts you need to know about. 

Please note, this article has been produced only as a guide and should not be taken as legal advice. Agency Central is not responsible for the consequences of any actions taken as a result of reading this post. 


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