Regulating temping agencies

Are temping agencies good or bad? That depends. If run properly, staffing agencies can offer great advantages to both job seekers and businesses, pairing up both of them with the right solution. However, on the flipside, a lot of staffing agencies seem like undesired middlemen who end up costing both businesses and employees too much money on their books.

The government will be legislating to regulate temping agencies that import foreign workers while incentivising those that are serious. A temping agency provides contract workers to local companies. Such workers are subcontracted to companies but are technically employed by recruitment agencies.

Many third-country nationals have spoken out about the abuse and exploitation they faced from such agencies. In November of last year, Parliamentary Secretary Andy Ellul said talks were under way to regulate these agencies and that unlicensed temporary employment agencies could be barred from bidding for public contracts.

It is about time that temping agencies are strictly regulated, yet one may easily understand that legal language may be confusing, so reviewing any of the acts and addenda that the eventual law may carry may help in understanding the fundamentals.

One frequent assumption about the recruitment market up until some time ago was that agencies should not be held accountable. Obviously, with the law in question, this will no longer be the case. Instead, recruitment agencies will be strictly regulated and must follow a set of legislative guidelines.

One expects that it will be prohibited to charge candidates for job placement. Job searchers can expect to pay the price only if they want to employ an additional service, such as CV writing or career counselling. Equally to be expected is that agency workers must be furnished with a documented contract. This must contain information on compensation, notice period, holiday entitlement and whether they work under a service or employment contract.

Agency workers’ pay cannot be withheld. Even if the employer is dissatisfied, the disagreement is between the employer and the agency. Agencies must verify candidates’ fitness. Recruiters are legally mandated to screen candidates to ensure they have the necessary skills and credentials. It must be evident that a recruitment agency is advertising the post. This notifies the candidate that they are not applying directly to the company.

Regarding staffing, recruitment agencies should declare any payments received if PAYE is not used and submit information about the employees and why PAYE was not implemented. In other words, they must declare it if they provide labour but do not collect income tax.

When hiring employees, employers and recruiters are not permitted to use prejudice. Age, gender, ethnicity, religion and marital status are protected traits. Even if a business outsources its hiring to a recruitment company, they are still liable if the recruiter violates the law.

Like any other company that gathers personal information, recruitment agencies are subject to the Data Protection Act. A recruitment company, in particular, must exercise caution in maintaining company and applicant data.

This latest initiative by the government to regulate temping agencies reflects the acknowledgement of the growing role played by private recruitment agencies in matching workers with available jobs and their potential to promote labour market efficiency. However, it also recognises the need for the government to regulate and monitor the activities of private employment agencies in an effort to prevent abusive practices and ensure the protection of migrant workers’ rights.

Although the state will bear the primary responsibility for monitoring recruitment regulations, social partners (i.e., trade unions and employers’ organisations) as well as non-governmental organisations can contribute to recruitment monitoring through self-regulation mechanisms, awareness-raising and advocacy campaigns.

Even before introducing new legislation governing the operation of private employment agencies, the government should be required to develop a monitoring and enforcing mechanism that ensures that all market actors meet the requirements. Licensing fees should be part of this mechanism. Monitoring and law enforcement can be carried out by the licensing authority or by regular labour inspection units and the police in the case of criminal activities. In order to operate effectively, law enforcement officials must have clear benchmarks and standards against which the performance of private employment agencies and other types of agencies can be evaluated. The conditions and criteria stipulated in the license can be used for this purpose, along with codes of conduct and relevant labour and immigration laws.

Of course, there are downsides. Every company needs to make money to keep the lights on in the office. Temp agencies charge employers a fee for the services provided in order to stay in business. Although the fees ultimately save the company money in human resources costs, businesses are always looking for the best deal. A temp agency that has higher overhead to maintain a higher-quality talent pool may lose company clients to competitors charging less.

Temp agencies need to be aware of economic trends and be willing to negotiate fees with clients to retain long-term relationships. Temporary work agencies can make money by charging employers for all the services they provide. For example, a temp agency may charge businesses for recruiting, screening, testing and placing workers at their locations, as well as performing administrative and human resource duties.

The need for temporary work agencies will increase. Businesses will be outsourcing their human resource needs to companies that are experienced in recruiting, interviewing and screening potential employees. Workers are also using temp agencies more.