Umbrella company kick back to agency

[force11]

Please can you help with some advice. I am working for an agency called Allen Lane who forced me to work through an umbrella company called First Umbrella. First Umbrella is charging me an extra £30 a day on top of their normal margin which they are paying back to Allen Lane. So basically I am paying Allen Lane £150 a week out of my earnings.

I spoke to another umbrella company who said this is actually illegal as the Conduct of Employment Agencies regulations say you cant charge a contractor. Please can someone confirm whether this is correct? Thank you.

[northernladuk]

Hmm. You can't charge for work finding services or something like that but sure it doesn't cover kick backs. It ought to be illegal though. That's a disgrace.

I'd be quite happy letting my client know what they are up to. Where it's really isn't any of their business what you are charged and the like I'm sure they won't be overly impressed with the agency acting like this. Suggest another agency to them that will charge the client a smaller cut and not have these stupid practices and I'm sure the client will be interested.

We are all aware all this works on kickbacks but it's the first time I've seen the kick back being charged to the contractor.

[TheFaQQer]

Essentially your day rate is £30 less than agreed because of this.

I'd mention to the client that you are thinking about having to terminate the contract because the agency has pretty much forced this cut onto you and go from there.

[cojak]

I'm afraid that performing due diligence includes using google.

http://forums.contractoruk.com/busin...llen-lane.html

The legislation post is on the bottom of this thread.

[force11]

Thanks for your replies. Will have a talk to the client.

[mike67]

The legislation concerning fees is actually the Employment Agencies Act 1973 (the Conduct of Employment Agencies and Employment Regulations 2003 is secondary legislation under this Act). Clause 6(1) of that Act says:

Except in such cases or classes of case as the Secretary of State may prescribe, a person carrying on an employment agency or an employment business shall not demand or directly or indirectly receive from any person any fee for finding him employment or for seeking to find him employment.


From what the OP says, it appears that Allen Lane is receiving a fee for finding him employment, either indirectly (ie from the OP via the umbrella company) or directly (from the umbrella company). The legislation does not just say it is illegal to receive a fee from the work seeker but from "any person", ie charging a fee to the umbrella company for finding employment is also prohibited.

In addition, Regulation 5 of the Conduct Regulations says that:

Neither an agency nor an employment business may make the provision to a work-seeker of work-finding services conditional upon the work-seeker—

(a)using other services for which the Act does not prohibit the charging of a fee, or
(b)hiring or purchasing goods,

whether provided by the agency or the employment business or by any person with whom the agency or employment business is connected.


Even if, for some reason, the Courts decided that the fee charged was legitimate, the OP stated that they were "forced to work through [the specific umbrella company]". This would appear to contravene Regulation 5 as the provision of work finding services has been made conditional on the work seeker using other services ... provided by ... any person with whom the agency is connected.

So this is not just despicable behaviour, but would appear to be illegal as well.

[cojak]

Thanks for the pointer, but I am really loking for an exact statement of the law.

Boo

Here it is:

The Conduct of Employment Agencies and Employment Businesses Regulations 2003

PART VI
CLIENT ACCOUNTS AND CHARGES TO WORK-SEEKERS
Circumstances in which fees may be charged to work-seekers
26.—(1) Subject to paragraphs (3) and (4), the restriction on charging fees to work-seekers contained in section 6(1)(a) of the Act(17) shall not apply in respect of a fee charged by an agency for the service provided by it of finding or seeking to find a work-seeker employment in any of the occupations listed in Schedule 3.

[CJ - Schedule 3 states the entertainment industry, music and that kind of work].

Horses mouth here: The Conduct of Employment Agencies and Employment Businesses Regulations 2003 No. 3319

This is actually a bit of a maze. The original legislation is tucked away in section 6(1) Employment Agencies Act 1973.

http://www.legislation.gov.uk/ukpga/...9730035_en.pdf

6.-(1)Except in such cases or classes of case as the Secretary of State may prescribe,a person carrying on an employment agency or an employment business shall not demand or directly or indirectly receive from any person any fee for finding him employment, or for seeking to find him employment.
(2)Any person who contravenes this section shall be guilty of an offence and liable on summary conviction to a fine not exceeding £400.

BUT HERE'S THE KICKER FOR UNSCRUPULOUS AGENCIES.

They CAN charge for other services such as CV writing, portfolio preparation, training and the like.

So be careful how you meet them or have them 'review' your CV or offer you advice.

This is an excellent translation of the regs:
http://www.bis.gov.uk/files/file24248.pdf

(PS. The TUC got it wrong, only photographic and modelling agencies are now included in the Regs, other media agencies are still out.)



Note the bold bit at the bottom..

[mike67]

Interested in your view Cojak (as clearly the forum expert here!) on the effect of opting out of the Conduct Regulations on this scenario.

My view is that the prohibition on charging fees is contained in the primary legislation, the Employment Agencies Act 1973. The Conduct Regulations support the Act, but whilst you could opt out working through an umbrella company you can only opt out of the Regulations, you cannot opt out of the Act.

Therefore there would be no way to charge fees directly or indirectly regardless of opt out status.

Do you agree?

[BrilloPad]

Please can you help with some advice. I am working for an agency called Allen Lane who forced me to work through an umbrella company called First Umbrella. First Umbrella is charging me an extra £30 a day on top of their normal margin which they are paying back to Allen Lane. So basically I am paying Allen Lane £150 a week out of my earnings.

I spoke to another umbrella company who said this is actually illegal as the Conduct of Employment Agencies regulations say you cant charge a contractor. Please can someone confirm whether this is correct? Thank you.

Do you have proof of that?

[kristen330]

Please can you help with some advice. I am working for an agency called Allen Lane who forced me to work through an umbrella company called First Umbrella. First Umbrella is charging me an extra £30 a day on top of their normal margin which they are paying back to Allen Lane. So basically I am paying Allen Lane £150 a week out of my earnings.

I spoke to another umbrella company who said this is actually illegal as the Conduct of Employment Agencies regulations say you cant charge a contractor. Please can someone confirm whether this is correct? Thank you.

I was in a similar boat but left after my contract finished. Allen lane, I believe, have sown a web of deceit so sophisticated it will be difficult to persuade a court that what they are doing is illegal. It is immoral, no question, but illegal, hard to prove.

I had this agency do the same thing to me. I didn't get the rate I was promised, and the rate I did get had £600/month contractor plus fee taken off. I was put on this scheme against my will and was not able to opt out. It was either "take the job with this fee, or no job". That was the essence of it. As I was desperate for work at the time, I took the job, knowing what was going on was wrong. I've done the maths and I'm probably out of pocket by £30k+ (before taxes) due to this fee. So the £5k fine allen lane would get if they were prosecuted will still have resulted in a significant profit for them. If this behaviour is to be deterred, I think the sum of all what they got in contractor plus since they started the policy +10% would be a deterrent. £5k is peanuts.

My advice to the OP would be to quit ASAP. Don't waste your time. Get yourself a job with a more reputable company with no hidden fees.