Umbrella company kick back to agency

[cojak]

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?

My view is that the opt-out is confused enough in itself (we have two opposing views from BIS), but this legislation is different and you cannot contract your way out of legality and into illegality. So I would agree with you.

BUT all of this discussion is dependant on the enforcement of this dusty little aspect of the law, and after that even if found guilty the maximum fine is only £400.

My ultimate opinion is that dodgy companies can ride roughshod over this legislation without a care in the world.

[SueEllen]

My view is that the opt-out is confused enough in itself (we have two opposing views from BIS), but this legislation is different and you cannot contract your way out of legality and into illegality. So I would agree with you.

BUT all of this discussion is dependant on the enforcement of this dusty little aspect of the law, and after that even if found guilty the maximum fine is only £400.

My ultimate opinion is that dodgy companies can ride roughshod over this legislation without a care in the world.

The trick is to find other things the dodgy companies are doing wrong so they can be raided. Having your records and computers taken means you will lose more money than just what the fine is.

[lucyclarityumbrella]

That is horrendous to charge it on top of the margin to the contractor. The agencies and brollies can have a business arrangement for referrals, but a lot of the respectable agencies have clauses within the B2B contract that state that the brolly cannot charge this on to the contractor.
Personally, I think the decision on what brolly to use should be a choice for the contractor, with the agency then performing due diligence on the brolly to protect them.

[mike67]

BUT all of this discussion is dependant on the enforcement of this dusty little aspect of the law, and after that even if found guilty the maximum fine is only £400.

The maximum fine in the original legislation was £400. But it was amended in 1982 to "not exceeding level 5 on the standard scale" which is £5,000. And that would be £5,000 per offence, so if they are doing this with 100 contractors, that would be potentially £500,000 which makes it more interesting.

[cojak]

The maximum fine in the original legislation was £400. But it was amended in 1982 to "not exceeding level 5 on the standard scale" which is £5,000. And that would be £5,000 per offence, so if they are doing this with 100 contractors, that would be potentially £500,000 which makes it more interesting.

Good to know, but my point on enforcement still stands.

[Fred Bloggs]

Setting aside all the scammy fake brollies, this has to be the worst abuse in the business I've ever seen. Are the REC able to take action? (I guess not?)

[northernladuk]

Anyone contacted the two parties and invited them to respond to this thread?

[lucyclarityumbrella]

Anyone contacted the two parties and invited them to respond to this thread?

I would guess that the only people to ask is the brolly - the agency can simply ask for it - it is likely to be the brolly that is making the decision to charge it on.

[northernladuk]

I would guess that the only people to ask is the brolly - the agency can simply ask for it - it is likely to be the brolly that is making the decision to charge it on.

Absolutely. I just thought seems neither of them are coming out of this smelling of roses I thought one of them might come on and attempt a bit of defence.

Maybe admin will let us link them with anchor text in this particular instance

[cojak]

I suspect that the agency's defence will be to demand that all threads referencing them be removed.