Regulation and the recruitment industry

14 Sep 2017


One common misconception that is bandied about is that the recruitment industry isn’t effectively regulated.

This couldn’t be further from the truth – and we’ve recently produced a factsheet to explain how the recruitment industry is regulated.

REC members must comply with our Code of Professional Practice

REC members must comply with our Code of Professional Practice, which means that clients and candidates can be assured that when they work with REC members they are dealing with an agency which is committed to upholding the highest operational and professional standards.

All agencies, whether or not they are REC members, must follow two pieces of legislation, the Employment Agencies Act 1973 (EAA) and the Conduct of Employment Agencies and Employment Business Regulations 2003 (Conduct Regulations).

For example, these regulations prohibit an agency from charging candidates, from preventing an agency worker working somewhere else, and from supplying workers to cover during industrial action.

The Employment Agencies Standards Inspectorate (EAS)

These regulations are enforced by the EAS, which responds to complaints as well as undertaking proactive operations. If an agency breaches, and fails to comply with the EAS, the regulations penalties could include an unlimited fine and/or a prohibition order.

If you wish to make a complaint about an agency, contact Acas for advice on 0300 123 1100 and they will, if appropriate, pass the call on to EAS. Complaints can also be made online  or you can email

The Gangmasters and Labour Abuse Authority (GLAA)

In certain sectors (agriculture, horticulture, and shellfish gathering) agencies require a licence from the GLAA. The supply or use of labour in these sectors without a licence is a criminal offence.

In April, the remit of the GLAA expanded to regulate labour market offences for all sectors of the economy, with new police-style enforcement powers, but with no extension to the number of sectors in their licencing remit.

Her Majesty’s Revenue and Customs (HMRC)

The National Minimum Wage Unit in HMRC ensures that all employers (including agencies) pay the National Living Wage and National Minimum Wage. We recently worked with them to produce a guide for recruiters to ensure that agencies understand the rules related to the National Living Wage.

New enforcement powers for more serious offences

The recently introduced Labour Market Enforcement (LME) undertakings and orders further strengthen EAS, GLAA and the HMRC NMW Unit’s enforcement powers. An LME undertaking sets out measures the agency must take to ensure they are compliant and can be sought by any of the three enforcement bodies if a ‘trigger offence’ is committed.

Breach of an LME order can result in a fine and/ or a sentence of up to two years imprisonment.

If the LME Undertaking is rejected or breached, the enforcement body can apply to a court for an LME order. Breach of an LME order can result in a fine and/ or a sentence of up to two years imprisonment.


Director of Labour Market Enforcement (DLME)

The Director of Labour Market Enforcement (DLME) ensures that all three of these bodies work more closely together and share intelligence.

The first ever Director was appointed in January this year, Sir David Metcalf (formerly of the Migration Advisory Committee) who set out his Introductory Report and initial consultation in July. This lays out his vision for the three enforcement bodies and sets out a number of questions which he is looking at.

This is a very welcome and timely consultation and the REC will be formally responding on behalf of the industry. We have already been working closely with the Director’s team and will be holding a roundtable with him and members on the 20th September.

If you would like to attend please let me know by emailing

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