Regulations for Recruitment Agencies: What You Need to Know

21 Jun 2020

Starting Your Own Recruitment Agency

If you’ve decided to start your own recruitment agency, then chances are you’ve begun looking at building up a client list and many of the other logistics.

However, are you aware of the different regulations that you must comply with? If you’re starting your own agency after working for a big player, it could be that these things were handled by someone else.

To help we’ve broken down the most important regulations, however do bear in mind there may be others specific to the industry you’re recruiting within:

Employment Agencies Act

Firstly your business must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Business Regulations 2003. They might be some old pieces of legislation, but they’re still very relevant.

Read both of the acts in full and note the different stipulations, such as the fact that you can’t charge people for helping them to find work and also that you must make it clear that you’re a recruiter when advertising a vacancy.

These regulations are enforced by the Employment Agencies Standards Inspectorate. If anyone makes a complaint against your agency for any reason, they have the power to enter your premises and even prosecute your business if they have reason.

The Income Tax (Pay As You Earn) Regulations 2015

Whether you’re employing staff within your agency or you’re simply suppling them, you of course need to familiarise yourself with The Income Tax Regulations 2015. Ensure you read everything in detail so you know how to keep your records and exactly what needs to be reported. also has a vast amount of useful information for recruitment agencies, including guidance if you’re planning to supply workers outside the UK.

National Minimum Wage and National Living Wage Rates

The rates for the National Minimum Wage and National Living Wage are updated every April, and employers will expect you to have the information to hand. There are different bands depending on the age of the employee.

Agency Worker Regulations 2010

If you plan to supply agency workers then you’ll need to comply with the Agency Worker Regulations 2010. These regulations protect agency workers from discrimination in the workplace. It ensures they’re paid fairly and, after a 12 week period, given the same rights as an employee, such as holiday entitlement and rights during pregnancy.

Equality Act 2010

As a recruiter you must not show any form of discrimination, as laid out in the Equality Act 2010. This is defined by a number of protected characteristics, such as sex, religion, age and marital status.

Not only must you as a recruiter comply with this act, but also any company that you work with, so look carefully at your responsibilities.

Working Time Regulations (1998)

When you’re supplying staff to a company it’s essential that you’re aware of The Working Time Regulations (1998), and you ensure they’re compliant, too. This relates to the number of breaks allowed as well as an employee’s right to annual leave.


In 2018, GDPR (or General Data Protection Regulation) was introduced to replace the Data Protection Act. It offers full protection to both your clients and candidates in terms of how you store and subsequently use their data.

It’s so important that you familiarise yourself and comply with these guidelines, as misuse can lead to heavy penalties.

CAP Non-broadcast Code

When it comes to advertising any vacancies or sending out marketing materials to clients or candidates, you must ensure you’re compliant with the CAP Code.

It ensures that ads do not intentionally mislead consumers. For example, all jobs advertised must be real and not merely for candidate data collection.

Recruitment and Employment Confederation (REC)

Though it’s not essential to be a member of the REC, it has a strong reputation within the industry and builds your credibility. They offer support to recruitment agencies in a number of different ways, including offering legal support and advice, running different relevant events and providing unlimited business resources to help you grow your agency.

Here at New Millenia we’re always here to offer support and guidance if you’re considering starting your own recruitment agency. We offer 100% recruitment financing, get in touch to find out more.

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