The Compliant World

Tania Bowers, General Counsel at APSCo surveys the multi-faceted challenge of being compliant

Amid today’s culture of transparency and accountability – and against a backdrop of continually evolving legislation – ensuring recruiters are up to speed on best practice compliance is business critical. Your clients expect your recruiters to have a detailed legal understanding to guide and support them, and expect you to indemnify them if something goes wrong. However, anecdotal research from APSCo suggests that some recruitment leaders are less than confident that their teams on the ground are compliant 100 per cent of the time.

Equality, diversity & discrimination

Legally, businesses have a responsibility to support jobseekers and employees with protected characteristics under the 2010 Equality Act. Protected characteristics include: age; gender; disability including mental health; marriage & civil partnership; pregnancy & maternity; race; religion & belief and sexual orientation. Looking at disability specifically, it is worth noting that individuals don’t have to have a specific mental health condition to get protection under the Act, rather demonstrate that their mental health has a substantial, adverse, and long term effect on their normal day-to-day activities. This can include conditions such as stress and anxiety. While firms may be committed to diversity and inclusion at organisational level, leaders must ensure that robust processes are put in place to ensure compliance on the ground, and that all recruiters are working in a way that is inclusive to diverse talent. The Act sets out the different ways in which it’s unlawful to treat someone – and off-the-cuff questions which may seem innocent could actually be out of bounds. For example, discussing a candidate’s health, asking who they live with or even what year they left school. Strategies that promote workplace equality by reducing discrimination and harassment can minimise a company’s risk of financial and reputational loss from lawsuits caused by discriminatory conduct. They also reduce the negative impact discriminatory behaviour has on organisational performance. For example, according to figures released by the Ministry of Justice, in 2018/19, 9,336 claims of sex discrimination were brought before an employment tribunal in the UK – representing a year on year increase of 69 per cent. Of those, 8,445 claims were successfully won by the employee, putting the employer national average win rate at just 10 per cent. With this in mind, introducing a checklist for bias, and ensuring that all employees are trained on D&I is vital.

Conduct regulations

The Conduct of Employment Agencies and Employment Businesses Regulations 2003, often referred to as the Conduct Regulations or the Conduct Regs, provide a framework of minimum standards that govern the conduct of the recruitment industry, including job boards, in the UK. Designed to improve the effectiveness of the enforcement of employment rights to protect vulnerable workers from exploitation, these are focused on protecting lower skilled, lower paid workers but apply across the whole recruitment market. All workers to whom a recruitment firm provides permanent or temporary work finding services are within the scope of the Conduct Regulations, regardless of the supply model they work through. However, contractors supplying services through a limited company may opt-out of the Conduct Regulations. A valid opt-out includes an agreement, signed by the contractor and the limited company before the start date of the assignment. If a recruiter has an opt-out process it must be fully compliant with the Conduct Reg requirements to be effective.

Umbrella compliance

It is widely believed that umbrella company usage is set to soar in 2020 following changes to off-payroll working in the private sector, and it is vital that anyone seeking to engage an umbrella company ensures that they are able to differentiate between ethical providers and those which sell non-compliant solutions. However, previous research from APSCo has found that one in four recruiters (24 per cent) are not confident that the umbrella companies they partner with are compliant – despite the vast majority (92 per cent) working with these type of business. While recruitment firms must always be careful not to recommend an umbrella, creating a Preferred Supplier List is a useful way to limit risk. Firms may choose to produce their own PSL or simply choose to use umbrella companies that already have an accreditation. We advise our members that setting up a successful PSL system takes time and, requires a robust auditing and due diligence process. All APSCo affiliate umbrella companies commit to a strict code of conduct and undergo a rigorous application process. They are also required to undertake a regular independent compliance audit which is carried out by one of four equally robust providers: Saffery Champness; EY; Professional Passport or hold current FCSA membership.

Off-payroll working

While I think it is fair to say that incoming IR35 reforms have not necessarily been welcomed by the vast majority of recruiters, the good news is that the Treasury has recently released a compliance statement which confirmed that HMRC will take a ‘light touch’ approach to penalising businesses for the first year, suggesting that only companies which deliberately don’t comply will face penalties. This so called ‘soft landing’ does offer some welcome relief for firms who may be facing challenges when it comes to implementing appropriate processes to manage contingent workers, or ensuring that new systems are compliant. However, recruiters who haven’t already must get up to speed on the new rules – and quickly. Make no mistake, your clients expect your firm to be able to help them evolve their workforce in a post-IR35 landscape. Good recruiters are happy to place genuine contractors outside of IR35 and are able to help the businesses they partner with to navigate the new landscape – but recruiters must be in a position to do this in a compliant way. The best firms will have sufficient knowledge within their teams to work with employers to identify legitimate contractors, determine the status of these individuals and advise on contracts accordingly, helping clients to overcome reasonable care requirements.

A commitment to confidentiality

GDPR is a business critical area with multiple touch points for recruiters. Put simply, you are in the business of using the personal data of clients and candidates to make introductions and arrange placements. You may also employ large workforces about whom you hold and process considerable amounts of personal data. There is no escaping the fact that, while robust processes may be in place to manage how staff collect, store, use and share data, individual consultants may be inadvertently responsible for data breaches if they are not trained sufficiently. It is crucial that everyone in the team understands that client data is personal data. Even an individual’s business email address can be considered personal information as GDPR defines ‘personal data’ as any information which may be attributed to an identified, or identifiable, individual and relates to that individual. This also means that data relating to an IP address, personal identification number, or account identification number is personal data in exactly the same way as information relating to a name, identity, or physical address.

Compliance as a key differentiator

Successful recruitment leaders have extensive experience in navigating complex legislation, but ensuring that this know-how is disseminated through the wider sales and support teams is crucial to running a compliant business. APSCo has just launched a new online training course, which enables those who pass the final exam to gain the APSCo Compliance+ Recruiter accreditation. In a first for the sector, and in conjunction with Recruitment Juice, the programme covers: the legalities around essential acts & regulations; equality, diversity & discrimination; Conduct Regulations; umbrella compliance; IR35; and GDPR & Data Protection. Your clients expect to work with knowledgeable, competent and compliant recruiters and support staff who are able to add value to their business. Training staff on compliance can provide a competitive advantage as well as peace of mind. Good, profitable business is compliant business

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