Recruitment business compliance: What do you need to know?

recruitment business compliance

8th April 2021

Any regular visitors to our blog will know that contractor and recruitment business compliance is becoming increasingly complex as global authorities continue to take action against unscrupulous behaviour. And with both the global pandemic and post-Brexit confusion still rife, ensuring your recruitment business and the contractors it places abide by local and international laws isn’t simple.

With uncertainty and complexity facing international recruitment businesses, 6CATS International CEO and Founder of 6CATSPRO, Michelle Reilly, shared her views on the upcoming compliance challenges facing recruiters with Global Recruiter magazine. Here’s a rundown of what she had to say.

Adapting in a Covid-hit environment

As we’ve mentioned in previous blogs, the on-going pandemic has presented numerous challenges for recruitment businesses tapping into the international contractor market. Travel restrictions in particular have created a compliance headache that some recruiters may be unaware of.

The idea of quarantining after travel, for example, is something that many of us may now expect. However, this does create an issue when it comes to contractor payments. While in quarantine, these temporary professionals understandably don’t want to lose any remuneration, so we do expect to continue to see quarantine pay stipulated in a number of contracts. Given the severity of the spread of the disease and potential for individuals to be hospitalised, having the appropriate health insurance is also now more important for contractors – in fact we are seeing many instances where end-clients stipulate that this is a necessity in contracts.

Making a move into international markers

We’ve also begun to see more UK agencies moving into international markets which can cause two serious problems for any firms choosing to do so without the proper guidance. In the first instance it’s important to highlight that the attempted use of UK Agency Worker Regulation (AWR) contracts for international contractors does not work and offers zero protection for the individual and recruiter. Note as well that a contractor on an employed solution has to be paid in the currency of the country in which they are operating.

Rather unfortunately, we have seen a concerning increase in the number of unscrupulous management companies offering impossibly high retentions to contractors along with a practice which has been borrowed from certain UK umbrellas to offer to pay for contractors’ referrals in the form of incentives. Staffing companies need to be aware that these are dangerous for the contractor, the agency and the end-client and are a clear breach of the Criminal Finances Act, so should be avoided at all costs.

Navigating Brexit developments

While the end of the Brexit transition period has come and gone, it is causing significant issues in that agencies can no longer simply place UK contractors into EU roles. A recruiter seeking to place a UK national in Europe will now need to ensure that the individual has obtained the appropriate work permit. However, these are not easy to gain and the process can be time consuming – taking up to three months to acquire in some cases – or impossible!

It’s not possible to simply have a ‘European’ visa that covers contractors for every EU location. And visa requirements will vary across destinations. While the European Union is a collective authority, each location has varied requirements for these visas and the timescales to securing them will differ.

Those with no prior experience working across the two jurisdictions should also be aware that a UK national operating under a UK-registered PSC in an EU country is likely to be working unlawfully. The use of A1 certificates – which allow the holder to work in the host country but stay within their home country’s social security system – is not recommended anywhere in the EU, is illegal in several and could result in potential penalties for the individual and the agency if used.

Every business will be impacted differently by Brexit, with those with prior experience of tapping into non-EU contract placements likely to already have the set up in place and relevant knowledge to transition into the new requirements relatively easily. However, for those who are essentially starting from scratch, robust compliance needs to be built into the process from the start.

An impact on UK contractors

Given the challenges of sourcing contractors across the UK and EU, it is likely that we will see a temporary decline in the number of EU-based recruitment agencies contracting UK workers. On the flip-side, though, we do expect that those non-EU workers based in Europe who already hold the required ‘right to remain’ or ‘right to work’ documents will still be utilised by many firms.

While Brexit has created a compliance challenge in itself, there are other legal requirements when placing contractors from the UK into Europe that have existed for some time. Agencies with prior experience of working between the two jurisdictions should already be aware of this, but for those tapping into the European market for the first time, it’s important to know what other requirements their contractors will be subject to, beyond the right visa.

Recruitment business compliance: seek guidance

International contractor recruitment has always been complex and this will only increase in the future. But the global market presents a wealth of lucrative opportunities for recruiters that can’t be ignored. Getting the right compliance process in place now will help set staffing businesses up for the best possible growth in the future.

Contact our expert team to find out more.

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