Much talk lately about opting in (or out) of the Conduct of Employment Agency and Employment Business Regulations 2003 and later amendments (hereinafter called “The Regs”!), much of it conflicting. Latest nonsense is Capita apparently saying that you have to either opt out or take a PAYE contract, which is patent nonsense (and, incidentally, illegal, for reasons that will become clear).
Firstly, The Regs are a good thing. They exist to protect vulnerable workers such as casual labourers, office temps, assorted low-grade locums and a whole range of people. They are not explicitly aimed at comparatively high-earning, informed and independent freelancers like us (well, me, anyway…).
Secondly the provision of the Opt Out is a good thing. Without it, many small businesses would be in scope and that would limit their ability to expand and employ others, among other things. PCG negotiated the opt out for very good reason. Also, despite the woolly wording, the opt out takes you out of the whole of the Regs, not just bits of it.
Nobody can make you opt out. It is entirely your decision and that of YourCo. It cannot be made conditional in any way. The only difference is that the agency will have two flavours of contract since they have different responsibilities to meet depending on your status.
It is absolutely nothing at all to do with IR35 and has no impact on your status.
You can’t opt out once you’ve been introduced to the client. Despite what agencies think, this means, in effect, as soon as the client knows who you are which for most of us means the interview stage (the real agency worker won’t have an interview, they just turn up on the Monday morning). So the only real way to do it is to send an Opt Out letter with your original application: you can always opt in later. If you don’t send that original letter, you’re opted in and that’s it.
Commercially, opting in gives you two “benefits”, a reduced handcuff clause and stronger guarantees of payment. Neither, in the real world, actually confer much benefit to be honest.
However, opt out and some good things happen. You can have a far more IR35-friendly contract. The agency has less work to do. The Agency doesn’t actually have to perform all those tedious ID and residency checks, although none of them seem to have realised that yet.
Finally I have argued that opting out also removes the restriction on agencies charging you for work finding, meaning they could then act like entertainment industry agents do and actively sell you to clients. Now that’s something we ought to pursue…
If you’re a member (and if you aren’t, why not?), PCG have written a very good guide to the Regs covering all the key points. Well worth a read.
Ultimately it has to be your decision to opt out (or in). However, my own highly personal and unsupported feeling is that out is better; we’re independents, we don’t need nannying.
opting out is perhaps one of the most gray areas of the current batch of legislation. part of the reason is that this has not been challenged and no precedent is set.
the regulations actually say that one must opt out “either” upon introduction to the end client or upon supply to said client.
this whilst vague covers those for whom there is no need for interview and those for whom interviews are essential.
The regs are trying to cover everything from crop pickers to rocket scientists, the employment mechanisims for each are poles apart.
Most agencies adopt the “upon supply” model as each opt out is role specific, cover all opt outs could in theory work however most come from the LTD company. One needs to have an opt out from ltd co and also as the worker, it is the latter that is often missing and after all it is the poor old worker the law is there to protect.