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Part 5 Guidance for Employment Agencies, Recruitment Agency

 
PART VI
CLIENT ACCOUNTS AND CHARGES TO WORK- SEEKERS
Regulation 25 � Client accounts
The only circumstance where employment agencies may request or
directly or indirectly receive money from the hirer on behalf of a workseeker
is where the money is owed directly by the hirer to the workseeker
and consists of the work-seeker�s earnings from employment in
the entertainment or modelling industries. In such circumstances the
money must be held by the agency for the work-seeker in one or more
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client accounts (i.e. current or deposit accounts at a bank or building
society that the ageny operates in order to hold clients� money) in
accordance with Schedule 2 of these Regulations. (Regulation 25(2 &
3)).
Whilst in the non-enetertainment sector, the hirer is usually the client, in
the entertainment sector the artist is the client and the hirer is the party
engaging the services of the work-seeker.
An agency will receive money on behalf of a work-seeker if either it, or
any person connected with it, receives money directly or indirectly from a
hirer or any person connected with the hirer in accordance with the
terms of any contract between the work-seeker and the hirer.
Employment businesses may never request or directly or indirectly
receive money on behalf of a work-seeker in any circumstances.
Under regulation 25(3), if an employment agency receives money on
behalf of a work-seeker and acts in contravention of the provisions of
regulation 25(2) and of Schedule 2 the agency must, by the end of the
second business day after the day the money is received, either:
� pay the money or an equivalent sum to the work-seeker on whose
behalf it has been received;
� pay the money to an agency which is able to comply with this
regulation; or
� repay it to the person from whom it was received.
Under regulation 25(4) all money received by an agency on behalf of a
work-seeker must be paid into a client account by the end of the second
business day after the day it is received. The only exceptions to this are
the following:
(a) cash paid to the work-seeker by the end of the second business day
after the day the money is received by the agency or any person
connected to it;
(a) cheques and banker�s drafts, made out to or drawn in the work
seeker�s name; and
(c) money dealt with in accordance with regulation 25(3).
Regulation 25(5) provides that all cheques and banker�s drafts drawn in
the work-seeker�s name must be sent to him/her by the end of the
second business day after the day on which the agency receives them.
When a payment is made to a work-seeker in accordance with regulation
25, regulation 25(6) provides that the agency must issue a statement
setting out:
(a) when, and from whom, the monies were received;
(b) the work to which the payment relates; and
(c) any fees or deductions made by the agency.
27
An agency within the entertainment or modelling sectors is permitted to
deduct a fee from monies payable to the work-seeker, provided the workseeker
has agreed to such a deduction in his contract with the agency.
Except for agreed fees and any sum required by law to be deducted, the
agency must not make any deductions from monies payable to the workseeker.
(Regulation 25(7) & (8)).
An agency, which receives money on behalf a work-seeker, which it is
required to place on client account, holds that money as trustee for the
work-seeker and must not hold it any longer than 10 days from beginning
of the day it was received unless the work-seeker has previously
requested a longer period. (Regulation 25(9)).
If a work-seeker at any time requests payment to him/herself, or to
another person, of some or all the money held on his/her behalf, the
agency must pay the amount requested by the end of the second
business day after the day on which the request was made. (Regulation
25 (10)).
If an agency holds money on behalf of a work-seeker for more than thirty
days from the day it was received, it must, by the end of the thirty second
day, provide the work-seeker with a statement setting out the amount
held as at the close of business on the thirtieth day. The agency must
continue to provide statements at intervals of not more than thirty days
until the entire sum held has been paid to the work-seeker. (Regulation
25(11))
Where money received by an agency on behalf of a work-seeker is paid
by cheque made out to the agency, the periods of 10 and 30 days
respectively referred to under regulation 25(9) and (11) above, start with
the day on which the cheque clears (Regulation 25(12)).
In addition, all invoices issued by the agency for work done by the workseeker
must state that if payment is to be made by cheque or banker�s
draft the cheque or banker�s draft must be made out to, or drawn in
favour of, the agency�s client account (Regulation 25(13)).
If an agency receives a hirer�s deposit (i.e. an advance against monies to
be paid to the work-seeker for work to be done by him/her and which
may be repayable to the hirer), it must, by the end of the second
business day after it is received, be paid into a client account without
deduction. (Regulation 25(14)).
Under regulation 25(15) an agency must not request or be in either direct
or indirect receipt of a hirer�s deposit unless it is money that the agency is
entitled to request or directly or indirectly receive on behalf of the workseeker
(i.e. it is money paid in respect of work to be done by the workseeker
and the agency has one or more client accounts lawfully
maintained in accordance with Schedule 2 to these Regulations.)
28
Regulation 25(16) provides that, if an agency receives a hirer�s deposit
that it is not entitled to receive, it must by the end of the second business
day after the money was received pay it, or an equivalent amount, to an
agency which is capable of lawfully receiving the money or repay it to the
person from whom it was received.
Regulation 25(17) provides that if an agenc y receives a hirer�s deposit it
pays it into a client account and holds it as trustee for the hirer until the
money either becomes payable to the work-seeker or to the hirer under
the terms of any contract between the hirer and the work-seeker.
Regulation 25(18) provides that where a work-seeker becomes entitled
under the terms of his/her contract with the hirer to any money paid to the
agency as a hirer�s deposit, the agency receives that money on behalf of
the work-seeker and will be treated as having received it on the day it
becomes payable to the work-seeker.
Regulation 26 � Circumstances in which fees may be charged to
work-seekers
The circumstances, where an employment agency may charge a workseeker
a fee, is limited to cases where the work-seeker is seeking
employment in any of the occupations listed in Schedule 3, namely jobs
within the entertainment, modelling sectors etc. (Regulation 26(1))
However, the agency cannot charge a fee to a particular work-seeker
where it, or any person with whom it is connected, also makes a charge
to the hirer who is engaging that work-seeker. (Regulation 26(3))
If an agency charges such a fee to a work-seeker it must be payable out
of that work-seeker�s earnings for work done that the agency has found
for him/her. (Regulation 26(2)) Nevertheless, there are special
provisions where the work-finding services include the production of a
publication. (See note on Regulation 26(5)).
Note: In the entertainment sector fee-charging arrangements can include
a commission on renewals on engagements and residuals as a result of
work arranged by the agent.
In any case where the agency and the hirer are connected, the
provisions of Regulation 26 will not apply unless the agency informs the
work-seeker of this fact, before providing the service for which the fee is
to be charged. (Regulation 26(4)).
Under certain circumstances an agency is permitted to charge a fee to a
work-seeker for including information about him/her in any publication,
which is designed either to find the work-seeker work in any of the
various occupations listed in Schedule 3 or to provide hirers with
information about work-seekers looking for work in those occupations.
Regulation 26(5)
29
Such a fee may only be charged where:
(i) the publication is the only work-finding service provided by
the agency, or
(ii) the fee charged to the work-seeker is no more that an
estimate of the cost of producing and circulating the
publication arising from the inclusion of the work-seeker�s
details in the publication.
Furthermore, the agency must make available to the work-seeker a copy
of a current edition of that publication, before it enters into a contract with
the work-seeker. (Regulation 26(5))
Note: Co-operative agents in the entertainment sector will often require a
stakeholder donation from work-seekers when they join the agency. This
donation allows the work-seeker a stake in the co-operative and is
returnable if the work-seeker leaves the agency. As such this donation is
exempt from the provisions of Regulation 26(2) because it is not a fee for
work-finding services and, therefore, such a payment can be requested
before any work is found.
There are no restrictions on charging fees to work-seekers for the
purchase of or subscription to a paper based publication which contains
information about employers only provided that this is the only workfinding
service the agency offers to the work-seeker and a copy of the
current edition has been made available to the work-seeker before s/he
has purchased or subscribed to it. (Regulation 26(6))
However, if the publication is in electronic form, the work-seeker must be
given access to a current edition of it. (Regulation 26(5&6))
Limited company contractors
Regulation 32(1)(a) provides that any reference in the Regulations to the
term work-seeker includes a work-seeker which is a company. Therefore
the exemption in regulation 26(1) and 26(7) to the restrictions on
charging fees to work-seekers in section 6(1)(a) of the Employment
Agencies Act 1973 includes limited company contractors. In other words
an agency can charge a limited company contractor operating in any
sector a fee for finding them work. However, these exemptions in
regulation 26(1) and (7) will not apply where the agency, or any person
connected with it, charges a fee to the hirer in respect of the service of
supplying that work-seeker to him regulation 26(3)
Please see the notes on Schedule 1 for the transitional provisions
relating to regulation 26.

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