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The Conduct of Employment Agencies and Employment Business Regulations 2003 provide workers and hirers with a minimum set of standards that can be expected from employment agencies and businesses.
As these regulations apply to workers who are under the control of the client, the vast majority of contractors and freelancers working through a Limited Company, Umbrella Company or PSC do not require the protection provided under these regulations. This was acknowledged by the DTI with the addition of regulation 32 which provides the opportunity to ‘opt out’ of the regulations.
You will need to sign a form to indicate whether you wish to ‘opt in’ or ‘opt out’ of the regulations. If you work through an Umbrella Company their signature will also be needed.
The main reason to ‘opt out’ of the regulations is that it helps to prove you are working outside IR35 as to ‘opt in’ may result in you being regarded as exhibiting more characteristics of an employee
You will be able to avoid potential delays in starting your assignment through reducing the amount of admin you need to complete at the start of the assignment
The regulations make sure that you get paid and make it unlawful for the agency to withhold any part of any payment in respect of work you have undertaken
Restrictive covenants allowing agencies to demand payment if you obtain work from the client at a later date when the agency is not involved in the contract become unenforceable if you opt into the regulations
You have more protection in relation to onerous contract terms and protection when you are required to work away from home
You have a statutory entitlement to information regarding health and safety
Your decision to ‘opt in’ in or ‘opt out’ will not affect an agency's selection procedure, but the client is not subject to the same restrictions and may seek a contractor or freelancer who has ‘opted out’.