What do the Conduct Regulations require of a recruitment agency?
The Conduct of Employment Agencies and Employment Businesses Regulations 2003 set the rules for how a UK agency deals with work-seekers and hirers. They require agreed terms before services are provided, checks on identity and suitability before an introduction or supply, limits on transfer fees, a ban on withholding pay because a hirer has not paid or has not signed a timesheet, a key information document, and records kept for at least a year. A limited company contractor can opt out of some of them, but not all.
Written by the Vayora team. Updated 28 October 2026.
The 2003 Regulations are made under the Employment Agencies Act 1973 and apply to agencies and employment businesses. They are procedural. Most of what they require is paperwork done in the right order, which is why breaches usually come from habit rather than bad faith: terms sent after the first placement, a check done by memory, a timesheet rule written into a contract.
A few of the rules touch your cash directly. Regulation 12 decides whether you can hold a contractor's pay until a client signs a timesheet or pays you. Regulation 10 decides whether a transfer fee is enforceable when a client hires a contractor you supplied. Regulation 32 decides who gets to opt out. Get those three wrong and the contract term you relied on is simply unenforceable.
This page walks through the regulations that matter at an agency desk, using the current text on legislation.gov.uk. It links the existing glossary entries on the Conduct Regulations and the opt-out rather than repeating them, and it deals with the key information document separately in its own answer.
Which rules apply, and what must your terms with work-seekers say?
The Regulations distinguish the two. An employment agency introduces people to hirers for direct employment, as in a permanent placement. An employment business supplies people to work under the hirer's direction, as in a contract or temporary placement. Most agencies that do both are each, depending on the placement. The rules you follow depend on which you are doing in a given deal.
Many of the duties below apply to an employment business only, such as the pay rules in regulation 12 and the transfer fee rules in regulation 10. If you place contractors, assume you are an employment business for those placements.
Before an employment business first provides work-finding services to a work-seeker, regulation 14 requires it to obtain the work-seeker's agreement to its terms. They must state that it will operate as an employment business, the type of work it will find, and the terms in regulation 15. Those are whether the person is engaged under a contract of service or a contract for services, an undertaking that the agency will pay for work done whether or not it is paid by the hirer, the notice each side must give, the rate or the minimum rate the agency expects to achieve, the pay intervals, and holiday entitlement and pay.
The terms should be recorded in a single document where possible and given to the work-seeker before services start. An employment business cannot change them without the work-seeker's agreement, and if both agree, it must give a document with the varied terms and the date they take effect within five business days. It cannot make continued service conditional on agreeing to a variation. Send terms before the first submission, not after the first placement.
Regulation by regulation: what each rule requires
The table lists the regulations that cause most trouble on a desk. Each row names the rule and the situation where it bites.
| Regulation | What it requires | Where it bites on a desk |
|---|---|---|
| 14 and 15 | Agreed terms with the work-seeker before work-finding services, including the undertaking to pay whether or not the hirer pays | Terms sent late, or signed after the first assignment |
| 13A | A key information document given before terms are agreed | A contractor registered on terms with no KID, or no revised KID after a change |
| 12 | No withholding pay because the hirer has not paid, or has not authenticated a timesheet | Contract wording that says no client sign-off, no payment |
| 10 | Transfer fees enforceable only if the hirer can elect an extended hire period, and only within the relevant period | A client hires your contractor in week ten and refuses the fee |
| 19 to 22 | Confirmation of identity, experience, qualifications and willingness before an introduction or supply, and extra steps for vulnerable persons | A CV sent before references or qualifications are on file |
| 29 | Records kept for at least a year | Deleting a contractor's records months after the last placement |
| 32 | Applies the Regulations to work-seekers that are companies, unless both company and individual opt out before supply | An opt-out signed after the CV has already gone to the client |
Can you hold back pay until a client signs the timesheet?
Not for an employment business, under regulation 12. It must not withhold, or threaten to withhold, any part of a payment for work done on four grounds: that it has not received payment from the hirer; that the work-seeker has not produced documentary evidence authenticated by the hirer that they worked in a period, although the agency may satisfy itself by other means that they did; that the work-seeker did not work during a period other than the one the payment covers; or any matter within the agency's own control.
Regulation 15 says the same thing from the other side: the terms must include an undertaking that the agency will pay for work done whether or not the hirer pays. So a clause that makes client sign-off or client payment a condition of paying the contractor is not something you can enforce against a contractor who is in scope of the Regulations. Many agencies manage the risk instead by setting credit limits on clients and chasing approvals quickly. Our answer on timesheet to invoice covers the cash side.
Can a limited company contractor opt out of the Regulations?
Partly. Regulation 32 applies the Regulations to a work-seeker that is a company. Paragraph 9 lets the company and the person it would supply agree that most of the Regulations should not apply, give notice of that agreement to the agency before it introduces or supplies them to a hirer, and have the agency tell the hirer. Withdrawal is by the individual, and a notice given or withdrawn while they are already working takes effect only when they stop working in that position.
There are limits. The opt-out is not available where the person would work with or attend vulnerable persons. An agency may not make work-finding services conditional on the company and individual opting out. Regulation 13A on the key information document and the record rules in regulation 29 still apply to a company work-seeker whether or not it opted out. Notice that an opt-out given after the CV has gone to the client is too late for that client. See the glossary on the opt-out.
Can you charge a transfer fee when a client hires your contractor?
Only within limits. Under regulation 10, a term making a payment depend on the contractor taking up work with the hirer is unenforceable unless the contract lets the hirer choose, by notice, an extended hire period instead of a fee. Separately, a term is unenforceable if the contractor starts after the relevant period, which is the later of 8 weeks from the day after they last worked for the hirer through you, or 14 weeks from the first day they worked for the hirer through you. Gaps of more than 42 days reset that first day.
An agency must not try to enforce a term that regulation 10 makes unenforceable, or ask for a payment it is not entitled to. Put an extended hire option in your client terms and keep a dated record of when each contractor first started and last worked. See terms of business for how this sits with your other client terms.
What checks must you make before sending a work-seeker to a hirer?
Regulation 19 bars an employment business from introducing or supplying a work-seeker unless it has obtained confirmation of their identity and that they have the experience, training, qualifications and any authorisation the hirer considers necessary or the law or a professional body requires, and that they are willing to do the work. Regulation 20 requires reasonably practicable steps to make both sides aware of legal requirements and enquiries to ensure the placement would not be detrimental to either. If information gives reasonable grounds to believe the work-seeker is unsuitable, the employment business must tell the hirer and end the supply without delay.
Regulation 21 sets the timing for giving information to the hirer and to the work-seeker, and confirming it in writing within three business days if given orally. Regulation 22 adds requirements for work with vulnerable persons, including two references from non-relatives and copies of relevant qualifications. Right to work is a separate duty; our answer on right to work checks explains it.
What records must an agency keep?
Regulation 29 requires records sufficient to show the Act and the Regulations are being complied with, including the particulars in Schedules 4 and 5 for work-seeker and hirer applications. They must be kept for at least a year from creation and, for the work-seeker and hirer particulars, for at least a year after the last time you provided services to that person. They can be electronic if they can be reproduced legibly. If they are kept elsewhere, they must be deliverable to the premises within two business days of a request under sections 96 or 97 of the Employment Rights Act 2025.
From 7 April 2026, enforcement in England, Scotland and Wales is by the Fair Work Agency, which GOV.UK says replaced the Employment Agency Standards Inspectorate. The practical rule is that if you could not produce the terms, the checks and the key information document for a given contractor within two days, your records are not good enough.
Where Vayora fits
Vayora is software, not legal advice. It supports the paper trail without checking your compliance for you. A contractor's record shows their Conduct Regulations status, in scope until an opt-out is signed. From that record Vayora can send the regulation 32(9) notice for electronic signature and stamps the opt-out date on the record when it is signed. Client terms of business are sent and signed electronically, the signed date is stamped on the client and the signed document is filed against it.
Timesheets follow a lifecycle from submitted to client approved to agency approved. A client can approve through a single-purpose email link without a login, and an agency can approve a submitted week directly, which is shown on the record as having no client approval. Pay runs gather invoices by period and do not wait for the client to pay. What Vayora does not do is write your terms, check the regulation 19 confirmations before a submission, apply the transfer fee rules, or generate a key information document. See contract finance or start a free trial.
Common questions
- Does the Conduct Regulations ban on withholding pay apply to limited company contractors?
- Yes, unless the company and the individual have opted out under regulation 32. Regulation 12 stops an employment business withholding pay because the hirer has not paid or has not authenticated a timesheet. After a valid opt-out that protection no longer applies to that contractor, but you must not make your services conditional on them opting out.
- How long do we keep records under the Conduct Regulations?
- Regulation 29 requires records to be kept for at least a year from the date they were created. The particulars of work-seeker and hirer applications must be kept for at least a year after the date you last provided services to that person. Records can be electronic if they can be reproduced legibly, and must be produced within two business days if requested.
- When can an agency charge a transfer fee for a contractor?
- Only if the client's contract lets it elect an extended hire period instead of paying a fee, and only where the contractor starts within the relevant period. That is the later of 8 weeks after they last worked for the client through you or 14 weeks from the first day they did. A gap of more than 42 days resets the first day.
- Can we make contractors opt out of the Conduct Regulations?
- No. Regulation 32 says an agency may not make work-finding services for a company conditional on the company and the individual entering into and giving notice of an opt-out. It also has to be given before you introduce or supply the contractor, and it is unavailable where the work involves vulnerable persons.
- Who enforces the Conduct Regulations in 2026?
- In England, Scotland and Wales enforcement moved to the Fair Work Agency on 7 April 2026, according to GOV.UK guidance for employment businesses. It replaced the Employment Agency Standards Inspectorate. Your key information documents must now carry the contact details of the officers appointed under the Employment Rights Act 2025.
Sources
- Regulation 12, Conduct of Employment Agencies and Employment Businesses Regulations 2003 (legislation.gov.uk)
- Regulation 10, transfer fees and the relevant period (legislation.gov.uk)
- Regulation 19, confirmations before introduction or supply (legislation.gov.uk)
- Regulation 29, records (legislation.gov.uk)
- Regulation 32, work-seekers that are companies and the opt-out (legislation.gov.uk)
Checked 28 October 2026