Recent news reports have highlighted that agency workers and gig economy participants are being charged fees to receive their pay quickly. However, is this practice legal, and could an agency violate the Conduct Regulations by doing so?
Charges for speedy pay
The practice of charging for accelerated payment is not new but is currently making headlines. In a recent article in the Guardian it was reported that some ‘freelance’ retail assistants could opt to be paid a minute after their shift for a 4.8% charge or within 3 days for a 2.9% charge. This is instead of being paid after 30 days. Furthermore, it is reported that in some cases workers who choose not to pay for expedited payment are informed that they will only be paid when the client pays. Such practices may be seen by some as an exploitation of vulnerable workers, but for others it’s a service option with charges reflecting the risk and cash flow of the paying platform.
In response to these headlines the Minister for Employment Rights, Justin Madders, has asked Employment Agency Standards (EAS) to investigate. Could this be relevant to traditional recruiters?
Is this legal?
The Agency Conduct Regulations apply to online platforms as much as traditional recruiters, and there are a few potential regulations and laws that EAS could be looking at. These may include whether the practice amounts to charging for a work-finding service, which is prohibited, save in very limited circumstances. If workers are being advised that they will only be paid when the client pays, this would be a clear breach of R. 12 of the Agency Conduct Regulations. This regulation prohibits an employment business from withholding or threatening to withhold, payments due to non-payment by a client. If the companies are simply saying that workers may choose to pay a fee for an accelerated payment service, then the position may be less clear cut.
As with all of these things the specific wording of the contracts will be relevant as well as what is actually happening in practice.
If the practice is not in itself, considered to be a charge or withholding, then it is arguably a service offered by the agency, to which R.13 may apply. So any businesses operating this option needs to be careful to ensure that it has the right terms in place covering the fees, calculations, payments and refunds. Other matters to consider include whether the deduction of the fee or withholding pay may bring the worker’s pay below the minimum wage.
Some online providers may not consider that they operate as employment agencies or businesses, and so would not be subject to the Agency Conduct Regulations. However, it is possible that they may fall within applicable definitions; simply providing services online (which the news suggests is the nature of those accused) does not exclude application of the regulations.
These issues are relevant to traditional recruiters as much as any online provider. Any business contemplating an unusual or non-standard model, additional charges or services, should take specialist advice, for example from Lawspeed. This may avoid EAS investigation, potential fines and penalties and of course the reputational damage caused by adverse publicity.
For expert advice on any recruitment law matter, please contact us on 01273 236 236 or email us at info@lawspeed.com.