Corporate report

Employment Agency Standards (EAS) Inspectorate: annual report, 2022 to 2023 (HTML version)

Published 18 July 2024

Foreword  

This report covers the activity of the Employment Agency Standards (EAS) Inspectorate for 2022 to 2023, the first full year post pandemic.  

EAS consistently delivers strong outcomes for the public with this year being no exception. Our flexible approach to delivery continues to evolve, adapting to changing business models. More agencies reduced their high street presence and moved to more regional hubs or only providing services online or through Apps. In turn, the hybrid working pattern is now business as usual for EAS and along with our key strategic principles of Advise, Protect and Enforce, this year our focus was on Systemise, Standardise, and Automate to streamline our processes and procedures, and increase efficiency and output.  

Some of EAS’ achievements are worth reflecting on here and are covered in more detail in the body of the report.  

We have:  

• fully implemented our hybrid working model with most of the operational activity being face to face, although streamlining the process to increase outbound work to consistently meet targets

• ensured agency workers and business are continually and consistently able to access the full range of government support

• worked with colleagues across government, the police, local authorities, and third sector organisations on issues arising in the care sector, which saw a significant increase in EAS activity

• worked on streamlining processes and procedures to improve the quality of communications, in particular, increased reach to businesses by creating and presenting webinars such as what to expect at an EAS inspection, which has driven up our engagement with business

•  reviewed processes, which have reduced the timescales to clear and resolve complaints, using automated processes where possible. With the strategic approach of standardisation, systemisation, and automation. With the aim of driving higher performance and efficiency to better serve and deliver for the public 

• successfully secured a legal confirmation of the scale and scope of the Employment Agencies Act 1973 and the associated regulations at the Court of Appeal

As in previous years, we continued to support all those using the recruitment sector to ensure that everyone is protected and provided with a service that meets all their needs. We have continued to deal with non-compliance robustly and have issued more warning letters in previous years.  

I would like to take this opportunity to thank all those businesses and partners with whom we have collaborated this year, and importantly to the recruitment sector who continue to offer great service and candidates to the great UK labour market.   

Ben Bruten

Head of EAS

Executive summary  

EAS is located within the Department for Business and Trade (DBT). EAS is the government regulator for the private recruitment sector, regulating all employment agencies and employment businesses that provide work-finding services in Great Britain.  

As with previous years, this report will focus on the 3 core principles: Advise, Protect and Enforce and some of the core activity undertaken.

Our year in numbers

Activity	Amount
Complaints	2,300
Targeted inspections	267
Infringements recorded	1,571
Warning letters issued	385
Money recovered for workers	£200,507
Webinar activity	30 events attended by 3,668 people

Agency workers and enforcement landscape

EAS role and responsibilities  

The private recruitment sector continues to play a crucial role in ensuring that the labour market works effectively, helping work-seekers to find temporary or permanent work that suits their needs. It has continued to respond dynamically to changes in demand in the various parts of the economy. 

The legislative basis for EAS and its work is set out in the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (both as amended) which applies across Great Britain. The Department for the Economy in Belfast is responsible for enforcing employment agency legislation in Northern Ireland.

EAS’ aim is to work with private recruitment agencies, hirers, and work-seekers to ensure compliance with the regulatory framework. It also seeks to ensure that anyone who uses the services of an agency to find work is afforded statutory protection of their employment rights. The budget for 2022 to 2023 of £1.525 million remained static. EAS has a budgeted complement of 18 frontline inspectors, although this number has fluctuated throughout the year. Operational delivery has been fully supported by colleagues on intelligence, risk, and IT (information technology).

EAS’ strategic approach 

EAS has 2 key strategic drivers:  

• ensuring effective compliance with the legislation and, where necessary, taking enforcement action against employment agencies and businesses
• providing excellent customer service

These sit alongside the established principles of:  

• Advise – providing advice, guidance and support to work-seekers, hirers, and businesses about current legislation to support and protect all parties in the employment relationship 

• Protect - vulnerable work-seekers where their employment rights may be denied

• Enforce - legislation, where serious and/or repeated non-compliance is identified

Advise 

During this reporting year EAS continued to build on existing relationships with a wide range of trade bodies, sector representatives and charities who have an ongoing interest in EAS’ work. This includes increased webinars and joint webinars with His Majesty’s Revenue and Customs’ (HMRC) National Minimum Wage (NME) and Gangmasters and Labour Abuse Authority (GLAA), collaboration with Department for Education (DfE) on their work to set up a National Tutoring Programme and assisting the Department for Health and Social Care (DHSC) with strengthening safeguards on international recruitment. EAS has continued to raise awareness of the protections of the law and have protected workers. We continued our close relationship with HMRC to produce new guidance on umbrella companies, aimed at work-seekers and employment businesses.  

EAS’s ongoing engagement programme with external bodies continued to develop. EAS is working with a hugely diverse stakeholder group, and which also now includes more organisations and individuals who work within the recruitment sector but can also bring specialist knowledge on sector specific issues. Examples of this are seen with in the care sector and with umbrella companies. EAS continues to deliver a rolling programme of quarterly meetings with all the major trade bodies for the recruitment sector, those that represent umbrella companies, and other interested parties. It continues to look for other opportunities to work with third sector organisations, trades unions and other groups that represent workers interests, to develop its understanding of issues in the sector.

EAS delivered a range of webinars to help support employment agencies and employment businesses. They covered a range of topics from ‘what to expect on an inspection’ to ‘Key Information Documents’. The aim was to advise and reassure that our role is ensuring compliance with the regulatory framework and can be especially useful prior to an employment business (EB)’s first inspection. ‘What to expect on an inspection’ has proven to be extremely popular and led to a better inspection experience for all concerned. 

We continued to work closely with a range of partners, offering guidance, advice and support on a range of issues affecting agency workers, maximising the impact of EAS’ regulatory framework.

Protect 

This reporting year we spent a substantial proportion of our time focused on issues arising in the care sector and working with partners to ensure the ecosystem that exists in the UK guarantees fair work, and provides high quality workers, resulting in maintaining and enhancing a high-quality service. 

We have worked with colleagues across a number of government departments, police forces, external regulatory bodies and other interested parties to look at the issues being raised by those coming to the UK as well as organisations in the UK using agencies to find workers.  Many of the issues being raised with EAS relate to the treatment of the work-seekers abroad and their entry into the UK. It was this information that saw EAS join up with a range of stakeholders and other government departments to issue updated guidance for both business and workers.  

During this period EAS engaged with an emerging challenge in the care sector. Referrals from trade unions and the National College of Nursing, led to increased operational activity in the adult care sector. EAS supported by the GLAA, and a host of other enforcement partners worked tirelessly to understand the emerging challenge and start to take the appropriate collective action to ensure full compliance with UK law. 

Early engagement with DHSC saw EAS work closely with them on refreshing guidance and establish suitable checking system for businesses who wanted to be part of the Ethical Recruiters List. 

EAS continues to develop its hybrid working pattern to deliver targeted operations. Making use of virtual compliance visits helped increase reach and drove up compliance activity. Whichever method was used, in all cases where non-compliance was found EAS engaged with the business and, where needed, issued a warning letter. This sets out the areas of non-compliance and the required corrective action. EAS requested evidence of the changes made by the business to ensure compliance had been achieved. 

EAS will re-visit a business where significant non-compliance has been found, to ensure that the remedial steps taken remain in place in practice. If the issues have not been rectified or the business has not maintained the changes, then further compliance action may be considered, or a referral made for enforcement action in the most serious cases. This action also applies if during a remote inspection we have reason to believe a visit is necessary.  

We work with non-governmental organisations (NGO), such as Jobs Aware, and use our customer support line to provide protection to workers allowing them to check their personal situation and where necessary we update our guidance to support niche businesses, for example the private tutoring sector. EAS has engaged with other government departments and Crown Commercial Services (CCS) to ensure a consistent, joined up regulatory approach to agency workers across government. 

Alongside the investigation and enforcement activity, EAS continues to work with industry, trade associations and other organisations to support those operating in the sector to comply with its legislation. This work complements the publicity strand of delivery whilst also ensuring EAS can be proactive in identifying emerging trends, risks, and threats.

Enforce  

EAS has a broad range of enforcement powers and although it aims to achieve compliance through support and education, there are instances that require a more robust response. In these instances where EAS has identified a small number of businesses that are deliberately or wilfully non-compliant, or where a business has failed to achieve compliance despite being given every opportunity to do so, a range of enforcement powers can and have been utilised.  

EAS is committed to ensuring that temporary workers receive the relevant protections afforded by the legislation. Unfortunately for some, they do not receive the service that they are expecting from an employment agency or employment business and will make a complaint to EAS. There are several ways in which a complaint can be made but it is strongly recommended that, if a work-seeker needs advice and guidance, they contact Acas (0300 1231100 or www.acas.org.uk). If the caller wishes to speak with an inspector, Acas can transfer the call for them to continue the conversation and then take details of any ensuing compliant.

Other ways in which a complaint can be made to EAS are:  

Email: [email protected]  

Use the online complaint form.

Phone: 020 4566 5333

By post:

EAS
Department for Business and Trade
Old Admiralty Building
Admiralty Place
London, SW1A 2DY

Labour Market Enforcement Undertakings and Labour Market Enforcement Orders  

EAS is keen to apply the right balance to enforcement and thus will only take the necessary steps to adopt more stringent enforcement powers upon businesses when it is most appropriate. Striking the right balance between our compliance approach and enforcement is something we are extremely proud of and businesses in turn welcome this approach.  

EAS did not issue any Labour Market Enforcement Undertakings (LMEUs) during this reporting year. This is because EAS has been successful in securing buy-in from businesses to make the necessary changes to their process. The LMEU sanction remains a valuable enforcement tool and will be used when it is appropriate and proportionate to do so. 

There was one Labour Market Enforcement Order (LMEO) issued during the reporting year. This LMEO was issued by the court when they were sentencing the individual following successful prosecution cases that EAS brought.

Prosecutions  

In this reporting year EAS has considered enforcement action against 17 employment agencies or employment businesses.  

These cases have involved 23 individuals and companies, including multiple directors as well as the limited company that the relevant employment agency or employment business traded under, and that EAS could consider bringing proceedings against.  

After careful consideration and reviewing all the evidence, 1 case has resulted in prosecution proceedings against an individual who operated as an employment agency finding work for entertainers and performers. There is another prosecution case where evidence is being gathered including obtaining witness statements. This case relates to an employment agency that finds work for fashion and photographic models and mode fees being withheld by the employment agency.   

Most of the other cases that we considered were concluded by EAS seeking compliance with the legislation and issuing a warning letter to the employment agency or employment business. Following the issue of the warning letter the relevant employment agency or employment business took remedial action to comply with the legal obligations of the legislation. 

Three cases remain on-going due to their complexities and detailed dialogue between EAS, legal advisers, the employment agencies, and other interested parties.   

Case study 1 

EAS investigated an employment agency that found work for entertainers and other performers. The investigation mainly focused on compliance with the obligation placed on employment agencies (such as supplying entertainers and performers) to operate a client account. The employment agency legislation provides that agencies finding work for certain occupations in the model and entertainment sector and receive money from hirers on behalf of work-seekers, must operate a client account as set out in the legislation. This includes the obligation to pay such money into the client account and pass the money to the relevant work-seeker, less any prior agreed or statutory deductions, within 10 days of the agency receiving the money. 

EAS had a history of dealing with this person in relation to seeking compliance with their obligations. EAS made enquiries with colleagues in The Insolvency Service and became aware of additional information. This resulted in further lines of enquiry in relation to this person’s business activities and financial affairs. A joint criminal investigation involving officers from EAS and The Insolvency Service followed culminating in a court hearing in February 2023. 

The person pleaded guilty to 3 charges:

1. Failing to maintain a client account.

2. Making payments and arrangements for the payment of remuneration to work-seekers without maintaining a client account.

3. Taking part in the formation of a company whilst an undischarged bankrupt, contrary to the Company Directors Disqualification Act (CDDA) 1996.   

In sentencing, the court awarded a financial penalty total around £1400.00. We also applied for a Labour Market Enforcement Order (LMEO). The court issued a copy of the LMEO and advised that breaching the order without reasonable excuse is itself a criminal offence, punishable with a 2-year custodial sentence, or fine or both.

Prohibitions  

There were no concluded prohibition applications during this reporting year. A total of 5 potential cases were considered. In 3 instances the person had previously been running employment businesses but had ceased trading and their limited company or companies had gone into liquidation. Following investigations by The Insolvency Service, each of the 3 persons had been banned from being a director of a limited company. 

EAS conducted further enquiries, obtained further evidence and submitted the case to legal advisers. Prohibition applications were made to the Employment Tribunal (ET) but, after issuing warnings about their future conduct, EAS decided in January 2024 to withdraw these applications. 

One person was running an employment business and supplying care workers to hirers but was being obstructive in allowing EAS to access their records. There was also evidence of previous misconduct. EAS has attempted to make further steps to conduct an inspection and this case is ongoing.  

One person was running a website offering services as a model agency and purportedly supplying child models to high street retailers. The website included children posing in underwear. EAS reported the matter to the police and made further enquiries with the model sector and the brands that supposedly had models supplied to them by this website. EAS approached the person behind the website, and it seems that the website and activity was not based in the UK. The website is no longer operating or offering services.  

In summary, we will always aim to strike the correct balance between compliance and support but will not hesitate to take the most robust action on those who have deliberately sought to profit by exploiting others.

Case study 2 

EAS received a complaint from a work-seeker who was employed by and supplied to hirers by an employment business. The work-seeker had a deduction from their wages totalling about £120 as ‘company losses’ for cancelling 2 shifts. The process adopted by this employment business was that work-seekers applied for and entered shifts that they can work, through an online portal rather than being booked directly by a staff member of the employment business. During the EAS investigation, the employment business stated that the work-seeker booked themself on 2 shifts but then cancelled them. The employment business set out that this meant the work-seeker had breached their contract by not giving the employment business at least 72 hours’ notice to cancel the booked shifts. The work-seeker stated there were no shifts allocated them for the dates in question and they did not turn down any work. 

EAS issued a warning letter to the employment business setting out the obligations under the legislation that it is illegal to withhold the whole or any part payment in respect of any work done by the work-seeker. The employment business challenged our view and EAS sought further advice. This resulted in a further warning letter to the employment business setting out the breaches of the conduct regulations. These included, (a) they were withholding part payment for work done, on the grounds that the work-seeker had not worked during any period other than to which the payment relates and (b) a detriment (withholding £120) on the grounds that the work-seeker had terminated any contract between them and the employment business. 

This action resulted in the work-seeker being refunded the fee that was deducted from their wages and EAS obtaining compliance by working with the employment business.

EAS performance  

A key strategic objective for EAS this reporting year was to use the increased resources to enable more risk- and intelligence-led operations and achieve greater balance between that and dealing with complaints. EAS has increased the number of proactive visits in proportion to the rise in the number of complaints received. This is an important development as it supports businesses by combining information and guidance to help educate and support future compliance.  

Number of complaints received

In 2022/23, EAS received 2,300 complaints, compared to 2170 in 2021/22. This amounted to an approximate increase of 6% in the number of complaints received.  

When infringements were found, EAS issued a total of 385 warning letters to the relevant employment business and sought compliance with the relevant provisions of the legislation. 

A high proportion of breaches related to the incorrect completion of the key information document, which was introduced in April 2020.

When the breaches related to non-payment of wages, we often found our early intervention resulted in early resolution, therefore avoiding regulatory breaches. This clearly demonstrates the strong positive impact our work has without the need to issue a warning letter. Where there is additional information received as part of the complaint, the agency will be looked at for a future inspection. 

Where EAS became involved, most businesses have responded quickly and positively, often resolving the issue within a few days. Decisive and quick resolution continues to make real differences in workers lives and is appreciated. Where multiple complaints have been received, each one is dealt with on its merits and all the information is assessed to check whether an inspection needs to be undertaken to look at the agency’s practices and procedures, or if enforcement action needs to be considered. 

Over the course of 2022 to 2023, EAS recovered £200,507 for individuals who were not paid for reasons ranging from administrative error to deliberate non-payment or being charged fees for work finding services. This is a 18% increase in comparison to 2020 to 2021, where £169,230 was recovered. The largest volume of complaints made to EAS this year continues to be about the failure of an employment business or agency to pay a worker (wages or earnings).  

More significantly with a return to face-to-face inspections, EAS completed 267 targeted inspections – an increase of 126% on 2021 to 2022 when 118 were undertaken. More focus on performance and quality has resulted in an increase of 116% on infringements found and a 74% increase on warning letters issued.  

Further details and analysis of the data relating to 2022 to 2023 can be found in the annexes.

Number and outcomes of EAS operations

During the reporting year, EAS undertook 10 targeted operations covering 267 inspections, covering a range of sectors and geographical locations. It should be noted that the data below relates to the number of inspections undertaken, not closed, during the reporting year.

Type of operation	Number of visits	Infringements found
Geographical (Hereford and Worcester) Op Apple	14	80
Geographical (Bristol and surrounding area) Op Berry	22	99
Geographical (Wales) Cymru	39	159
Geographical (Scotland - Inverness and Aberdeen) Op Dome	3	7
Geographical (West Midlands) Op James	21	86
Geographical (London) Op Thunder	35	126
Geographical (Brighton) Op Rush	17	57
Geographical (Bedford and surrounding areas) Op Waters	13	39
Sectoral/ Geographical (teaching in Wales) Op Dysgu	10	19
Sectoral/ Geographical (Teaching in England and Scotland) Op Philadelphia	7	32
Sectoral (Care) Op Topaz	30	161
National (Intel) Op Owl	18	81
Inspections carried out not associated with a specific sector or location	28	79

Freedom of Information requests 

EAS received 10 Freedom of Information requests during the reporting year and responded to 100% of requests within the deadline, and one internal review that was also completed within the deadline.

EAS does not publish the detail of investigations, or reveal information captured during an inspection, unless it leads to a prosecution, prohibition, or the issue of a Labour Market Enforcement Order, which are a matter of public record. Section 9 of the Employment Agencies Act 1973, which sets out the inspectors’ enforcement powers, makes it illegal for EAS inspectors to disclose any information to a third party that has been obtained during any EAS investigation, without the permission of the person providing the information.

Continuous improvement  

As noted above, EAS continued to make improvements to case handling and have upgraded our customer relationship management (CRM) tool. The mapping function of the tool was further extended to enable intelligence gathering and analysis. Data download from the Companies House database has enabled a closer understanding of market trends in the recruitment sector and will lead to more targeted operations. By concentrating on emerging strategies, EAS introduced a focus on standardisation, systemisation, and automation to further increase process efficiency and hence productivity. 

Streamlining processes to increase productivity included the introduction of standard lines to reduce time taken when issuing a warning letter. In addition, this aided consistency and automation so that overall case handling times were reduced. Streamlining will continue with the further integration of processes into EAS’ CRM, to help reduce resolution time on more straightforward cases. 

EAS’ internal training programme has been subject to continuous review. Evaluation from each new group of inspectors is fed back into the programme to improve the delivery and to enhance understanding of the legislation and EAS’ processes.  

This has reduced the amount of time needed to train and deploy fully effective inspectors to support work-seekers with advice and guidance, as well as guiding them through the complaint process to resolution.

EAS received 10 Freedom of Information requests during the reporting year and responded to 100% of requests within the deadline, and 1 internal review that was also completed within the deadline. EAS does not publish the detail of investigations, or reveal information captured during an inspection, unless it leads to a prosecution, prohibition, or the issue of a Labour Market Enforcement Order, which are a matter of public record. Section 9 of the Employment Agencies Act 1973, which sets out the inspectors’ enforcement powers, makes it illegal for EAS inspectors to disclose any information to a third party that has been obtained during any EAS investigation, without the permission of the person providing the information.

Information on EAS  

Go to the EAS website on GOV.UK.

Find further information about the legislation that agencies and employment businesses are obliged to comply with on GOV.UK.

Find further information on your rights as a worker on GOV.UK.

Annex A - EAS case statistics – 2015 to 2016 to 2022 to 2023 financial years   

The statistics presented in the following tables are derived from a live case management system and so are based on a snapshot of a moment in time. Validation of the data and derived statistics has been undertaken but is still liable to change.

Cases	2015-16	2016-17	2017 - 18	2018-19	2019-20	2020-21	2021-22	2022/23
Complaints received	781	828	1,261	1,953	1,698	1,827	2,170	2,300
Complaints cleared	730	750	1,267	1,805	1,836	1,800	2,275	2,033
Targeted inspections	172	142	145	261	303	177	118	267
Infringements found (cleared cases and inspections)	782	782	1,071	1,242	1,490	900	724	1,571
Total number of warning letters issued	275	387	321	415	382	267	212	385

Notes:  

Complaints received late in the previous reporting year are not cleared until the current reporting year so can lead to a higher reported number of cleared cases when compared to those received.

Annex B - complaints cleared, targeted inspections and analysis of infringements carried out (by sector) – 1 April 2022 to 31 March 2023

To improve transparency, we have not aggregated some of the data and as such for some sectors it will not be possible to compare this to previous years. The data is from a live system and therefore is a snapshot and could change.

Agency Sector	Number of cases	% of total cases	Infringements found*	% of total cases	Warning letters	% of total cases
Childcare	7	0	24	2	5	0
Commercial	93	4	114	7	33	9
Construction	134	6	116	7	39	10
Drivers	61	3	70	4	17	4
Engineering	25	1	12	1	47	12
Entertainment	8	1	7	1	4	0
Executive / management	7	0	15	1	3	0
Healthcare	201	8	352	22	61	16
Hospitality	73	3	85	5	22	6
Hotel / catering	6	0	5	1	2	1
Industrial	244	11	245	16	59	15
IT / online	34	2	101	6	18	5
Job boards	2	0	0	1	1	0
Models	11	1	8	1	1	0
Other	74	3	72	5	19	5
Other education	18	1	6	0	3	0
Professional	29	2	49	3	17	1
Seafarers	3	0	2	0	2	0
Teaching	42	2	94	6	28	7
Transport	13	1	21	1	4	0
Unknown	1179	51	145	9	36	9
Total	2,300	100	1571	100	385	100

Glossary 

Employment agency

For the purposes of the Employment Agencies Act 1973, ‘employment agency’ means the business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of providing services (whether by the provision of information or otherwise) for the purpose of finding persons employment with employers or of supplying employers with persons for employment by them. 

Employment business

For the purposes of the Employment Agencies Act 1973, ‘employment business’ means the business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity. 

Labour Market Enforcement Undertakings and Orders

The Immigration Act 2016 introduced 2 new enforcement tools for EAS where trigger offences set out in the legislation are breached: LMEU and LMEO. More information on these can be found in the code of practice on Labour Market Enforcement Undertakings and Orders. 

Prohibition

EAS can also consider seeking to prohibit individuals from running, owning, or managing an employment agency or business because of their misconduct or unsuitability through an ET. The maximum prohibition period is up to 10 years, and it is for the ET to determine a suitable length of time based on the information presented to it. It is possible for EAS to approach the original tribunal to seek a further order if it is deemed necessary due to the nature of the misconduct. It should also be noted that a prohibition can be sought against other persons to protect persons and prevent the misconduct that has resulted in an order being sought in the first place. Prohibitions may also be sought where individuals have been successfully prosecuted by another authority, and EAS consider that sanctions imposed make them unsuitable to run an employment business or agency. 

Prosecutions

Where appropriate, EAS can consider prosecution for serious breaches of its legislation. Breaches of the legislation can be treated as ‘either way’ offences, which means that they could be tried in a Magistrates’ or Crown Court. If convicted, in either court, unlimited fines may be imposed against all defendants. As noted above, a court may also consider issuing a LMEO.  

Umbrella company

There is currently no legal definition of an umbrella company, but DBT is working on a definition. For the purposes of this report, an umbrella company is the organisation that employs a work-seeker and is responsible for paying them, based on information and money passed to them by an employment business.