Conduct Regulations 2003 Explained

SI 2003/3319

The main rulebook for agencies and employment businesses

Where

England, Scotland and Wales

Since 6 April 2020

Key Information Document before agreeing terms

Since 7 April 2026

Enforced by the Fair Work Agency

What the Conduct Regulations cover, at a glance

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (SI 2003/3319), usually called the Conduct Regulations, are the main rulebook for recruitment firms. They are made under the Employment Agencies Act 1973 and set out how agencies and employment businesses must deal with work-seekers and hirers. They apply in England, Scotland and Wales. Northern Ireland has its own rules and its own regulator.

The main duties fall into a few groups:

• General obligations: no making work-finding services conditional on buying other services, no penalising a work-seeker for taking work elsewhere, no supplying temps to cover workers taking part in official strikes or other industrial action, no withholding a temp's pay because the hirer hasn't paid, and limits on transfer fees.
• Before you provide services: agreeing terms with work-seekers and, for employment businesses, giving a Key Information Document.
• Before an introduction or supply: getting information about the role from the hirer, confirming the work-seeker's identity, experience and qualifications, and passing information to both sides.
• Record keeping, client accounts and advertising.

The 1973 Act also bars charging work-seekers a fee for finding them work, with narrow exceptions (for example entertainment and modelling) set out in regulation 26.

Employment agency vs employment business: the 1973 Act distinction

The Regulations use two defined terms from section 13 of the 1973 Act, and some duties apply to only one of them.

• An employment agency provides services "for the purpose of finding persons employment with employers or of supplying employers with persons for employment by them". The client employs the worker directly, whether the role is permanent or fixed-term.
• An employment business supplies people in its own employment to act for, and under the control of, other people (hirers). This is temporary and contract supply. The Employment Rights Act 2025 widens this to anyone "participating in" such arrangements, which reaches umbrella companies, but as at the "Last reviewed" date that wording is in force only for making regulations (SI 2026/3, regulation 2(17)).

Most recruitment firms with a temp desk and a perm desk are both. The glossary entry on employment business vs employment agency covers the definitions in more detail, including the Employment Rights Act 2025 wording that is not yet fully in force.

Agreeing terms of business before you provide work-finding services

An employment business must obtain the work-seeker's agreement to its terms before first providing any work-finding services, under regulation 14. The terms must say that it is acting as an employment business, the type of work it will look for, and the matters in regulation 15, including whether the worker is employed under a contract of service or a contract for services, an undertaking to pay the worker for work done whether or not the hirer pays, notice periods, the rate of pay or the minimum rate expected, pay intervals and holiday entitlement. The agreed terms must be recorded and given to the work-seeker before any services they cover. A signature isn't required, but you must be able to show the terms were agreed.

For an employment agency, regulation 16 requires agreed terms before providing work-finding services for which it is allowed to charge the work-seeker a fee under regulation 26. There is no longer a regulation requiring set terms with hirers, but your hirer terms still matter: a transfer fee is only enforceable if they contain what regulation 10 requires (see below).

The Key Information Document requirement

Since 6 April 2020, an employment business must give a temporary work-seeker a Key Information Document (KID) before agreeing terms with them, under regulation 13A. The duty falls on employment businesses only, not on employment agencies placing permanent staff.

The KID is tightly specified:

• It must be headed "Key Information Document", be separate from any other document, and fit on a maximum of two sides of A4 when printed.
• It sets out how the worker is engaged, who pays them, the rate of pay (or the minimum rate the employment business reasonably expects to achieve), pay intervals, deductions and fees, holiday entitlement and a representative example of take-home pay for one pay period.
• Under regulation 13A(9)(b) it may not contain any other items of additional information.
• It must give contact details for the enforcement officers the worker can complain to. The wording was amended on 7 April 2026, so the enforcement contact is now the Fair Work Agency.
• Once terms are agreed, a revised KID is due by the end of the fifth business day after any of the details change.

Where the worker is supplied through an umbrella company or another third party, the person who will do the work must receive the KID too. Regulation 13A(18) keeps the KID duty for limited-company work-seekers even where they have opted out of the rest of the Regulations. Our free Key Information Document generator builds one from your pay details, and gov.uk publishes KID guidance and templates.

Transfer fees: what happens when a temp becomes permanent

The Regulations don't cap what you charge hirers, but regulation 10 controls temp-to-perm fees, which the law calls transfer fees. Two conditions decide whether you can enforce one when a hirer takes on your temp directly, or through another employment business.

The hirer must be offered an extended period of hire instead. Your contract with the hirer must say that, instead of paying the fee, the hirer may elect by notice to have the worker supplied for a further hire period of a length set out in the contract, on terms no less favourable than those that applied just before the notice. The hirer chooses. If the contract doesn't offer this, or you then fail to supply the worker for that period, unless you were in no way at fault, the fee term is unenforceable.

The move must happen within the relevant period. That is whichever of these ends later:

• 14 weeks starting on the first day the worker worked for the hirer under your supply; or
• 8 weeks starting on the day after the worker last worked for the hirer under your supply.

If there was a gap of more than 42 days in which the worker didn't work for that hirer through you, supply before the gap is ignored when finding the first day. A move after the relevant period can't trigger a fee, and regulation 10 bars you from asking for one.

Opt-outs under the Conduct Regulations

A work-seeker that is a limited company can opt out of most of the Regulations under regulation 32(9). Both the company and the person who will do the work must agree to the opt-out and notify you before you introduce or supply them, and you must tell the hirer. The worker can withdraw the opt-out by notice. An opt-out or withdrawal given while they are working in a position takes effect when they stop working in it.

There are firm limits:

• Limited-company work-seekers only. The opt-out is for a work-seeker that is a company, such as a contractor's own limited company. Individual work-seekers, including sole traders, can't opt out.
• No opt-out for roles involving vulnerable persons. Regulation 32(12) disapplies the opt-out where the person will work with or attend vulnerable persons.
• No pressure. Under regulation 32(13), you can't make your services conditional on the work-seeker opting out.
• The KID and its records still apply. Regulations 13A(18) and 29(7) keep them for opted-out companies.

The Fair Work Agency's overview of the Conduct Regulations 2003 confirms that work-seekers can't opt out where the role involves working with vulnerable people.

What used to be different: the Swedish derogation

The Swedish derogation is often mentioned alongside the Conduct Regulations, but it was never part of them. It was a rule in a different statutory instrument, regulation 10 of the Agency Workers Regulations 2010 (AWR). It let an agency switch off the AWR equal-pay right for a worker it employed on a permanent contract of employment, in return for paying them between assignments.

The Agency Workers (Amendment) Regulations 2019 removed it from 6 April 2020, for existing contracts as well as new ones. Agencies had to give each affected worker a written statement by 30 April 2020 that the old statement no longer had effect and that they were entitled to equal pay after the 12-week qualifying period. Today every agency worker in England, Scotland and Wales who completes that period gets equal pay; our AWR 12-week rule guide explains how it's counted.

Enforcement: from EAS to the Fair Work Agency

Since 7 April 2026, the Conduct Regulations have been enforced by the Fair Work Agency (FWA), an executive agency of the Department for Business and Trade. It brought together several enforcement bodies, including the Employment Agency Standards Inspectorate (EAS), which used to police recruitment agencies. The FWA acts as the state regulator for employment agencies and employment businesses in England, Scotland and Wales.

Apart from updated cross-references (SI 2026/302, such as the KID's enforcement contact), the rules didn't change when the FWA took over. The FWA overview says breaching the Act or the Regulations is an offence carrying a fine, and the FWA can seek a Labour Market Enforcement Undertaking or Order, while the Secretary of State can seek a prohibition order of up to 10 years. Our employment law changes 2026 guide covers the wider changes, and if you supply workers for agriculture, horticulture, gathering shellfish, or processing or packaging agricultural produce, shellfish or fish, you also need a gangmaster's licence under the Gangmasters (Licensing) Act 2004; see our gangmasters licence guide.

How Templio helps you stay compliant

Templio is timesheet, approval, invoicing and compliance software for recruitment agencies. It doesn't write your terms of business or give legal advice. It does keep the records the Conduct Regulations lean on: each contract holds its compliance record, the document vault stores the worker's documents with expiry alerts, and approved timesheets give you a dated record of hours worked for every assignment. See our recruitment agency compliance checklist for where these duties sit alongside the rest. Start your 14-day free trial, no card required.

This guide is general information, not legal advice. It reflects the law and gov.uk guidance as at the "Last reviewed" date. Check the live legislation.gov.uk and gov.uk pages before relying on a specific rule.