Employment Business, Employment Agency, Locum App, what's the difference?


Phil Snowball

Do you know the difference between an Employment Business, an Employment Agency and a locum app? 

There are currently 3 types of locum supplier in the UK, the first is an Employment Business, the second is an Employment Agency and the third are locum apps / platforms.

All three operate and are regulated very differently and offer very different levels of service. But what is the difference and how does it affect you as the end client?

Employment Business

An Employment Business is a locum agency who pays the locum directly, they are regulated by the Conduct of Employment Business Regulations and the Employment Agency Standards Inspectorate (EAS), the Employment Business is the most highly regulated. All locums supplied by Employment Businesses must be ID checked, 'Right to Work' checked, professional body checked and reference checked. Also an Employment Business has to comply with IR35 legislation, AWR rules, HMRC Employment Intermediary Reporting rules, can never charge the locum a fee and must always pay the locum regardless of whether the agency is paid by the end client. This means that implementation of all employment and tax legislation lies with the Employment Business and not the end client. Due to the added compliance, extra financial risk, and additional cost of funding the locums pay, Employment Businesses tend to be more expensive than Employment Agencies and locum apps.

Employment Agency

An Employment Agency is a locum agency who introduces locums to clients but does not pay them directly, they are regulated by the Conduct of Employment Agency Regulations and the Employment Agency Standards Inspectorate but are not obliged to carry out pre-employment checks. Responsibility for compliance is therefore passed onto the end client meaning the end client will be responsible for all compliance, legislation and employment checks before engaging the locum and will be liable for any errors or mistakes. Due to the lack of regulatory or financial risk, Employment Agencies tend to be less expensive than Employment Businesses.

Mobile Employment Apps

There has been a proliferation of mobile apps for temporary workers in recent years. This is where things can get slightly tricky for the end client. Different mobile apps can, on the surface, look very similar, but behind the scenes they can operate very differently. Some are essentially an online job board who charge clients an annual fee for advertising jobs. Others can operate as Employment Businesses and are therefore governed by the EAS and the Conduct of Employment Business Regulations and have to conform to all necessary regulations, other simply act as Employment Agencies. It is important therefore that you establish exactly how they operate before using their services so that you know what your responsibilities are after engaging a locum. If they are essentially just an online job board then the employer is required to carry out all pre-employment check before engaging the locum and will be liable for any errors or mistakes. It is also worth bearing in mind that apps who operate as job boards will also charge clients fees regardless of whether a locum is found for a position whereas an app operating as an Employment Agency and Employment Business are only paid on results. 

Cost of getting it wrong

The penalties for failing to check the right to work are high. For a first breach in a three year period, the employer can be fined a starting penalty of £15,000 per illegal worker and for a second/further breach in a three year period the starting point is £20,000 per illegal worker. There are also potential tax liabilities and penalties if you get the employment status of a worker wrong. For example if you employ self employed locums who HMRC deem to be employees, HMRC can go back six years for unpaid tax and NIC's, penalties and interest.

Best of both worlds

Recruit4vets is one of the best locum agencies and is making waves in the world of work. We offer simple, effective employment and recruitment solutions that connect employers and locums through our locum staffing app and locum agency.

We provide a high-quality service, reliable locums, a transparent and inexpensive fee structure, with all the benefits and protection of a fully compliant Employment Business.

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