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Job Board Summit Legal challenges and changes 2015? [email protected] Osborne Clarke - November 2014
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About Osborne Clarke
"the acknowledged experts [in recruitment]."
"Osborne Clarke enjoys an outstanding reputation in digital business, enhanced by its international credentials"
Legal 500 UK, 2013
• International law firm: 22 offices in Europe, Asia and US
• Clients
• Facebook, Expedia, Amazon, Airbnb
• Allegis, Manpower, Matchtech, Harvey Nash, CDI, Yoh, Advantage/Recruit Holdings, Empresaria
• 15 jobsites and online exchanges (US, UK)
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About Osborne Clarke
"the acknowledged experts [in recruitment]."
"Osborne Clarke enjoys an outstanding reputation in digital business, enhanced by its international credentials"
Legal 500 UK, 2013
• 2013-4: co-ordinated industry input on regulation affecting job boards and online exchanges
• UK Government
• US organisations
• UK job boards
• Ipsos Mori/OC Big data gold rush report
• Different limits across Europe on use of personal data
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About Osborne Clarke
"the acknowledged experts [in recruitment]."
"Osborne Clarke enjoys an outstanding reputation in digital business, enhanced by its international credentials"
Legal 500 UK, 2013
• 2014: working with Cabinet Office, BIS and Collaborative Consumption Europe on deregulation necessary in UK to support "Sharing Economy"
• Nov 2014: "Unlocking the sharing economy: An independent review" - commissioned by UK Govt
• Includes platforms which help people share skills/personal services
• Independent review published 26 November and presented to Government
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Issues for job boards and online exchanges in 2015
• Original UK regulatory review in 2013-5 re job boards and online exchanges– Should they be exempted from UK recruitment regulation?– What regulations will remain?
• Cabinet Office initiative re "barriers to growth" of Sharing Economy– Unlocking the sharing economy- an independent review (issued 26 Nov 2014)
• Privacy: – Changes to EU Data Protection laws
• Data ownership: ICO comments re social media and recruitment• Payment Services Regulations• Tax:
– false self-employment via online exchanges?
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Original UK regulatory review 2013-5
• Current legislation- Employment Agencies Act 1973- Conduct of Employment Agencies and Employment Businesses Regulations
2003 (as amended) – the "Conduct Regulations"• Definitions:
• "employment agency" [and "employment business"] – very broad• "except publications …unless wholly or mainly for the purpose of…" • = wide enough to capture online businesses/jobsites[?]
• Charging • general prohibition of charges to work-seekers incl self-employed• restrictions on monetisation (cooling off, client accounts etc.)
• Checks - identity, qualifications etc. where candidate working with vulnerable• Sanctions - incl. criminal
• Has led to serious problems with fundraisings and flotations – if job boards and online exchanges have an illegal operating model will an investor invest?
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Original UK regulatory review 2013-5
• Current legislation designed to regulate (?dodgy/exploitative?) "bricks and mortar" recruiters
• OC helped jobsites, online exchanges, social and professional networking sites against investigations 2008-2014
• Admissions off the record (in the BERR/EASI 2009 consultation and recent EASI investigations) that the regime is out of date
• 2013 consultation – stated that existing laws "have not kept pace with developments in the online sector"
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Original UK regulatory review 2013-5
- Govt said in July 2013 that it would amend 1973 definition of "employment agency/business" so online entities are not caught by the legislation
- Draft expected "any day" (waiting ministerial approval) – then limited further consultation and new law in force for April 2015
- If changes that we asked for are implemented, online entities will be:- freed from admin burdens e.g. checks/contracts (without committing a crim offence); - able to charge "subscription" to work seekers and/or offer workers paid-for services
(without committing a crim offence); - able to sign off due diligence documents for investors (confirming compliance)
without fear AND not face "proceeds of crime" concerns.- BUT possibility that :
- exemption will be defective, still capturing some online providers - any exemption will be subject to inappropriate bureaucratic conditions - inappropriate new law specifically targeting some aspects of online offerings- charges to workseekers will still be prohibited
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Suggestions for response Definitions
• Expand existing "Publication Exemption"?• New exemptions?
– Wording distinguishing between passive and active role in finding work?
• Very difficult to draft? What about search engines? Make underlying rules in search engines public?
• (Sharing Economy review of November 2014 has recommended exemption should apply provided no human intervention)
– All online is exempt subject to clear notices/satisfaction audits/systems to weed out charges to desperate and vulnerable, and supplies in vulnerable situations?
– Specific exemptions
• Self-employed? What evidence?
• Age? Qualifications? Types of job/pay levels? What evidence?
– Other?
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Suggestions for responseMonetisation of work seeker
• Issues– Monetisation: Financial interest in making of match?
– Accept categories who should not be monetised – by exception?
• Qualifications? What evidence?
• Types of job? What evidence?
• Age? What evidence?
• Employed vs self-employed? What evidence?
– How much should be charged?
• Some info free?
– Subject to evidence that real job? What evidence?
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Suggestions for responseRelax/abolish checking regime
• Current position: – CRs prohibit an agency from "introducing or supplying" a work-seeker to a hirer – which may involve working with, caring for or attending a "vulnerable person"– unless it has obtained certain "confirmations" (or taken reasonable steps etc.)
• Who is a "vulnerable person"?– any person who by reason of age, infirmity, illness, disability or any other
circumstance is in need of care or attention– includes any person under the age of eighteen
• Suggestions to change?
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Sharing economyIndependent review Nov 2014
http://bit.ly/1vNnDyr
Government promise response early 2015 (Matthew Hancock MP – Business Minister)
Helpful suggestions in the review?
• Platforms which plan a merely passive role (i.e. no human intervention) in helping individuals find assignments should not fall within the current UK recruitment regulation regime. Instead there should be a separate lighter touch regulatory regime
• ID verification – making this easier by allowing platforms to use UK Government online verification systems
• Disclosure and barring re criminal records – allow platforms access to digitised records
• Trade body to help online platforms to negotiate better deals with suppliers e.g. insurance policies
• Government labour exchanges should encourage work seekers to use online platforms to find assignments
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Sharing economyIndependent review Nov 2014
Other relevant suggestions
• Skill sharing platforms to agree to ensure users are paid a living wage (£9.15 in London and £7.85 in rest of the UK – about 50% higher in London than the current National Minimum Wage) http://www.bbc.co.uk/news/business-20204594 (This took us by surprise)
• UK Government to clarify the employment status of individuals who provide personal services via online platforms – what if any statutory rights will they and won’t they have, and who will owe them those rights (platform or hirer?)
What is not covered by the review?
• Clarification/simplification of VAT status of supplies via a platform (EU law)
• HMRC guide for platforms about what income tax and NICs liabilities they may have (e.g. Intermediaries legislation etc.) = “touchy” area - better to avoid it
• Clarification /simplification of Payment Services Regulations status of payments to workers via a platform (EU law)
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Sharing economy and original review
What is the likely outcome?
• Tax?
• Payment Services Regulations?
• The UK Government may play with an exemption from recruitment regulation for job boards and online labour/skill sharing exchanges, which may help a bit
• …but coalition governments may be here to stay - will they prioritise potentially risky deregulation at a time when many people feel there is media focus on a growth of false self-employment via "intermediaries" and growth of a vulnerable underclass of “non-employed” workers?
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Privacy: New data protection legislation?
• Right to be forgotten will become statutory right under proposed new legislation• New obligation to obtain express consents etc. of transfer of details to particular
recipients from workseekers – implied consent not enough• Penalties
• going up to Euros 100M or 5% of worldwide t/o
• All being looked at by European Parliament this winter – new law in 2015
• In the meantime • European Court of Justice is wading in and making new law anyway
• Google case – limited right to be forgotten• Safe harbor action debate – report due
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Data ownership: ICO comments re social media and recruitment
• Social media usage for non domestic purposes• Member of staff uses personal networking page for recruitment = non domestic usage =
crim offence by worker and employer• …as a result of which employers must:
– stop such activity (as if!) OR – assert ownership of employee social media activity
• (Assertion of ownership is at odds with contractual terms issued by LinkedIn etc.)
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Tax: penalties for false self-employment via online exchanges?
• Online exchanges often have higher transaction fees than job boards• ..and users want an easy payment conduit• = some online exchanges act as payment/contractual intermediaries to "control" the
relationship/money and to be user friendly
• Worldwide concerns about false self-employment– time based payments?– personal service?
• Liabilities for hirers if tax and social security not deducted – US/Germany– UK Intermediaries legislation – changes in 2014 – online platform liable for PAYE and NICs
• Industry needs credible payroll expertise
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Online exchanges and Payment Services Directive?
• Some online exchanges avoid acting as contractual intermediaries and instead act as payment intermediaries to "control" the relationship/money and to be user friendly
• = payment agent/money remittance business• EU exemption being withdrawn in France and Germany (and UK) • Online exchanges need to comply with PSD (client accounts/authorised persons/cash
reserves)
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Thankyou
"the acknowledged experts [in recruitment]."
"Osborne Clarke enjoys an outstanding reputation in digital business , enhanced by its international credentials"
Legal 500 UK, 2013
• Questions
osborneclarke.com
OC team
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Kevin is a partner in Osborne Clarke's recruitment and resourcing team. He advises on national and global flexible workforce projects, including business process, HR and recruitment process outsourcing, as well as business protection, tax and regulatory advice relating to contingent workers , SOW workers and contract staff., and the use of online exchanges and jobsites
Kevin has advised on global staffing , VMS and MSP projects involving Allegis, CDI, Yoh, Advantage, Harvey Nash Group plc, Matchtech Group plc, and many other suppliers and users of recruitment and staffing services.
Kevin is an acknowledged expert in the recruitment sector and digital recruitment and speaks regularly at industry conferences and seminars. He regularly contributes to international webinars and conferences for SIA and is regularly involved in consultations with the UK Government about employment and tax legislation affecting recruitment.
Kevin BarrowPartner,T +44 20 7105 [email protected]
Frances is head of the firm's recruitment sector team, specialising in advising end users and recruitment companies on all aspects of the recruitment process, payroll outsourcing and HR outsourcing. She advises on the liability and insurance aspects, as well as the regulatory issues faced by recruitment businesses. Frances is also experienced in advising on the employment status of contingent workers, TUPE and on the employment law aspects of outsourcing and other commercial deals.
She has advised the CBI and APSCo on the Agency Workers Directive, is regularly consulted by HM Treasury and HMRC in the UK on the tax regime relating to contingent workers and independent contractors, and delivers seminars both to clients and internally.
Thomas is a partner in Osborne Clarke's employment practice in the firm's recruitment and resourcing team in Germany. He advises on employment aspects of mergers and acquisitions, consequences of transfer of business, as well as all aspects of laws governing works councils and collective bargaining law. He specializes in employment, regulatory, and social insurance law regarding contingent workers and independent contractors.
The German Osborne Clarke team advises foreign staffing firms which intend to supply/use contingent workers in the German market and on equal pay issues relating to contingent workers in Germany. Osborne Clarke regularly advises on large staffing projects and Managed service Provision contracts in Germany and in Europe.
Frances LewisConsultant,T +44 20 7105 [email protected]
Thomas LeisterPartner, MunichT +44 49 89 5434 [email protected]
