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Opting out of Conduct Regulations

The opt out was designed originally to give a choice to highly skilled, professional personnel who wanted to operate as limited companies due to tax advantages but may not have wanted to be governed by the Regulations.

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (Conduct Regulations) automatically protect any work-seekers who are placed on assignment by an employment business. 

One of the key rights under the Conduct Regulations is that a work-seeker is entitled to be paid for the work which they have carried out, irrespective of whether the employment business has been or expects to be paid by the client for that work. This pseudo-employment protection is often considered to be unsuitable for limited company contractors who intend to provide their services outside of IR35; a significant indicator of IR35 status is whether the contractor takes genuine commercial risk when performing their assignment and, if the contractor is guaranteed to be paid irrespective of any defects or deficiencies in their services, it is arguable that the contractor is not really taking any commercial risk at all. For this reason, professional contractors will often waive their protection under the Conduct Regulations by signing an Opt Out. There is, of course, no guarantee that Opting Out of the Conduct Regulations would make the difference between a contractor being inside or outside of IR35. However, if a contractor has Opted Out, this can only assist their position in the event of an investigation into the contractor’s employment status.

This outline is given for information purposes only and individual situations are unique. Independent advice should be sought from an accounting or tax professional in all cases. 

If you wish to opt out of the Conduct of Employment Agencies and Employment Businesses Regulations 2003, please complete the request form below/leave your details and a member of the Administration team will be in touch: