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Why Agency PSLs are hurting Contractors

What is an Agency PSL?

A PSL or Preferred Suppliers List is something that is commonplace with work agencies nowadays and is a tool that is used to try and control what umbrella companies their contractors use.

So, What’s the Issue?

On the surface, a PSL should simply be used for an agency to make recommendations to their employees about what umbrella companies to use, but in most cases, this is not the driving force behind why they are used.

Many agencies will profess to use PSLs to guard their contractors against uncompliant umbrella companies and push them toward FCSA regulated umbrellas. The irony is, this, by its own nature, is uncompliant.

What a lot of agencies are less open about is the financial incentives behind their PSLs. By creating a list of preferred suppliers, they are directly generating business for these companies, and in many cases, this is often met with commission payments from the umbrella to the agency – which is unlawful on many grounds.

By acting on these terms, the agency is often neglecting what is best for the individual in favour of their own financial gain.

The Legalities

Where an employment business (agency) finds work for a contractor under the condition that they work via a third party i.e., an umbrella company from a PSL, is a breach of Regulation 5 of the Conduct of Employment Agencies and Recruitment Businesses Regulations 2003 which states:

‘Neither an agency nor an employment business may make the provision to a work-seeker of work-finding services conditional upon the work-seeker using other services for which the Act does not prohibit the charging of a fee, whether provided by the agency or the employment business or by any person with whom the agency or employment business is connected’

As said before, agencies will often try to use the excuse that they have a PSL to ensure high ethical standards are met. Again, this is not valid, because in the vast majority of cases the agency is benefitting commercially from the arrangement.

Any such breach of these Regulations is ‘actionable’ by law, which means the losses suffered by a contractor could be recovered in court from the non-compliant employment business.

The Solution

The only effective method of stopping these unlawful actions of agencies is by actionable force.

Umbrella Reclaim has been set up specifically to help contractors who have been forced into using an umbrella by an agency PSL. By way of Group Litigation, we can seek redress for any damages made to contractors by agencies and unlawful umbrella companies, and ultimately put an end to this scandal.

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