Job Board Summit

Legal challenges 2014?

kevin.barrow@osborneclarke.com Osborne Clarke - 4 December 2013

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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: 16 offices in Europe and US

• Clients

• Facebook, Expedia, Amazon, Airbnb

• Allegis, Manpower, Matchtech, Harvey Nash, CDI, Yoh, Advantage/Recruit Holdings, Empresaria

• 12 jobsites and online exchanges (US, UK)

• 2013: co-ordinated industry input on regulation affecting job boards and online exchanges

• UK Government

• US hirer organisations (Staffing Industry Analysts)

• Ipsos Mori/OC Big data gold rush report

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Issues for job boards and online exchanges in 2014

• UK regulatory review 2013-4 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"• Privacy: US Safe Harbor arrangements will be pulled?• Data ownership: ICO comments re social media and recruitment• Tax: false self-employment via online exchanges?

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UK regulatory review 2013-4

• 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

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UK regulatory review 2013-4

• Current legislation designed to regulate (?dodgy/exploitative?) "bricks and mortar" recruiters

• OC helped jobsites, online exchanges, social and professional networking sites against investigations 2008-2013

• Admissions off the record (in the BERR/EASI 2009 consultation and recent EASI investigations) that the regime is out of date

• 2013 consultation – states that existing laws "have not kept pace with developments in the online sector"

• (NB in addition: Cabinet Office initiative re "barriers to growth" – 2014)

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UK regulatory review 2013-4

- 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 Jan/Feb 2014 – then limited further consultation- If changes that we asked for are implemented, online entities will be:

- freed from admin burdens e.g.checks/contracts (without fear of committing a crim offence);

- able to charge "subscription" to work seekers and/or offer workers paid-for services (without fear of 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 :- a revised def of "employment agency" 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?

– 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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Suggestion 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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Suggestion 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

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Privacy: Safe Harbor arrangements for US entities will be pulled?

• Edward Snowden saga – threat to review Safe Harbor scheme used by 3000 US entities• Latest EU announcement affects entities with transatlantic data flows

•including recruiters/job boards • New requirements - operational changes by US based entities

•disclose privacy arrangements with subcontractors eg cloud providers and US law enforcement access•investigate false claims of safe harbor•progress to be reviewed in Summer 2014

• …or US entities must adopt new (more burdensome) measures e.g. "Binding Corporate Rules"

• Penalties•£500k in UK and more elsewhere• going up to Euros 1M or 5% of worldwide t/o)

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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 with 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? – changes in 2014 - Chancellor's Statement and HoL Select Committee

• Industry needs credible payroll expertise

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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

• TMT Firm of the Year, 2012 (The Lawyer Awards, UK)

• Digital Business & Marketing & Advertising Services Law Firm of the Year, 2012 (Lawyers World Global Awards, UK)

• IT Law Firm of the Year, 2012 (JUVE Awards, Germany)

• Media Law Firm of the Year, 2012 (JUVE Awards, Germany

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Thankyou

• Questions

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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 7030kevin.barrow@osborneclarke.com

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 7032frances.lewis@osborneclarke.com

Thomas LeisterPartner, MunichT +44 49 89 5434 8064Thomas.leister@osborneclarke.com