How to start a recruitment agency in the UK: the legal checklist for a perm desk, and what a temp desk adds

You do not need a licence to start a recruitment agency in Great Britain unless you supply workers into a short list of sectors. What you need is to follow the Conduct of Employment Agencies and Employment Businesses Regulations 2003 from the first CV you send. The fixed official fees are small: £152 on day one for a limited company. The work is in the paperwork, and how much of it there is depends on whether you run a permanent desk, a temp desk or both.

This guide covers England, Wales and Scotland, which is where the Conduct Regulations apply.

Who does need a licence or registration

GOV.UK lists two groups:

• Agencies supplying workers in agriculture, horticulture, shellfish gathering, or food processing and packaging need a licence from the Fair Work Agency.
• Nursing and domiciliary care agencies register with the care regulator for their nation, which in England is the Care Quality Commission.

Everyone else can start trading without asking permission. The rules still apply, and since 7 April 2026 the Fair Work Agency enforces them. GOV.UK's overview lists prohibition orders of up to 10 years among the penalties.

The fixed fees

£100 plus £52 is £152. With the direct debit discount it is £100 plus £47, which is £147. A sole trader skips the Companies House fee and pays only the ICO.

Tier 1 of the ICO fee covers an organisation with turnover of no more than £632,000 or no more than 10 staff. An agency holds CVs, so it uses personal information from its first candidate and should expect to pay unless the ICO's self-assessment says it is exempt. The next tier up is £78.

Two kinds of business in law

The Regulations split the sector in two, and the split decides your duties. In GOV.UK's words, an employment agency "finds work-seekers 'permanent' placements, where workers are employed by the hirer", and an employment business "finds work-seekers temporary assignments, where they employ and supply temporary and contract workers". A perm desk is the first and a temp desk is the second. Many firms are both.

The perm desk checklist

1. Agree terms with each candidate before you start looking for work for them. GOV.UK says these "must be agreed with the work-seeker before providing any work-finding services".
2. Never charge the candidate. Charging a work-seeker a fee for finding work is prohibited outside entertainment and modelling.
3. Get signed terms from the client before the first CV goes out. The regulation that once required written terms with a hirer, regulation 17, was removed on 8 May 2016, so this step is about being paid, not about the Regulations. The guide to terms of business sets out the clauses that decide fee disputes.
4. Collect the facts about each vacancy before you put anyone forward. GOV.UK's list includes the hirer's identity, the nature of its business, the start date and likely length, the position, the location, the hours, any health and safety risks, and the qualifications needed.
5. Keep records of candidates and clients for at least 12 months after you create them and at least 12 months after you last provided work-finding services.
6. Write a privacy notice that says what you do with a CV. If any software scores or sorts applicants, read the ICO rules on AI screening first.

What a temp desk adds

The moment you supply a temp, you are the one who pays them, and several more duties arrive together.

1. Give every temp a Key Information Document before you agree terms. Regulation 13A requires it for anyone registering on or after 6 April 2020. It must be a separate document and no longer than two sides of A4.
2. Pay the temp for work done whether or not the client has paid you. GOV.UK states that an employment business "must not withhold pay from a work-seeker" on that ground, so the business needs cash before it opens: wages go out first and client invoices are paid later.
3. Register as an employer with HMRC before the first payday. You cannot register more than 2 months before you start paying people.
4. Buy employers' liability insurance with cover of at least £5 million. The fine is £2,500 for every day you are not properly insured, and £1,000 for not displaying the certificate.
5. Check each temp's right to work before the first shift. The right to work check router says which check fits which document.
6. Count weeks from the first assignment. After 12 qualifying weeks a temp is entitled to equal treatment on pay, which the 12-week rule calculator works out.
7. State any temp-to-perm fee in your client terms and offer the extended-hire choice, or the fee cannot be charged. The transfer fee guide has the dates.
8. Decide how you will pay contractors who use their own companies or an umbrella. The IR35 guide for agencies explains why that choice can cost more than the margin.

Temps must also be paid at least the National Minimum Wage, get paid holiday, and work no more than 48 hours a week, all of which GOV.UK lists as the agency's job to make sure of.

The first week, in order

1. Incorporate the company, or decide to trade as a sole trader.
2. Pay the ICO fee and write the privacy notice.
3. Have a solicitor draft client terms and candidate terms.
4. Set up files that keep terms, vacancy details and candidate records for the 12-month periods above.
5. For a temp desk: arrange insurance, register as an employer, write the Key Information Document and work out how many weeks of wages you can fund.
6. Only then send the first CV.

We could not confirm a typical insurance premium or start-up budget from an official source, so this page gives neither. Overlyft can set up an AI assistant that keeps the terms, the vacancy record and the checks on each file; who is put forward to a client is the consultant's decision. This page is general information, not legal advice.