What you need before you place your first candidate

9 minute read · Updated 2026-09-09

Starting a recruitment agency in the United Kingdom needs no licence in most sectors, no minimum capital and no examination. That is the good news and it is also the trap: nothing stops you placing your first candidate on Monday, and nothing warns you about the six things you should have done first.

Here is that list, in the order it matters, with the free official source for each one. Everything on it can be done by you except two contracts, and those two are the ones worth paying for.

Before the first candidate, not after

1. Decide what you actually are

An employment agency finds permanent staff: you introduce somebody, the client employs them, you invoice a fee and you are finished. An employment business supplies temporary workers: the worker is yours, you pay them every week, and you carry holiday pay, statutory sick pay, a pension and the payroll. Most agencies do both and the law treats them differently at almost every turn.

If you are starting with no money behind you, start permanent. Temporary work pays better over time and it needs cash you may not have: your worker is paid on Friday and your client pays you in thirty days.

2. Terms of business with the client, signed before the first CV

This is how you get paid and how you keep the candidate. A client who has your candidate and no signed terms holds every card there is. It needs your fee, your rebate scale, what counts as an introduction, and, for temporary work, the transfer terms required by regulation 10 of the Conduct Regulations. We have written a full guide to what goes in them.

3. Terms with the work-seeker

The Conduct Regulations require written terms with the person you are working for, agreed before you do anything for them. For temporary workers you also need a key information document, and it has to be given before they agree those terms.

4. A right to work procedure, written down

Not a habit, a procedure. The penalty is up to £45,000 for a first breach and £60,000 for a repeat, per worker, and from 1 October 2026 the duty reaches into labour supply chains rather than stopping at direct employment. The detail is here, and the employer's guide is free.

5. Insurance

Professional indemnity for being sued over a placement, public liability for damage your people cause, and employer's liability from the day anybody is on your payroll, which is compulsory at a minimum of five million pounds under the Employers' Liability (Compulsory Insurance) Act. No serious client signs with an agency that cannot produce the certificates. Use a broker who knows recruitment rather than a price comparison site.

6. Register with the Information Commissioner

You process personal data as a business, so you pay the data protection fee. For most small agencies it is £52 a year. It takes ten minutes and not having done it is the first thing anybody checks.

Then check whether your sector needs more

Supplying workers into agriculture, horticulture, shellfish gathering or the food and drink processing and packaging attached to them requires a gangmaster's licence, issued by the Fair Work Agency. Operating without one is a criminal offence, not a fine, and a warehouse role inside a food factory can be caught. We have written that one up separately because the boundary is not obvious.

Care, health and education roles bring DBS checks and, under regulation 22, extra duties where the work is with vulnerable people.

The first month or two, not day one

• A data protection policy and a retention schedule. Driving records have their own periods and holding a medical longer than you need is a breach on the most sensitive data you will ever hold.
• An appropriate policy document before you hold your first medical or DBS result. Schedule 1 of the Data Protection Act 2018 requires it for most of the conditions that let you hold that data at all.
• Equal opportunities, complaints, modern slavery and anti bribery policies. Bigger clients send a supplier questionnaire before they place a single order, and having the answers ready is the difference between winning that account and being asked to come back later.
• A simple record of processing activities. A spreadsheet is enough at this size.

Four things that are never optional

1. Never charge a work-seeker for finding them work. Section 6 of the Employment Agencies Act 1973. There are narrow exceptions for a few entertainment and modelling sectors and they will not apply to you.
2. Never advertise a job you do not have. Regulation 27 requires the client's written authority before you advertise their role. A general advert for no particular hirer is fine; inventing a vacancy to collect CVs is not, and it is the fastest way to lose a reputation you have not built yet.
3. Never send a CV without the candidate's agreement to that client and that role.
4. Never use an umbrella company you have not looked into, and read what changed on 6 April 2026 before you use one at all.

Before you rely on this

This is a guide, not legal advice, and it is free because the law behind it is free. Every source we used is linked in the text so you can read it yourself rather than take our word for it. Where a decision turns on your own circumstances, and two of them below do, pay a solicitor once. It is cheaper than the alternative.

We are a UK job board and we are building a recruitment arm of our own, so we are working through this list ourselves. If you spot something out of date, tell us and we will fix it and say when.