The Hidden Costs of Low Agency Rates and the RISK to Operators

In the transport and logistics industry, where operator licences are the bedrock of legal operations, the choice of recruitment agency and the contractual terms they offer are of paramount importance.

Low hourly rates, such as offers of £15 per hour from some agencies, might seem appealing but require a rigorous evaluation. This is especially crucial when these agencies may be engaging their drivers as limited company workers or sole traders. At C9 Recruitment, we’ve witnessed the pitfalls of such arrangements throughout the sector from non-compliant agencies.

Licence Lending Risks with LTD and Sole Trader Engagements

When transport operators engage drivers who work as limited company workers or sole traders either directly or through a recruitment agency as the worker is under the SDC (Supervision Direction and Control) of the operator, they potentially face a critical regulatory issue often overlooked:

  • Licence Lending Concern: UK regulations mandate that operators must maintain direct control over their operations. This includes oversight of vehicles, drivers, and compliance with safety and employment regulations. Engaging drivers as limited companies or sole traders can risk the operator’s licence by creating a perception or reality of ‘lending’ the licence to these individuals or their companies. Such a setup suggests that the operator no longer retains the direct control required by law.
  • Legal and Regulatory Repercussions: If it appears that an operator’s licence is being used by another business entity (the limited company or sole trader), this can be viewed as a breach of the licence conditions. Consequences can be severe, including the revocation of the operator’s licence, which can stop business operations abruptly and lead to long-term legal battles to regain licensing.

The Financial and Operational Impact

The initial cost savings from low agency rates can be quickly overshadowed by the extensive risks:

  • Severe Financial Penalties: Non-compliance can trigger significant fines and penalties that far exceed any initial cost benefits from lower rates.
  • Operational Disruptions: Compliance issues can lead to operational interruptions, such as vehicle seizures and service stoppages, undermining service delivery and customer trust.
  • Reputational Damage: Non-compliance can tarnish your reputation, affecting your ability to secure future contracts and maintain current ones.

Selecting a Compliant Recruitment Partner

To safeguard your operations and ensure compliance, take these measures:

  • Thorough Vetting: Investigate the compliance track record of recruitment agencies, specifically if they manage contracts with limited company workers and sole traders, and Proof of Employment Status (we would suggest requesting this regardless of what the agency has informed you).
  • Compliance over Cost: Always prioritise compliance and regulatory adherence over seemingly attractive cost reductions. The long-term health of your business depends on it.
  • Demand Transparency: Opt for partners who are transparent about their business practices and how they achieve compliance with regulatory standards without compromising legal requirements.


Choosing the right recruitment agency is a decision that impacts not just your operational costs but the very legality of your operations. Engaging drivers through inappropriate contractual structures not only poses a risk to your operator’s licence but can jeopardise your entire business. With C9 Recruitment, you choose a partner committed to compliance and industry best practices, ensuring your operations remain secure and legally sound.

Short of drivers? Want to use an agency that DOESN’T put your operation at risk?
CALL C9 TODAY: 0208 152 4574


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