Hotel operators who use contracted-out staff risk ending up with exploited and illegal workers who could also pose a security threat.
Up to one-third of the 300 agencies serving London hospitality firms are not playing by the book, according to Tony Hailwood, managing director of the Capital People agency.
A consultant at Elite Housekeeping reckons the number of dubious firms - especially in housekeeping and food and beverage - has soared in the past year-and-a-half since agencies no longer have to register.
Caterer sent a post-graduate student to four agencies posing as an illegal worker. One, Hotelcare in London's Hatton Gardens, registered her with just a photocopy of her passport details and offered her a cleaning job at the Jurys Inn on Great Russell Street at a rate unlikely to provide the legal minimum wage. The agency claimed that it would undertake the necessary work permit checks when she arrived at the hotel.
Jurys Doyle Hotels insisted it had written confirmation that Hotelcare staff had the necessary work permits. The company said it also audited Hotelcare files.
But many large companies, such as InterContinental and Hilton, rely solely on the agencies to vet lower-level staff.
Illegal workers are vulnerable to many abuses. Elite has taken on Polish workers who were charged £250 just to get a job but are too afraid to name the agency. Other agencies charge workers for sending out their cheques and do not provide pay slips or holiday pay.
Unreferenced staff pose a security threat ranging from pilfering to potential terrorist activities.
Another headache, according to Cumbria-based AWOL Recruitment, lies with agencies who place people as self-employed without checking with the Inland Revenue, leaving hotel owners to deal with problems of PAYE and national insurance.
But many hotels turn a blind eye to rogue operators to save money. Justin Johnson, group human resources manager at Corus Hotels, said using reputable agencies can add 30-40% to the bill.
"Hotels go for prices. In the three-star and bottom-of-the-range four-star hotels it is a cattle market," said Elite's consultant. "They don't care if the staff are not getting a legal wage so long as their rooms are cleaned cheaply."