Recruitment businesses and their clients could be forgiven for not prioritising compliance, paying lip service to it as a box ticking exercise that has to be done. But the government is not going to turn a blind eye when it comes to regulation and driving up standards and it has long been aware of the potential for workers to be exploited by a labour market supply chain that is flawed in parts. Government has come to realise that in the temporary labour market there is potential for unscrupulous businesses to take advantage of vulnerable workers and profit unfairly from doing so and it will not be tolerated any more.
Over the last couple of years legislation has been devised by policymakers in a move to clamp down on exploitation and we have seen a number of compliance changes being made in a concerted effort to stamp out unethical business practices. The Criminal Finances Act, off-payroll reforms in the public sector, gender pay gap reporting and changes to payslips from April 2019 are just a few and, in the coming twelve months, recruitment firms will need to get to grips with off-payroll reforms in the private sector, repeal of Swedish Derogation, introduction of Key Facts Statements, right to request more stable contracts after 26 weeks, and providing written statements from day one. Umbrella employers are also to face regulation in the near future so recruiters will want to be sure that they are only working with compliant businesses. It’s a lot to get to grips with.
Along with this raft of changes, the government’s labour market strategy is pledging to increase compliance in the labour supply chains, to better enforce holiday pay rights for workers, to collaborate with the Insolvency Service regarding ‘phoenixing’, when a company goes into liquidation only to be reborn in a different form, and to work with HMRC in relation to non-compliant intermediaries. Sir David Metcalf, the director for Labour Market Enforcement has laid out his recommendations that some joint responsibility measures be introduced where the hirer at the top of a chain bears some responsibility for non-compliance found further down the chain. He is not currently proposing full ‘joint and several’ legal liability similar to that found in some other European countries. Instead he suggests a process where if non-compliance is found, follow-up action by enforcement agencies, in conjunction with the hirer and supplier, would be undertaken in private to address the infringement. If it is not satisfactorily dealt with then there could be naming and shaming of the end-hirer and the supplier. Discussions are at an early stage and it isn’t yet clear what shape any supply chain responsibility will take, however one thing is clear; firms at the top of the supply chain should be encouraged to take more responsibility for compliance throughout their supply chain. The rationale is sound; the end client will want to protect their brand and therefore pay more due diligence throughout their supply chain.
Compliance becomes integral
Combined, all of these initiatives suggest that compliance is becoming increasingly integral to the day to day working of a recruitment business and must be taken seriously. The reputational damage to clients and to recruitment firms cannot be underestimated quite apart from any financial costs of non-compliance.
Let’s not underestimate the power of trade unions and individual workers themselves. Hardly a day goes by without worker rights hitting the news headlines as those who feel wronged in the workplace take a stand against being treated badly. It is important that we are not all tarnished with the same brush, and now, more than ever, we need to be raising standards whilst providing high quality services that deliver value to our clients. The key to driving up standards is continued professionalisation of our industry’s services – recruiters need to deliver services that exceed clients’ expectations in an increasingly competitive recruitment environment. I argue that delivering on compliance is an added-value service that clients certainly need and should also value. Your recruitment business is well-placed to advise and guide your clients through the nuances of compliance, indeed I am sure that is exactly what some clients expect by virtue of the fact that they are engaging you as the experts in this field.
If you can truly embed compliance into the recruitment services you sell, even by just raising the issues and then signposting clients to the appropriate person in your business, you will be looking after their best interests and ultimately helping them to manage their risk. Through your expertise in advising clients you will be building their trust in your business to truly support them to meet their objectives, and if you position yourselves as the experts then clients will be confident in your ability and will be more likely to come to you for future requirements. I am not suggesting that your sales team should be ‘doing’ compliance, you may prefer for that responsibility to remain with appropriate experts within your business, but it should be another string to your bow, a selling point which will position your business ahead of the competition. Clients definitely need support in meeting their obligations and this is not going away anytime soon. Compliance continues to be a priority for government, and the sooner you embrace the challenge, the sooner you can exploit the opportunity for repeat business and real long-term gains.
So, my message to recruiters is do not treat recruitment as a transactional commodity but go the extra mile to add value. The labour market is a complex environment but as professional recruitment businesses you are best placed to help drive up standards and give guidance to clients so that they are better informed about the importance of compliance. You will be managing their risk, so I am sure they will thank you for it.