What's on the horizon for the recruitment industry?

The UK recruitment industry places over one million people into new permanent roles each year and over 1.3 million temporary and contract workers on assignment in any given week. With statistics suggesting that the majority of children entering primary schools today will eventually enter jobs that do not yet exist, there is huge opportunity for the recruitment industry to gain competitive advantage by building even closer partnerships with clients to develop strategies to benefit great hiring during this time of such rapid requirement change.

Shorter term, with Brexit literally round the corner, retention and settlement of key staff members is an urgent concern for many businesses, and particularly pressing in industries such as manufacturing, hospitality and agriculture.

Such uncertainty around workplace requirements should provide recruiters with more opportunity to work in collaboration with industry, organisations or trade bodies to help inform, and potentially shape the understanding of what short and more medium recruitment strategies are going to look like, what key competencies are likely to be and where those competencies might come be sourced from – now and into the future.

With higher employment rates and increased use of flexible staffing models, recruiters across industry sectors more than ever need to bring their expertise to the table of businesses to help them look at options for employing ‘atypical’ workers, like contractors, freelancers, gig workers and agency staff.  

From an employment law perspective, the government has recently announced proposals to combat what it considers is unequal treatment of these types of workers, and bring the law in line with modern employment practices. 

Businesses and their recruitment partners will need to get to grips with and prepare for the impacts on their processes arising from new legislation coming into force on 6 April 2020, which includes requiring:

  • Parity of terms and conditions between agency workers those directly employed by the ‘end user’ business after completing 12 weeks service. At the moment temporary workers supplied by employment businesses (those placing temporary workers) are not entitled to the same pay as those directly employed by the ‘end user’ if they have entered into a permanent contract of employment (with the employment business) that also secures minimum pay terms in between assignments (usually national minimum wage or half pay during such periods). This exception is known as the “Swedish Derogation”, which will now be removed from April next year.

  • A written statement of terms to be given on or before the first day of employment, rather than within two months of starting. The right to a written statement of terms will also be extended to all workers (i.e. not just employees) and the extent of terms that have to be included has been widened.

  • The reference period for determining an average week's pay (for the purposes of calculating holiday pay) will be increased from 12 weeks to 52 weeks (or the number of complete weeks during which the worker has been employed). This could have a significant impact and substantially increase the applicable holiday pay rate when compared to what workers are receiving now.

There is more change expected, to benefit the rights of agency and gig economy workers although when it will hit has not been confirmed. Changes are expected to include:

  • Agency workers to be entitled to a “Key Facts Page” from employment businesses which must detail the type of contract they are engaged on, the minimum expected rate of pay, how they will be paid, by whom and what deductions or fees will be applied. The government has confirmed (in its Labour Enforcement Strategy for 2018/2019) that enforcement powers may extend to civil penalties as an alternative to prosecution or serving prohibition notices to those breaching worker and employee rights.

  • Expansion of the remit of the EAS to cover umbrella companies to address concerns they may not assist those typically working in lower skilled, lower paid agency positions. Recruiters dealing with or through umbrella companies that charge workers fees which are not entirely clear may find themselves on the EAS radar so understanding what due diligence is required should be something recruiters are working on if they are not already. The EAS will be empowered to investigate complaints involving an umbrella company and take enforcement action where required (prosecution, civil penalties and/or prohibition notices).

  • Workers being entitled to request a more fixed working pattern from their employer after 26 weeks’ service. This will affect those working on a variable, casual or zero hour basis and provide them with greater certainty around the number of hours or fixed days they will be asked to work.

  • Extending the gap breaking continuous service from one week to four weeks’ employment with the same employer. This is likely to assist more employees gaining access to employment rights, where they wouldn’t have previously

Planning for Change

The recruitment sector is no stranger to change or regulation. Along with all change there is opportunity to be grasped. Recruiters who are keeping abreast of what is coming down the track and working or plan to work with businesses to align processes and strategies to ensure efficiencies and scope are optimised will benefit greatly. Staying ahead of the curve by helping businesses ensure job descriptions, role remits and duties and responsibilities are clearly defined to service operational needs of clients will be essential as the sector, workforce and workplace arrangements evolve. 

It’s clear the government wants to tackle what are perceived to be unfair arrangements that have developed across atypical working. The drive to ensure equal pay (and removing the Swedish Derogation provisions) may challenge demand of the temporary agency market where placements are for 12 weeks or more and reduce margins but only time will tell what other impacts there will be on the sector as its shape continues to evolve.

For more information or just to have a chat about employment law changes impacting the recruitment industry don’t hesitate to reach out to any of our lawyers at legal@leyton.com

Leyton Legal