New Regulations Anger Recruiters; Information and Communication Technology

Article excerpt

Byline: DANNY BRADBURY

The DTI's proposed amendments to its employment regulations finally appeared last month - and the IT recruitment sector is not amused. Danny Bradbury reports

THE DTI caused something of a stir in the IT sector at the beginning of February, following the announcement of proposed amendments to existing employment agency rules by Industry Minister Alan Johnson. The Government says that the amendments - which directly affect employment agencies - will bring flexibility to the industry but IT recruitment executives and legal spokespeople have other ideas.

Under the new regulations, which will be in consultation until mid-March and then made law in the summer, employment agencies will face restrictions in a number of important areas.

Firstly, the law surrounding transfer fees will change. Previously, employment agencies were able to stipulate that if their temporary workers went to work for another agency in an agreed period of time after their contract ended, the rival agency would have to pay a commission. That period has been restricted to four weeks.

Similarly, agencies will be restricted when charging transfer fees to employers. If a contractor goes to work permanently for a corporate customer which previously employed him through an agency on a temporary basis, the agency will only be able to charge a transfer fee up to 14 weeks after the temporary contract began.

If it happens after the contractor stops working for the agency, a transfer fee will only be payable if the contractor starts working permanently with the former temporary employer within eight weeks of the end of the temp contract.

Confused? Anne Swain, chief executive of the Association of Technology Staffing Companies, is crystal clear on what it means for recruitment firms, but she is not so sure why the Government is doing it. She is annoyed because she feels that contractors can now be bought and sold by agencies like commodities and she adds that the regulations will stifle competition in the industry.

Agencies invest money in signing contract staff and, the argument goes, if larger companies can come in and poach them from under the noses of smaller recruitment agencies, it will make it difficult for the small fry to survive.

Kevin Barrow, of solicitor Tarlo Lyons, says that the terms are a little strict and adds that it could lead to problems for recruitment companies as large corporate end-user customers may well use the amendments to the regulations to transfer their contractors to a small number of preferred suppliers. …