RM April 2020

THE VIEW AND THE INTELLIGENCE

Why we need voluntary standards p2 BI G TALKI NG POI NT

Get ready for the new rules on 6 April p4

Recruitment Issue 84 April 2020 Ma ers

HADLE Y’S COMME NT

Seize the opportuniঞes of change p6 PRODU CTS AND TRAI NI NG

Upcoming training and events p8

REC report: adding value

Boost productivity with be er recruitment

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e ng recruitment right can boost produc vity, but ge ng it wrong could cost big money, according to the latest report from the REC. A bad hire of a mid-manager on £42,000 can cost a business as much as £132,000, and the report calculates that £40,500 of this is lost because of reduced produc vity across the business.

The rest of the losses occur because of wasted training and recruitment expenses.

Produc vity goes down when, for example, co-workers have to pick up the slack, staff morale falls, deadlines are missed and orders are unfulfilled.

This cost to produc vity is more widespread than you might think.

Almost nine in 10 businesses (85%) say they have hired the wrong person for the job at some point. As organisa ons try to solve the puzzle of why the UK has had low produc vity since the late 2000s, ge ng recruitment right could make all the difference.

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Overcoming the talent delusion The report iden fies six areas where ge ng recruitment right (for example, by helping businesses to find that perfect match) can boost produc vity – with knockon effects for the whole economy. The report argues that many bad hires happen because of a “talent delusion”, when employers try to fill a role quickly and treat labour as a commodity that can be bought to fill vacancies. But performance is about more than that: good recruitment can help to unlock individual mo va on and collec ve energy to make a real impact. You have to have the right person in the right job in the right organisa on!

“Recruitment must address how people feel – both in making the decision to join and in ge ng the right landing into the business to set them up for success. With 93%

Good recruitment can help to unlock individual moঞvaঞon and collecঞve energy to make a real impact

Making great work happen

of employers seeing an inclusive workforce as important or vital to their success, helping businesses to reach a wider pool of talent is essen al,” said Tom Hadley from the REC. “Helping clients to design an inclusive workplace and make the most of technology and flexible working will help them to reap the rewards of good recruitment.

That’s why recruiters are an important piece in solving the produc vity puzzle.”

Get the full report on the REC website at www.rec.uk.com

www.rec.uk.com 03/03/2020 16:34

Leading the industry

the view...

Enforcement is only part of the story – we have a responsibility to deliver great work, says Neil Carberry, REC Chief Execuঞve

W

elcome to our bumper edi on on compliance and regula on. What fun!

IR35 is now so close that the market is already star ng to feel its effects. Demand for temporary jobs has been flat so far this year, while permanent posi ons have been more buoyant, riding on a wave of post-elec on, post-Brexit certainty. The businesses in our ‘Report on Jobs’ survey were clear that IR35 is a key reason for the slower progress in the temp market, which includes the contractor segment.

This highlights a reversal in the trends we’ve seen over the past year or two, when the temps market has led the way as Brexit upheaval dampened demand for permanent employees.

But IR35 isn’t the only issue on the to-do list. Other imminent changes to recruitment law have been just as hot topics at our events around the country – par cularly concerns around the key informa on document and the removal of Swedish deroga on from the Agency Workers Regula on rules (see page 4 for more on these).

That is a lot of change in a me of general economic uncertainty – given that the final Brexit picture is not se led, and there were signs of a global slowdown even before the coronavirus emerged.

Our message has always been that regulatory change is inevitable, but it has to be handled well. On IR35, the main issue is the lack of clarity from government about final rules and too li le progress on necessary regula on of umbrella companies. Any change that is made has to be fair and enforceable. That’s why the CEOs of 14 major companies wrote to the Treasury under the REC banner recently to ask that the new rules be delayed to give the government me to think again and make changes to get things right.

Will they, won’t they?

To put an anecdote to the uncertainty, the final legisla on was due to be published along with the budget on 11 March. That le just 17 working days before the 6 April implementa on date. However, as I was wri ng this column, the Chancellor resigned. Nobody expected that! As I write, it looks as if the Budget is s ll going ahead. But by the me you read this, things might have changed. This shows that it’s s ll not quite business as usual for poli cs and that means a lack of clarity for businesses and workers.

My advice to all REC members is to prepare for changes to happen – so any policy improvements benefit you, but your business does not rely on them. The REC legal helpline and our lawyers are working hard to make sure you have all the informa on you need to do this. We are only ever a phone call away!

“Prepare for changes– so any policy improvements benefit you, but your business does not rely on them”

Ulঞmately, we must all take responsibility

These legal and tax changes are, no doubt, a challenge, but the industry has come through such mes before. I am a great believer in our resilience and op mism. But, more than that, state enforcement can only ever be a part of good prac ce.

It was interes ng to hear Ma hew Taylor, in his first speech as Director of Labour Market Enforcement, acknowledge this and call for more robust voluntary standards as part of the solu on to protec ng workers and compliant companies. We’ll be fully engaged in that idea as it develops. REC standards and rules on compliance are market-leading and it remains my goal that more and more clients look for our badge because it is the mark of quality and trust in the work you do.

If you want to keep up to speed with all things recruitment then follow me on Twi er @RECNeil

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Leading the industry

the intelligence...

UK: the third largest recruitment industry in the world Thalia Ioannidou, Research Manager, REC The UK has the third-largest recruitment industry in the world, according to the World Employment Confedera on’s (WEC’s) ‘Economic Report 2020’.

The report, which compares the recruitment industries in major economies across the world from Brazil to Australia, and from Italy to China, found that the total value of the global recruitment industry was £418.9 billion (€473.4 billion) in terms of sales revenue in 2018. That’s a rise of 2% on the year before. Agency work accounted for 80% of this, worth £334 billion (€377 billion).

Our place in the world This not only gives UK recruiters a sense of their contribu on to the global recruitment market, but it also offers insights into how well the industry func ons here compared to in other countries.

UK recruiters are clearly making a huge contribu on:

80% Agency work accounted for 80% of the value of the global recruitment industry in 2018, worth £334 billion.

10% The UK is the largest market in Europe, responsible for nearly 10% of all placements in the region.

Puzzled by producঞvity?

Look to recruitment Year-on-year change in NDR/NFI and employee numbers in 2019 +2.3%

2.5% 2.0% 1.5% 1.0% 0.5%

-0.2%%

0.0% -0.5% NDR/NFI versus last year

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Total employee versus last year

• The UK is the third largest in terms of agency work sales revenues, behind only the USA and Japan. These three markets comprise over half of global sales revenues (54%).

• It is the fourth-largest market in permanent recruitment globally, behind the USA, Australia and China.

• The UK is the largest market in Europe, responsible for nearly 10% of all placements in the region. It generates 23% of all agency work sales revenues and 42% of sales revenues in the direct recruitment market.

Good recruitment, UK style With economic uncertainty, skills shortages and regulatory reforms domina ng the UK agenda, our contribu on to the global recruitment market is testament to the work done by our recruiters.

As our ‘Recruitment Industry Trends 2018/19’ report revealed, Poli cians grappling with stagnant UK produc vity should look to the recruitment sector.

Recruitment agency produc vity rose in 2019, despite sta c staff numbers.

Last year the average recruiter had 0.2% fewer

£418.9 billion

the total value of the global recruitment industry in 2018

recruiters placed over a million people into permanent posi ons, genera ng £5.5 billion in revenues.

There were more than 1.1 million temporary workers on assignment on any given day, genera ng £33.4 billion in revenues. This performance was achieved by 119,000 professionals across the country, part of a growing recruitment workforce.

A er prolonged uncertainty and subdued ac vity, employers are star ng to make more hiring and investment decisions (‘JobsOutlook’, February 2020). How we leave the EU and on what terms will of course affect the recruitment market, but if the outstanding performance of the UK industry is anything to go by, recruiters will con nue to demonstrate resilience and will respond to changing needs with agility.

team members than in 2018, according to the median recruiter in the RIB Index across 2019.

Despite this small fall, however, produc vity levels increased by an average of 2.3%, measured by net fee income (NFI) or Net Disposable Revenue

(NDR). This was not driven by an increase in fee earners, since the propor on of non-fee-earning staff rose from 28.6% to 30.6%. Small shi s in the recruitment agency employee base can therefore affect produc vity significantly.

Belinda Johnson runs employment research consultancy Worklab, and is Associate Knowledge & Insight Director of Recruitment Industry Benchmarking (RIB). The RIB Index provides bespoke confidenঞal reports on industry benchmarks and trends. www.ribindex.com

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Legal update

big talking point

Roles, rules and regs: what you need to do before 6 April On 6 April new laws come into force, which increase protec on for agency workers and aim to promote transparency in the supply chain. How will this affect you?

I

f you think repealing the Swedish deroga on is something to do with securing visas for an ABBA tribute band, or that pu ng a KID in place is what you do with your children while you go to work, you need to read this ar cle. As this magazine hits desks, you have about a week to ensure that you are up to speed with all the new rules concerning agency workers.

It’s not just changes to IR35 that are going to make an immediate difference. Other regulatory developments may have caused less controversy than IR35, but they include changes that need immediate ac on. And, while some will merely involve providing exis ng documents faster, or in a new format, others will involve more work – including finding out crucial data from third par es. If you haven’t started preparing yet, there’s no me to lose.

on 6 April. The provision around workers waiving their right to equal pay will fall away, but the rest of the contract will remain valid and in force unless it is terminated by agreement in advance.

What you need to do now Agencies using these contracts must decide the best way to manage them in future.

In the short term, they must supply a wri en statement to all workers with Swedish deroga on contracts that won’t be terminated by the 6 April confirming that they are en tled to equal pay under the AWR. This must be done by 30 April.

2. Holiday pay reference period The period referred to when calcula ng holiday pay for workers with irregular hours will increase from 12 to 52 weeks. The maximum me that this can be applied retrospec vely is capped at 104 weeks.

The reference period applies to workers whose pay varies because: a. they do not have normal working hours, or b. they have normal working hours, but their working days or mes change every week.

If a worker has not yet worked for 52 weeks, the reference period is the total number of weeks they have worked.

The changes

1. Repeal of Swedish derogaঞon (pay between assignments) contracts Agency workers will no longer be able to give up their right to equal pay with comparable permanent staff in return for a guaranteed rate of pay during gaps between roles. Instead, workers will qualify for equal pay a er comple ng 12 weeks on the job.

This is because the Agency Workers (Amendment) Regula ons 2019 repeals regula ons 10 and 11 of the Agency Workers Regula ons 2010 (AWR).

This does not mean, however, that Swedish deroga on contracts will automa cally terminate 4

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8-10%

of agency workers will be affected by the repeal of the Swedish deroga on model.

33%

of recruiters are concerned about the effect of the changes on temporary and permanent recruitment.

1,105,000

temporary/contract workers were on assignment on any given day in 2018/19.

The recruitment industry made £33,378m turnover from temporary and contract recruitment in 2018/19.

11,385

enterprises operated as temporary employment agencies in 2018/19.

3 in 5

of those who got a temporary job through an agency said they were sa sfied with the service provided.

The change means that workers should get the same pay when on leave as they would if they were working. It will parঞcularly benefit workers who typically take leave

Key quesঞons Q: In pracঞce, when will the KID be given to workers?

A: The KID should be one of the first documents that a worker receives and it should be given before terms are agreed with them. When a candidate registers with an agency they should get the KID either at registraঞon or shortly a[erwards. If a candidate submits a CV via an online portal then they should be given the KID when the agency knows that they can provide work-finding services to them and before terms are agreed.

Q: Can I email the KID to candidates, or do they need to sign to acknowledge that they have received it?

A: There is no requirement for workers to sign for the KID, but keep records to prove that they have had it. Sending the KID as an email a achment is fine, but keep proof that it has been sent.

Q: What can I do now to prepare for the KID? A: You need to liaise with any intermediaries in the supply chain – such as umbrella companies – to get the informaঞon required for the KID. If you engage with these parঞes in advance, you will have all the relevant informaঞon when you need it. For example, do you know what the umbrella company’s profit margin is?

at quieter ঞmes of the year when the average weekly pay is lower.

3. Wri en statements Several changes relate to the requirement to provide wri en statements of the main terms and condiঞons of employment, or ‘parঞculars’. a) The right to receive a wri en statement will be extended from employees to all workers (including temporary workers). b) Employers must provide this statement on day one of employment (previously they had two months to do so). c) The statement must include addiঞonal informaঞon, such as whether any training is required and who will pay for it.

What you need to do now As under the current rules, the informaঞon required in the wri en statement can be provided in another document, such as a

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contract of employment or le er of engagement.

However, agencies must now ensure that workers get this document on day one of the engagement and that all relevant informaঞon is in the one document.

4. Key informaঞon document A new provision to the regulaঞons that govern agencies (known as the Conduct Regulaঞons) will require agencies that supply temporary workers to give them a ‘key informaঞon document’ (KID) before terms are in place.

This is intended to address lack of transparency around pay (parঞcularly deducঞons from pay) caused by increasingly complex supply chains.

The document has two parts, the first part sets out general informaঞon about the role and method of payment. The second is a representaঞve statement that includes real numbers and demonstrates how pay deducঞons will be made.

What you need to do now Check the government’s guidance and look at the document templates. This document must be separate from any other documents. It must contain the specific informaঞon about pay and deducঞons set out in the legislaঞon and no addiঞonal informaঞon can be included.

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Hadley’s comment

the view...

The future of recruitment “Don’t just keep up with the changes in recruitment, seize the opportuniঞes,” says Tom Hadley, REC’s Director of Policy and Campaigns

F

rom ar ficial intelligence (AI) specialists to data protec on officers, new types of jobs are emerging in hotspots across the country. The world of work is changing rapidly.

This is thanks to several factors including local growth strategies, new technologies and regula ons such as the General Data Protec on Regula on (GDPR). So what does it mean for recruiters?

How can we make the most of the opportuni es that lie ahead?

The answers are in our ‘Regions 2025 White Paper’, which was the focal point of the regional Future of Recruitment Forum events we hosted in associa on with LinkedIn. Industry leaders in these forums pinpointed some answers: 1. Harness tech and AI. Recruiters want to focus on ‘added value’ ac vi es, but the challenge is to

Building a future recruitment business through resilience Sign up now at www.rec.uk.com

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si through the plethora of new tech. Crea ng space to exchange intel with peers and experts is a priority.

2. Use local jobs and skills data. One in nine employers (90%) say that they look to their recruitment partners for one thing above all else: exper se. In the words of LinkedIn’s Darren Connolly: “Being able to analyse people’s talent is an increasingly sought-a er skill for employers looking to boost workforce planning; this is where recruiters can provide strategic advice to clients.”

3. Find new workforce soluঞons. Industry bodies and Local Enterprise Partnerships (LEPs) flagged workforce challenges as the biggest priority facing employers in their region. Recruitment professionals must seize the opportunity to find new solu ons to the skills squeeze.

4. Drive recruitment innovaঞon. Our ‘JobsOutlook’ report shows that word of mouth and passively adver sing jobs on company websites remain the top two recruitment channels. Now is the me to shout about our industry’s game-changing role in driving innova ve and inclusive hiring across all regions.

That’s what our Good Recruitment Collec ve of over 500 employers is all about. £38.9 billion This grand total is testament to the recruitment industry’s resilience – an essenঞal trait for success in this industry.

The REC’s annual industry report revealed encouraging stats for entrepreneurs looking to set up their own recruitment agency.

These included: • More than 31,140 recruitment enterprises operated across the UK in March 2019.

• Over one million people were placed into permanent roles in 2018/19 by the recruitment industry.

• Temp and contract sales saw a net 25% increase on the previous year.

• The REC predicts the recruitment industry will grow by 4.6% in 2019/20, 3% in 2020/21 and 5.9% in 2021/22.

5. Build bridges. Nurturing be er links between educa on and work is a priority across all regions. We saw great examples of recruiters making a real impact here. Promo ng and facilita ng engagement between recruiters, local schools and colleges is the core aim of the REC Future of Jobs Ambassadors network.

Helping recruitment businesses to pre-empt evolving skills needs and build strategic rela onships with clients is at the heart of our partnership with LinkedIn. As well as posi oning our industry at the forefront of the future of work debate, our journey into the future is about providing prac cal support to recruiters and seizing new opportuni es.

You can follow Tom on Twi er @HadleysComment

The industry is ready for you.

Are you ready to enter the industry?

The REC has been helping those keen to make a footprint in the recruitment industry for many years, parঞcularly via their threeday intensive Start-up training programme.

Covering all the essenঞals of seমng up a viable recruitment agency, Start-up training also allows a endees to join the REC as corporate members once they complete it.

Start-up training dates for your diary: 5 May, London | 16 June, London | 30 June, Manchester | 15 September, London | 3 November, London | 1 December, London Sign up at www.rec.uk.com or call 020 7009 2100 to book. www.rec.uk.com

03/03/2020 16:35

Inspira on

Q&A

Behind the scenes with REC Professionals Camilla Mitcham, Recruitment Partner at Anne Corder

Recruitment, on how recruiters can help when a large local employer goes bust – and what they get back in return.

Your offices are opposite Thomas Cook’s former headquarters. How did you get involved when the company collapsed last year?

Thomas Cook was a big employer here and we had placed many of the people who were made redundant in their roles, so a lot of these people came back to us immediately when they lost their jobs.

Others came because they heard about us through word of mouth.

We also put no ces up on LinkedIn offering advice and encouraging people to come to see us.

However, it was a challenging situa on. I wasn’t prepared for the raw emo on that we saw – one person came straight over on the Monday with all his things from his desk in a bag. We saw husbands and wives who had both worked there for years. And lots of people felt that it was like a family – most of their friends worked there too. I’ve never had people

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burst into tears in front of me at work before this.

What help could you offer them?

Many of the people who came to us at Anne Corder Recruitment had not applied for a job for years.

One person had worked at Thomas Cook for 34 years.

They’d lost a huge amount of confidence and most had no idea how to write a CV and no experience of interviews. A colleague and I set up some CV workshops to give people the basics they needed.

We ran about six onehour workshops with 12 people in each on the Friday a er redundancies were announced. At the end of the day I was exhausted, but it had been enormously rewarding to be able to help even in a small way.

We also contacted local businesses and got them to do half-hour mock interviews with people to give them experience and boost their confidence.

We posted up interview advice on LinkedIn and

also offered to give more tailored advice at a oneto-one level, but it was good to be able to give people other perspec ves and views from local businesses as well. That was really valuable. The feedback was hugely posi ve and people said it definitely helped them.

We placed some people in permanent roles, but we also found temporary posi ons for others who wanted to work un l something more long-term came up. A few chose to take me out and are coming to us now they’ve had me to take stock and think about their op ons.

What were the commonest concerns?

Apart from lack of experience applying for jobs and wri ng CVs, many people were unsure what their skills were and where they would be valued. Like other industries, the travel sector has specific job tles and I had to explain what job descrip ons were really asking for and why someone’s skills were

transferable and relevant to roles in other sectors, even if the terminology looked strange or in mida ng.

What did you learn from the experience?

It really brought home to me the way that one day everything can be fine and the next day it isn’t. It was very important to me that I could share my knowledge and experience and that other people could benefit from it. That was so rewarding and I really felt I could give something back.

I was shocked that people knew so li le about the recruitment process and it made me realise how valuable our experience and exper se can be.

The most important thing we could do was to listen and try to help get people back on their feet and in the right place for them. It was hard to watch people who were so upset and bere and everyone in our office felt it. This made it challenging, but we learnt so much from running the workshops and from the people we helped.

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Products & training

Upcoming training Supercharge your professional development April 1 Business Development Planning (Birmingham) 1 Essen al Skills for Temporary Recruiters (London) 2 Essen al Skills for Permanent Recruiters (London) 2 Recruitment Law: Understanding the Essen als (Birmingham) 2 Social Strategy and Branding (London) 21-22 Balancing Act (Glasgow) 21 Candidate Sourcing and Management (Newcastle) 21-22 Introduc on to Recruitment Prac ce (London) 21 Recruitment Law: IR35 and Supplying Limited Company Contractors (Swindon) 23 Essen al Skills for Temporary Recruiters (Aberdeen) 23 Telephone Sales (London) 28 Business Development Planning (London) 28 Recruitment Law: Managing PAYE Temp Workers (London)

29 Recruitment Law: IR35 and Supplying Limited Company Contractors (London) 30 Social Media Recrui ng: Mastering LinkedIn (Birmingham) May 5-7 Start Up a Recruitment Agency (London) 6-7 Introduc on to Recruitment Prac ce (Birmingham) 7 Recruitment Law: Understanding the Essen als (London) 12 Business Development Planning (Newcastle) 12 Essen al Skills for Temporary Recruiters (London) 13 Recruitment Law: IR35 and Supplying Limited Company Contractors (Glasgow) 19-20 Balancing Act (London) 21 Recruitment Law: IR35 and Supplying Limited Company Contractors (London) 21 Successful Account Management (Birmingham) 21 Telephone Sales (London)

June 2 Social Strategy and Branding (Birmingham) 3 Essen al Skills for Temporary Recruiters (London) 3 Management Essen als (Birmingham) 4 Essen al Skills for Permanent Recruiters (London) 9-10 Introduc on to Recruitment Prac ce (London) 10 Telephone Sales (Bristol) 11 Perfect Client Mee ng (London) 11 The Comprehensive Interviewer (Swindon) 16 Business Development Planning (London) 16-18 Start Up a Recruitment Agency (London) For more informa on visit www.rec.uk.com/training

Upcoming events 7 April – REC Regional Forum: Spotlight on South (Portsmouth) Our new informal member forums are designed to encourage dialogue and learning and to enable ques ons, debate and conversa on around the topical issues that will make an impact on every recruitment business in 2020 and beyond.

We will share market insights, industry data and research and discuss how to use compliance to win business and share best prac ce from across the industry.

Recruitment Ma ers

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The official magazine of The Recruitment & Employment Confedera on Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 2100 www.rec.uk.com

12 May – REC Naঞonal Forum: Spotlight on Scotland (Glasgow) Find out what is going on and walk away with a clear view of what the market will be like for your business over the next year. Gather hints and ps on how to develop your business for success in uncertain mes. Each spotlight event will start with an open discussion to iden fy your ques ons and issues.

Each event includes three dis nct sessions: policy, compliance and legal; the big picture; REC – how we can support you.

Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redac ve Publishing Ltd, Level 5, 78 Chamber Street, London E1 8BL Tel: 020 7880 6200. www.redac ve.co.uk Editorial: Editor: Ruth Pricke pressoffice@rec.uk.com Produc on Editor: Vanessa Townsend Producঞon: Produc on Execu ve: Rachel Young rachel.young@redac ve.co.uk Tel: 020 7880 6209 Prinঞng: Printed by Precision Colour Prin ng © 2020 Recruitment Ma ers. Although every effort is made to ensure accuracy, neither REC, Redac ve Publishing Ltd nor the authors can accept liability for errors or omissions. Views expressed in the magazine are not necessarily those of the REC or Redac ve Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduc on in whole or part without wri en permission.

www.rec.uk.com

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