THE VIEW AND THE INTELLIGENC E
Recruitment and the post-Brexit economy P2 BIG TALKING PO INT
Why the government must pause on IR35 P4 LEGAL UPDATE
RECRUITMENT Issue 67 MATTERS November 2018
Payslips update P6-7 IR P AWAR DS
Full shortlist for this year’s awards P8
NHS
REC calls for review of NHS bank costs T
he REC is calling for an independent review of the real costs of using banks for supplying NHS staff. It comes after a Freedom of Information Act request found that Derby Teaching Hospitals spent an additional £820,000 on staff and infrastructure to operate its trust bank. Staff banks are often touted as a solution to chronic staff shortages in the NHS as they cut out agencies and offer greater worker flexibility. But the REC says the 20% saving proposed by NHS Improvement fails to consider the cost of operating an in-house service for additional human and infrastructure needs. The REC is calling for the cap on agency staff used in the NHS to be applied to trust banks too. REC director of policy and professional services Tom Hadley
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“It’s important the UK maintains a world-class health service and ensures patient safety” says agency staff play a key role in ensuring safe staffing ratios, and the playing field should be level.
“The staff bank service also lacks the expertise and compliance management that recruiters have when solving chronic staff shortages in the NHS,” he says. The REC says a full independent review of bank spending will reveal the real costs, broken down separately by doctors and nurses. World-class health service Tom Hadley says it’s important the UK maintains a world-class health service and ensures patient safety. “We will continue to work with the NHS and key stakeholders to find a better solution and we ask for a level playing field for recruiters who are working hard to ease staff shortages,” he says. “Temporary staff bring flexibility and emergency cover at short notice to ensure patient safety, which is of paramount importance.”
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L E A D I N G T H E I N D U S T RY
the view... Deal or no deal? Whatever happens, recruiters will play a big part in the UK economy post-Brexit, says NEIL CARBERRY, REC chief executive
A
t the party conferences the REC represented members and talked about all things that matter to jobs, where recruiters are ideally placed to help. Skills. The future of work. Inclusion. But Brexit focused most people’s minds. Chequers, Canada, Norway… there are many options. Each with enough support to be relevant, but none commanding a majority. With only five months before Brexit day, the clock is ticking. One thing is for certain – businesses will need to be ready with contingency plans for whatever deal or non-deal we get. Recruiters will play a big part in helping them. EU nationals keep many sectors going, so there will be a lot to do – either helping clients negotiate new rules or finding new ways of resourcing for roles. Having worked with corporate HR leaders, I know they will value the support recruiters can give at this critical time. There was mixed news for recruiters in September’s Migration Advisory Committee report on EU immigration. We would have liked to have seen more recognition of the shortages you all report in lower skilled roles. But equally, the MAC report highlighted the benefits of mobility to skills and productivity – delivered at no significant cost to wage growth or UK citizen employment. We’ll use this to make a case for an immigration system that allows employers to hire at all skill levels, and for individuals to hold the right to work once they get here – so they can take on temporary roles if they wish. Whatever the final outcome, a transition to a new system is essential. It was good to see reports that even in the event of a ‘no deal’ the Home Office is arguing in government for a two-year transition period for immigration rules. That’s the right choice – everyone in the REC is working to give the sector a smooth transition, not the dreaded cliff edge. If you want to keep up to speed with all things recruitment then follow me on Twitter @RECNeil
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How do we measure ‘good work’? asks TOM HADLEY, REC director of policy and professional services HADL EY ’ S C OMMENT
What gets measured... The UK jobs markets continues to defy gravity and remains remarkably robust, with record employment levels and falling unemployment. At the same time, the increasing focus on quality as well as quantity of jobs will continue to intensify. Re-evaluating the way we measure ‘good work’ and the overall success of the UK jobs market is an opportunity to showcase the pivotal role of recruitment and employment professionals. The need to find new ways of measuring job quality was a core message of the REC’s Future of Jobs commission and is at the heart of a report launched last month (September) by the Carnegie Trust. It was also a key recommendation in Matthew Taylor’s review into modern working practices. So what does ‘good work’ look like? Taylor defined it as: ‘work that is fair and decent, with realistic scope for development and fulfilment’. On all of these measures, recruitment professionals can make a positive impact. Our industry is predicated on helping find a job, then find a better job. Good work is also about how a job makes people feel. Doing the right thing in terms of compliance and worker rights is part of this; as is the ability to match the right people to the right job in the first place. Agencies also provide a crucial outlet for individuals; examples include providing Employee Assistance Programmes for temporary staff or taking forward issues raised by workers with end-users. Driving ‘good work’ in specific industries will also help attract people into sectors such as hospitality, logistics and care, which face major staffing challenges. We will feed into sectoral initiatives through specialist REC sector groups. Looking at the longer term, recruitment professionals can become ‘Future of Jobs ambassadors’ by spreading the good recruitment message and helping future generations navigate the changing world of work. As the saying goes, what gets measured gets done. What gets measured also gets recognised. Feeding into hugely topical debates around progression, good work and job quality measurement are a great example of the recruitment and employment sector driving social innovation and helping to build one of the most inclusive and dynamic jobs market in the world. Recruiters make good work happen; we need to be proactive in telling our story and explaining how. You can follow Tom on Twitter @hadleyscomment
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£30K
the intelligence... WITH REC SENIOR RESEARCHER, MARK HARRISON
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t time of writing, we are still awaiting the release of the government’s long-awaited Immigration white paper. However, what has been published is the final report on EEA migration into the UK from the Migration Advisory Committee (MAC), an independent public advisory body. The report was commissioned by the Home Office to better understand EEA migration into the UK and inform post-Brexit immigration policy. Whilst acknowledging that UK-EU immigration may form part of Brexit negotiations, the report sets out an immigration system that would apply to immigrants from both Europe and the rest of the world. This would mark a significant break from the present system where EEA citizens are covered by freedom of movement. The overarching rationale of the proposed unified system is to make higher-skilled immigration easier and lower-skilled immigration more difficult from all parts of the world. At present, the ‘Tier 2 (General)’ visa (T2 visa) is the main route for high-skilled immigration into the UK, with up to 20,700 T2 visas granted annually. The MAC proposes using a significantly modified and expanded T2 visa as a template for future high-skilled and also medium-skilled immigration.
PERMANENT PLACEMENT MARGIN UNDER PRESSURE
17.5% 13.8% 11.0%
20.9% 16.8% 12.8%
Upper quartile RIB recruiter Median RIB recruiter Lower quartile RIB recruiter
Average permanent placement margin H1 2017 2018 Average permanent placement margin, H1 2017 & 2018, for the median recruiter and those in the upper and lower quartile
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Firstly, the MAC proposes removing the annual cap on T2 visas, allowing all who meet the criteria to qualify. Secondly, the MAC proposes lowering the qualification level required to apply for a T2 visa from National Qualification Framework Level 6 (ie. bachelor’s degree or equivalent) to NQF Level 3 (ie. A level or equivalent). Thirdly, the MAC proposes removing the resident labour market test, a requirement for most skilled vacancies that they are advertised for 28 days in the UK first to ensure settled workers have the first opportunity to fill any vacancy. The MAC proposes retaining the current T2 salary threshold (£30,000) and Immigration Skills Charge on employers (up to £1,000 per migrant employee) as ways of protecting against the potential for (or perception of) undercutting of wages. Whereas the report proposes expanding and liberalising the T2 system, the proposals would largely cut off the current supply of EEA workers into low-skill roles. The MAC leaves open two potential routes for
The latest real-time information from the RIB Index shows that average permanent placement margins were lower in H1 2018 than those achieved a year earlier. For the median RIB recruiter, the average margin across H1 2018 (13.8%) was 3 percentage points lower than in H1 2017 (16.8%).
The MAC proposes retaining the current T2 salary threshold (£30,000) and Immigration Skills Charge on employers (up to £1,000 per migrant employee) as ways of protecting against the potential for (or perception of) undercutting of wages.
low-skill immigration: a Seasonal Agricultural Workers Scheme and an extension of the Tier 5 Youth Mobility Scheme (which allows 18-30-yearolds from certain countries to come to the UK for a two-year period). However, these are highly unlikely to provide the necessary pool of labour currently required by a wide range of industries. The government should ensure that there is still a route for immigration into the UK for such roles in the years following Brexit to enable businesses to continue growing and thriving.
This margin pressure similarly affected recruiters at the higher and lower end of the performance spectrum, however. For RIB recruiters in the upper quartile, the average margin dropped by 3.4 percentage points, year-on-year, to 17.5%, whilst there was a 1.8 percentage point fall in the average margin (to
T2 visa
The MAC proposes using a significantly modified and expanded T2 visa
11%) for those in the lower quartile. With employer demand for support from recruitment agency partners increasing, recruiters are able to offset some of the reduced yield per placement through increased volumes and/or making placements higher up the salary spectrum.
BELINDA JOHNSON runs employment research consultancy Worklab, and is associate knowledge & insight director of Recruitment Industry Benchmarking (RIB) – part of the Bluestones Group. The RIB Index provides bespoke confidential reports on industry benchmarks and trends. See www.ribindex.com; info@ribindex.com: 020 8544 9807. The RIB is a strategic partner of the REC.
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TA X
big talking point
The taxing issues behind IR35 Due to the upheavals eavals caused by IR35 reforms in the public sector, the private sector or needs to get to grips with what’s heading its way. The REC is currently ently working hard to delay the proposed extension of these tax reforms orms by April 2019. Pip Brooking investigates why
veryone yone should pay the correct rect amount of tax. But if the he government rushes through ough poorly designed reforms orms to how contractors payy it, it risks damaging many ny businesses – at a timee when they can least afford ord it. Proposed changes to IR35 5 in the private sector would add cost and complexity omplexity to firms already facing uncertainty inty around Brexit and skills shortages, and nd it could have wider economic ramifications ns than the government expects.
What’s the deal with ith IR35? IR35 was introduced in n 2000 to combat tax avoidance by workers using their own limited company to ‘disguise’ their employment. In April 2017, these off-payroll payroll working rules were tightened in the public sector and the government has proposed osed to extend them to the private sector by April next year. But the rule changes have caused upheaval in the public sector. And the difficulties are likely to be replicated, rather than resolved, if
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the roll-out continues as proposed. The issues have been highlighted in several studies: • The rules are difficult to comply with, say half the central government bodies surveyed in research commissioned by HMRC. • Skilled contractors are going elsewhere. Half of public sector hiring managers think they’ve lost talent because of the changes, and nearly three quarters are finding it hard to retain it, according to research by CIPD and IPSE, the association for the self-employed. • Too many contractors are being made liable for more tax than they should be. The burden of the reform means worker status is not being decided on a case-by-case basis as it should be. In a survey of REC members in 2018, 69% said more often than not July 2018 their public sector clients have made ‘blanket in or out of scope decisions’. • The number of unregulated intermediaries is rising. 42% of REC
members have observed this increase since the new rules were introduced. So instead of benefiting the Treasury, this means the taxpayer is losing out – as are compliant recruiters and workers.
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TA X
So, what are the issues at stake for the private sector? There is nothing to suggest the same difficulties won’t apply – but the size and diversity of the private sector and the limited capacity of HMRC to deal with the challenges are likely to worsen the effects. A significant majority (72%) of REC members believe aggressive tax avoidance is likely to increase in the private sector, just as it has in the public sector. And 74% said early implementation would reduce flexibility of the labour market, while 68% said it would exacerbate skills shortages. From a more practical point of view, many businesses will need to replace or upgrade their payroll systems to accommodate the deduction of PAYE and National Insurance contributions from limited companies – and will not have budgeted for it in the upcoming tax year. Others may need to change their back office and IT functions, which some members fear could cost them more than £100,000. “Our current accounting does not support payroll on such a scale and as such we would need to invest heavily in accounting advice, training and possible increased staff overheads,” said one REC member. “The changes would affect more than 500 of our current contractors, and the administrative and practical burden of wholesale change to our back office functions and renegotiation of contracts will be seriously problematical in such a short timeframe,” said another. And when small businesses have only just recovered from months of preparation for the arrival of the General Data Protection Regulation (GDPR), they understandably worry about being “swamped”.
How can this damage be avoided? In its submission to the Chancellor ahead of this month’s Budget, the REC has urged the government to adopt an approach to any private sector reforms that allows businesses adequate time to prepare, resolves the issues with the off-payroll rules in the public sector and reduces
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42% of REC members observe an increase in non-compliant umbrella/ intermediary models since the introduction of the public sector IR35 reform in April 2017 72% of members expect the same to happen in the private sector if the reforms are implemented in April 2019 74% of members worry about the impact of early implementation of reforms on the flexibility of the labour market 68% of members it will exacerbate skills shortages But only 15% think it will improve compliance with IR35 rules
the administrative costs and burden to business. Included in its asks were the following: • Let the Matthew Taylor review into modern working practices run its course. Recent consultations on employment status, agency work and transparency all have a bearing on IR35 discussions. With possible further changes to tax and employment status and ways to tackle non-compliant intermediaries in the pipeline, it is better to wait than implement piecemeal and flawed reforms. • Resolve issues with the public sector reform before implementing any changes in the private sector. And if changes are made in the private sector this should also be replicated in the public sector, so there are no tax or administrative advantages for contractors choosing to work in one over the other. • Speed up investigations and implement an appeals process for contractors who disagree with their IR35 status determination. The current process for reclaiming overpaid tax is also inefficient and excessively burdensome, considering that the deductions should not have been made in the first place. • Make clients liable for the decisions they make on the tax status of contractors. It cannot be right that a fee-paying agency is wholly liable for a decision taken by the end-client. • Run an education campaign. When knowledge and understanding of the IR35 legislation in the private sector is low, the government needs to help to ensure organisations can comply with any new legislation – and allow businesses time to prepare. “Rushing through these reforms could be a gift to the unscrupulous – encouraging those who use tax avoidance schemes not those workers and companies who do the right thing,” says the REC chief executive Neil Carberry. “The government needs to pause for thought on IR35.”
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REFERENCES
legal update Changes to payslips for employees and workers Changes to the Employment Rights Act means agency workers are now entitled to receive payslips. REC solicitor and commercial advisor BUNMI ADEFUYE explains
E
arlier this year, the government announced that there will be two amendments to the Employment Rights Act 1996 (ERA) with regards to employees and workers receiving itemised pay statements. The itemised pay statements will be applicable to employees and workers whose pay varies according to the hours they work.
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The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 was laid before parliament on 8 February 2018 and it comes into force on 6 April 2019. Under the ERA, only employees were entitled to receive pay slips, and agency workers were not. However, this amendment extends the entitlement to agency workers. The Taylor Review which was published in July 2017 played a key role in the changes to the ERA as it set
out recommendations on the rights of agency workers. The response from the government to the Taylor Review confirmed that they will introduce legislation to improve the rights of agency workers, which includes the right to receive a payslip. The amendments to the legislation will assist both employees and agency workers to determine whether they have been paid correctly and also increase transparency with regards to their pay. Section 8 of the ERA set outs the information which must be included in the itemised pay statement as follows: • show the total number of hours worked for each payment that is being made; or • separate figures for the different types of work or different pay rates. In order to comply with the new requirement in April 2019, employers and employment businesses should review their payroll process and make the necessary changes to obtain the additional information required and adjust the format of their payslips to comply with the amended ERA.
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I N S P I R AT I O N To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com
STEVE GRIMSLEY is the
managing director & head of Search InfoSec People
How did you get into recruitment?
What sector do you recruit in?
What sector do you recruit in? We work within the block management sector, which is an industry not many people know about.
What are some of your big challenges? Like most niche sectors it comes down to candidates – as per my previous answer we
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CHRIS DUNNING-WALTON is
managing director of TemplePM
I used to work in the sales team for a small business and my favourite client was an interim recruitment company. When I left the company, I went into the first recruitment agency I saw and said I was thinking about becoming a recruiter. My feet didn’t touch the ground! The rest as they say, is history. Fifteen years later it has proven to be a great choice.
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Q&A
What I know
BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS
work in a sector that many people aren’t aware of, so there is no natural feed into the industry. We are actively looking to help with this issue within our field.
What are you looking forward to? Fridays! I am lucky that owning my own business has meant I am able to work a four-day week. I believe that life is for living and not just for working.
What advice would you give a recruitment entrepreneur/ leader starting out? Know your sector – this is so important and is the reason why clients choose you! Also use support from friends and family.
I launched InfoSec People 10 years ago and we’re a specialist in the cyber security sector. With cyber security seeing such fantastic growth over the last few years, it really has been a rollercoaster ride – with the InfoSec brand recently adding a further two businesses.
What are some of your big challenges? I’ve always wanted to challenge what ‘good’ looks like in recruitment. The recruitment industry hasn’t evolved significantly in the last 20 years, with the same aggressive sales tactics being adopted by the majority of agencies. As such, recruiters generally do not trust candidates or clients – or each other! By far my biggest challenge has been in proving that recruitment
does not need to be like this. Our trust-based, KPI-free culture has resonated with our clients and means we have never lost any of our team to a local competitor – in fact, it is quite the reverse.
What advice would you give a recruitment entrepreneur/leader starting out? Be true to yourself. Do not worry about the money, be excellent at everything you do each day and the score will take care of itself. Read widely and be brave. Above all, do not give up and make it your mission to inspire others to be great.
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W H AT ’ S C O M I N G U P ?
IRP Awards 2018 The complete shortlist For 10 years, the IRP Awards has been celebrating the best practice and professional excellence of our inspirational members. We’ve seen 190 winners, 1,150
shortlisted recruiters and companies, and thousands more recruitment professionals come together to celebrate the best of our industry.
The REC would like to congratulate the following individuals and companies who made this year’s awards shortlist: Individual awards NEWCOMER OF THE YEAR Sariat Adeniji - Hyper Recruitment Solutions Yasmin Boffa - Academics Heather Eaves - Term Time Teachers Chris Forsyth - Redline Group Josh Howell - Evolve Hospitality Daniel Thompson - Acorn Recruitment Theo Varcoe - RedLaw JOBS TRANSFORM LIVES: BEST CANDIDATE EXPERIENCE Adriana Brito Brito - One Step Recruitment Emily Garvey - Consultus Care & Nursing Jodie Rafferty - Rafferty Resourcing Courtney Wardle - Jane Lewis International PERMANENT CONSULTANT OF THE YEAR David Alexander - Star Isabel Brehcist - Give A Grad A Go Adam Cardey - Gattaca Matthew Covell - Search Consultancy Firaz Hameed - Airswift Chantelle Mensah - Admiral Recruitment Claire Philpott - Cartwheel Recruitment Kristy Potter - Acorn People Louise Scott - Castle Employment Group TEMPORARY CONSULTANT OF THE YEAR Mehreen Ayub - Admiral Recruitment Sophie Banks - Monarch Education Molly Fielding - Evolve Hospitality Laura Jeffreys - New Directions Education Asha Kacha - Star Denise McGillivray - Search Consultancy
RECRUITMENT MATTERS
BUSINESS MANAGER OF THE YEAR Pavan Arora - Acorn Recruitment Fiona Blackwell - Girling Jones Beth Daniels - Jane Lewis Peter Denham - Airswift Jon Evans - New Directions Education Chris Pritchard - Search Consultancy Kate Salt - Castle Employment Group James Tuckett - One Step Recruitment Anna Wilson - Castle Employment Group Joe Wilson - Matchtech BUSINESS LEADER OF THE YEAR Sasza Bandiera - Oyster Partnership Richard Bradley - Kelly Services Debbie Caswell - Search Consultancy Edward Clark - LSC Education Amy Hambleton - RedLaw Jodie Rafferty - Rafferty Resourcing Suki Sandhu - Audeliss Kieran Smith - Driver Require Raj Tulsiani - Green Park RECRUITMENT APPRENTICE OF THE YEAR Alfie Colmer - England Associates India James - England Associates Abigail Robertson - England Associates Matthew Stimpson - Human Capital Ventures Claire Taylor - Connect2Staff
The official magazine of The Recruitment & Employment Confederation Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 2100 www.rec.uk.com
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Christopher Moon - Monarch Education Laura Preston - Redline Group Zoe Rogers - Evolve Hospitality Georgia St John-Smith - Hyper Recruitment Solutions Ellis Thorne - Class People
BACK-OFFICE SUPPORT TEAM OF THE YEAR Compass Associates ea Change Group InterQuest Group Meridian Business Support Pertemps Star
BEST COMPANY TO WORK FOR (UP TO 150 EMPLOYEES) Admiral Recruitment Bespoke Careers BPS World Commercial Services Group Recruitment Concilium Search Extrastaff VHR
PEOPLE DEVELOPMENT OF THE YEAR Amoria Bond Class People Jane Lewis Healthcare Sidekicks
BEST COMPANY TO WORK FOR (OVER 150 EMPLOYEES) Amoria Bond Pertemps Search Consultancy
BEST COMPANY TO WORK FOR (UP TO 20 EMPLOYEES) Cityscape Recruitment Girling Jones InfoSec People Lawrence Dean Recruitment Group Marine Resource Oakwell Hampton Red Berry Recruitment TRIA Recruitment Wilkinson Partners
ADVOCATE COMPANY OF THE YEAR Affinity Workforce Evolve Hospitality Serocor Group
Company awards
BEST COMPANY TO WORK FOR (UP TO 50 EMPLOYEES) Bramwith Consulting Building Careers UK Carmichael UK Carrington West Driver Require ea Change Group Hyper Recruitment Solutions Jane Lewis Oyster Partnership
RECRUITMENT CAMPAIGN OF THE YEAR Guidant Group Jane Lewis International CORPORATE AND SOCIAL RESPONSIBILITY PRACTITIONERS OF THE YEAR Commercial Services Group Recruitment Give A Grad A Go Harvey Nash HR GO Hyper Recruitment Solutions Oyster Partnership Red Berry Recruitment Thorpe Molloy Recruitment VGC Group What’s next? Book your table, get your glad rags on and join us on 29 November in London. Find out more at www.irpawards.com
Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, Level 5, 78 Chamber Street, London E1 8BL Tel: 020 7880 6200. www.redactive.co.uk Editorial: Editor Michael Oliver michael.oliver@redactive.co.uk. Production Editor: Vanessa Townsend Production: Senior Production Executive: Rachel Young rachel.young@redactive.co.uk Tel: 020 7880 6209 Printing: Printed by Precision Colour Printing © 2018 Recruitment Matters. Although every effort is made to ensure accuracy, neither REC, Redactive 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 Redactive Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduction in whole or part without written permission.
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