Recruitment reforms threaten employers

Employers could be faced with higher recruitment charges and a slump in service quality if a proposed reform of the Employment Agencies Act goes ahead.

Recruitment industry body, the Association of Technology Staffing Companies (Atsco), believes that Department of Trade and Industry plans will encourage poaching of IT staff and restrict labour market flexibility.

The proposed reform of the law, due to take effect this summer, aims to make it easier for temporary workers to become permanent employees.

Companies will no longer be liable for a 'temp to perm' fee if they recruit a worker previously employed in a temporary capacity - provided the permanent contract starts at least eight weeks after the original hiring finishes.

"The proposed regulations look like good news for employers, making it easier to try out a contractor before taking them on permanently," said Atsco chief executive, Ann Swain. "However, recruiters will simply front-load their charges to recoup their costs."

Swain also warned that the move would prompt widespread consolidation among recruiters, with smaller agencies struggling to compete. "Good recruitment companies manage their contractors. All of that costs money. Recruitment will become process-oriented and we'll lose the personal touch. They're going to kill the industry," she said.

Kevin Barrow, head of the IT personnel group at law firm Tarlo Lyons, said the implications of the revised law would be minimal. "There's not much evidence to suggest that end-user recruiters want to convert their contractors to permies. Better agencies will sell themselves on quality as well as price. We should see agencies taking take a long-term view of the service they provide."

"There's the possibility that salespeople from disreputable recruitment agencies will call contractors on-site to undercut the competition and lure them away to other jobs," Barrow warned.

"However, if the government puts some money into policing this - and it has said it will, it could drive out some of the cowboys."

First published in Computing

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