ARC welcomes consultation on late payment

Referring to the recently announced consultation “Duty to report on Payment Practices”, the Association of Recruitment Consultancies (ARC) welcomed it as the first step towards addressing certain key issues affecting temporary labour supply chains as well as the broader payments picture.

“Since the emergence of the RPO and master vendor model (RPO) within the recruitment industry it has become common practice to include pay when paid clauses within contracts so that 2nd tier supply agencies do not get paid until the RPO does” explains Adrian Marlowe, Chairman of ARC.  “At the same time it is also common for RPOs to avoid strict timelines within which to claim payment from their clients, the hirers of the supplied staff with the result that 2nd tier businesses are prejudiced.  Agencies are obliged to pay their staff regardless of payment by the RPO or hirer, so some take out expensive finance to bridge the gap and others simply choose not to participate thus limiting the availability of resources for the hirer.”

The consultation appears to address this issue by suggesting legislation to ensure that time scales within which organisations actually make payment should become transparent, and standard payment terms and supply chain finance provisions exposed.  This is to work alongside a new prompt payment advisory panel which is due to submit more concrete proposals in Spring 2015.

“We welcome these steps”, continues Marlowe.  “It is difficult for the government to legislate against specific bad practices and this approach, if followed and the consultation confirms the need, will certainly help enormously.  It would then remain to be seen if further measures are required to eradicate unfairness particularly in the RPO sector.”

ARC, which has a membership of businesses many of which work with RPOs, has been pressing for legislative changes to address the RPO issue for many years.  “Codes of conduct, which some RPOs have signed up to, simply have not produced the results.  We know of some cases where procurement officers for those signed up have not even been aware of the codes, let alone attempt to change the payment arrangements.”  Marlowe concluded “There is no alternative to legislation of the kind suggested for the position to be improved, and we support the thinking and respond to the consultation positively.”

The consultation was published on 27th November 2014 and is due to close on 2nd February 2015.  It can be found here

For more information on ARC’s campaign see and to support this and other key ARC campaigns call 01273 777997.