The recently announced code of conduct for recruitment supply chains and RPOs does not go far enough says the Association of Recruitment Consultancies (ARC) and fails to address the key issue.
The code seeks to tackle an unfairness where second tier agencies, if they wish to deal with a hirer that uses an RPO, have to submit to onerous payment terms including pay when paid provisions. The code is voluntary, and even if adopted, does not require fixed period payment terms to be agreed, leaving a disadvantaged second tier agency in an uncertain position as to payment and exposed to more onerous finance terms. This gives RPOs an advantage over second tier agencies that many regard as divisive and unfair.
The ARC argues that the only fair way forward is if the RPO is obliged to make payment to a second tier regardless of receipt of funds from the client, in the same way that the second tier is already required by legislation to make payment to the workers concerned.
The ARC has been running a campaign in this area since July 2011 and has asked the government to review provisions relating to payment terms for RPOs in order to level the playing field which currently significantly favours larger RPO businesses.
Ben Grover, External Policy Adviser to the ARC said “Whilst the code gives the impression that this is something that has now been resolved, nothing could be further from the truth. The code itself recognises the existence of the problem and our own evidence shows how disadvantaged second tier agencies are where there are no fixed payment terms. Whilst the industry has made some effort to create a code this cannot be as good as a change in the law. Currently payment regardless of receipt of funds is not compulsory for RPOs, the code in any event does not seek to make it mandatory and, in any event, some RPOs have not even signed up to it.
Grover concludes “the fact that the code has been produced shows the need to focus in this area, but as it stands it could cause more problem than it solves not the least by suggesting that the problem has gone away and need not be addressed.”
Details of the ARC Campaign are online. The ARC welcomes evidence and enquiries from agencies who have been negatively affected by current RPO arrangements. Call 01273 777997 or email to Ben@arc-org.net.
A version of this article orginally appeared on The Association of Recruitment Consultancies website.