Challenging amendments to transfer fees

VICTORY! 21st January 2010

We are delighted to announce that, following our campaign, the government has withdrawn its proposal to amend R.10. This leaves employment businesses able to rely on commercial terms agreed with their clients when charging temp to perm and temp to temp fees so long as they either comply with Regulation 10 or the contractor concerned has opted out of the Regulations.

Adrian Marlowe, Chairman of ARC, said "this is a victory for common sense, a significant achievement for the recruitment industry and I thank all those involved who supported our campaign. We had focused on temp to temp fees just as much as temp to perm and had written to more than 900 agencies, none of whom wanted the change. I think the result demonstrates the advantage of approaching these matters in a legal as well as a commercial context, a formula that we shall continue to use in our representations."

This campaign has now therefore closed. 

Original Campaign text:

Most agencies or consultancies (“supply agencies”) engaged in temp or contract supply (“temp supply”) recognise the need to be able to charge fees if a hirer directly hires your candidate or re engages the candidate through a competitor. If charges are not recoverable the hirer will simply be able to take the supplied candidates, thus divesting the supply agency of the valuable candidate resource without payment for the introduction.

Why should supply agencies be concerned now?

A formula for charging transfer fees was set out in r.10 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 and has worked well for some 5 years. However now, with little warning, the government wishes to change the wording of the regulation to ensure that only reasonable transfer fees are recoverable.

What is reasonable is not defined, leaving it open to every hirer to argue on each occasion that the transfer fee is unreasonable. Similarly a hirer can argue that the required optional period of extended hire set out in the original terms agreed with the supply agency, is unreasonable.

This means that if a Court decides that either the fee or the extended period is unreasonable, no fee is owed.

We think this plan is grossly unfair and prejudicial. It gives hirers significant encouragement to challenge the basis of any transfer fee and it leaves supply agencies on the back foot in any settlement negotiations wherever there is a dispute.

Few would doubt that contract and temp recruitment is an ever important tool for hirers going forwards, yet we believe this proposed new law threatens to destabilise the industry.

Our campaign is to persuade the Government to abandon the proposed changes to r.10.

Give more force to our campaign by joining us. Join ARC now!
For more information call us on 01273 777997.