Since August 2011, ARC has been campaigning to persuade the government to tackle the unfairness that currently exists when RPOs use ‘pay when paid’ clauses whilst the Conduct Regulations still require recruiters to pay workers regardless.
It would now appear that our cries have (partially) been heard. April 2017 is set to see the implementation of a statutory duty on large companies to report quarterly on their supplier payment practices. This will include the average number of days within which invoices were paid and the percentage of invoices which were not paid within their period for payment.
Although this is far from a panacea for 2nd tier recruitment businesses, legislation that aims to tackle cash flow issues by highlighting those companies that are not paying suppliers in a timely manner is certainly a step in the right direction.
Far better would be for the government to heed ARC’s suggestion that RPOs should be obliged to make payments to 2nd tier suppliers of agency workers within definite time scales. This would remove uncertainty and reduce cost. Also, as the bulk of payment is in respect of the charge for the worker’s time, it would be consistent with the payment obligations of the supplying 2nd tier agency.