Category: Recruitment Agencies

By David McCormack, CEO of HIVE360

Recruitment businesses are wrestling with how to cover the increased costs following the IR35 changes that took effect last month. An outsourced PAYE model is the solution as both recruiters and their workers will be financially better off.

Following a year of COVID-19-related delays, IR35 changes kicked-in last month. To comply, recruitment businesses have three options: set-up an in-house payroll facility, cut workers’ pay, or outsource payroll to a recommended PAYE, compliant specialist.

The cost of IR35

The new off-payroll rules mean there is more tax to pay.  Umbrella companies charge recruiters for administering payroll, at an average £20 per worker per week – so that’s around £1,000 per worker a year, based on an £18,000 salary.

An in-house payroll also carries additional costs – we estimate a recruitment company with 400 workers should plan for an additional £30,000 each year in administration and resource costs.

To cover these and the additional tax, recruitment business must either ‘absorb’ the financial hit, or pass the costs on to workers in the form of a pay cut, which, if using an umbrella model, would have to be at least five percent to cover the additional costs.

If agencies offer workers a fair, comparable PAYE rate, workers are financially better off being paid this way. When you deduct the weekly fee and all costs of employment going through an umbrella company, and see the real ‘take-home pay’ for workers, you have to ask if the vanity of a higher umbrella rate (and we all know it’s not really a higher pay rate) is stopping recruiters moving workers to PAYE, which is the ‘IR35 safe solution’.

The cost-savings of outsourcing PAYE payroll to a compliant provider speak for themselves:

  • > Recruiters outsourcing temporary workers’ PAYE payroll to Hive360 report savings of £100 or more per worker in the first year.
  • > A temp agency with 2,000 PAYE temps could see a return of £200,000 per annum.
  • > An employer with 100 employees could achieve a bottom-line return of over £10,000.

Added benefits on-the-go 

HIVE360 is an expert in recruitment agency PAYE payroll including those governed by the GLAA (Gangmasters and Labour Abuse Authority). We are also specialists in wellbeing and benefits provision – and bring all this together in one powerful and unique solution: Engage.

Recruiters that outsource their PAYE payroll to HIVE360 gain automatic, complimentary access for all pay-rolled workers to this employee digital health and wellbeing app.

The app’s features include a personal doctor, personal support helpline, care support, and gym memberships, thousands of high-street and online lifestyle, dining and insurance discounts, mobile phone savings, online training resources, and GDPR-compliant pay and pension information such as digital payslips and a real-time workplace pension dashboard.

Recruitment businesses using Engage record worker engagement levels of over 80%.

Recruiters’ choice

By bringing recruiters’ candidate and HR systems seamlessly together in one mobile experience, and by working closely with our team, Engage delivers customised, accurate, on time and fully transparent agency worker pay, whilst creating significant cost savings on PAYE Payroll and Pensions Administration, as well as improving internal process efficiencies and reducing overheads.

Dean Nixon, Commercial Director of First Call Contract Services told me: “Operating extensively in the GLAA Sector means our business has a big commitment to the welfare of our workers. Our decision to launch a new engagement platform with HIVE360 during the global pandemic was an easy one. By giving our temporary workers access to a mobile app that provides immediate GP services, mental health counsellors, pay and pensions information, means we’re helping to support and protect them ‘on the go’ and can give them immediate access to vital information.”

Tricia Hay, MD of First Base Employment added: “I’m really passionate about making sure we consistently uphold high standards in what is a highly competitive recruitment market, especially in the way we treat and look after our temporary workers. Partnering with HIVE360 has allowed First Base to really take welfare and benefits to an exemplary level for all of our valued candidates and our own staff.”

Speaking about its partnership with HIVE360, MD of Rocket Software, Danny Steel, said: “We had been looking for a strategic partner in the employee benefits space and after reviewing numerous potential partners, we found HIVE360 innovative, collaborative, progressive and creative. Their mobile-based tech easily integrates with our TempID+ software and Pocket Rocket app, and as GLAA license holders with much experience in this vital sector, we felt HIVE360 was a really good fit for us, and so they became the obvious choice for our preferred strategic partner.”

Specialist employee benefits and outsourced payroll provider, GLAA license holder and Inspiring Workplaces corporate member, HIVE360 is championing a new model of employment administration in the UK market, and redefining employment and pension administration processing.  For more information, visit: www.hive360.com  

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Three recruitment companies have won prestigious Queen’s Awards for Enterprise, which recognise outstanding performance in international trade, innovation, and sustainable development.

This year marks the 55th Anniversary of the Queen’s award, which was originally established by HRH The Duke of Edinburgh as Her Majesty’s Awards in 1965 and subsequently led to the creation of the Queen’s Award to Industry. The Queen’s Awards for Enterprise are made each year by the Queen and are awarded on the recommendation of the Prime Minister following a rigorous application process.

Specialist ICT Recruitment & Project Solutions Consultancy LA International won the Queen’s Award for International Trade for outstanding continuous growth in overseas sales over the last six years. This is its second Queen’s Award, having previously won it in 2015. “I am delighted and honoured that LA International has again received this internationally recognised and highly sought after award for a second consecutive 5 year term in recognition of our contribution to flying the flag of British enterprise,” said Founder, Chairman & CEO Paul Lukic.

Temp, perm and RPO specialist recruiter nGAGE also won a Queen’s Award for overseas growth, with international sales increasing year on year from £681,000 in 2015 to £91,999,336 in 2020, driven mainly by the US and Northern Europe. “We are delighted and honoured to be receiving the Queen’s Award for Enterprise and to be recognised as one of the best UK companies to be operating successfully on the global stage,” said Tim Cook, CEO of nGAGE.

Specialist audio and entertainment technology recruiter Interfacio was the third agency recognised out of 205 companies – also for sustained international growth between 2014 and 2020. With North America, Europe and APAC now representing over 80% of the company’s business, it added a specialist Research and Development Engineering capability to focus on critical engineering hiring which has strengthened its presence in Asia Pacific (which now makes up one fifth of its non-UK business).

“Recruiting in international markets requires experience, expertise, and high sensitivity to differences in communication and business cultures,” said founder and Managing Director Richard Wear. “Recent search project successes for clients in Norway, Denmark, Austria, Germany, France, Italy, Spain, Russia, China, Canada and the US illustrate the depth and strength of the capability we now have internationally.”

Winning with awards

The next webinar in TALiNT Partner’s PointSix programme of events for agency, talent solution and HR Tech leaders will offer practical insights on why and how to win industry and business awards from expert awards consultant Donna O’Toole, founder of August Awards & Recognition.

“Donna has an unrivalled success rate for prestigious accolades like the Queen’s Awards and the Queen’s Honours List and we’re delighted that she will bring her expertise to PointSix,” said Alex Evans, Programme Director of TALiNT Partners and former head of the National Business Awards, who will also offer insight on how to win TIARA awards and maximise recognition to a targeted audience of HR leaders.

“We will share top tips for choosing and winning the right awards to support a range of objectives, from retaining talent and winning new business to attracting investors and building personal profile as an industry champion and media commentator.”

If you would like to attend this PointSix webinar on How to win with your awards strategy, register now at https://www.talint.co.uk/events/awards-webinar/.

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The increasing trend towards remote working caused by the pandemic is leading firms to look further afield for contract workers.

According to a recent analysis by 6CATS International, in Q1 there was an increase in demand for contractors outside Europe, with opportunities booming in India and South Africa in particular.

Stefanie Cook, Sales Director at 6CATS International, said: “Destinations such as France, Belgium, Germany and the Netherlands have long been hotspots of activity, but we’re increasingly seeing contractors, recruiters and end clients looking beyond Europe, with South Africa and India currently leading a significant proportion of the demand for contractor management solutions.

“Much of this shift has arguably been driven by the uptick in remote working options for contract professionals – meaning that recruiters and hirers are less limited by borders when sourcing temporary experts.

“Instead, we are increasingly seeing staffing businesses able to take a more strategic standpoint and focus on where the talent can be found, without concerns around in-country right to work regulations, immigration checks and visa requirements.”

On a sector basis, demand for contractors was highest in the pharmaceutical area, with oil and gas, engineering and IT also seeing a rise in activity in the first quarter of 2021.

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The co-chair of the Loan Charge APPG report on the contracting industry has effectively called for an end to umbrella companies by suggesting the government strike out part of its Finance Bill.

Speaking in parliament the week after the APPG’s How Contracting Should Work document was published, Ruth Cadbury MP launched a scathing attack on the umbrella industry.

“The unintended consequences of IR35, off payroll legislation, has been a proliferation of umbrella companies, some of which have pushed people into disguised remuneration schemes,” she said.

She added that the APPG report had, “exposed significant malpractice, including withholding holiday pay and kickbacks for recommending or passing on contractors, even including providing fitted kitchens and holidays for recruitment agency directors”.

Opportunity for change

While she said that long term an alignment of tax and employment laws was needed, Cadbury suggested the government now had an opportunity to stamp out bad practices by making changes to Clause 21 of the Finance Bill, which deals with workers provided by intermediaries.

“The government could simply strike out Clause 21, which would then ensure workers got the agency rights they should be getting. Agencies can run their own payrolls, they do for their own staff anyway, they do not need umbrella companies and neither do their contractors.

“Or, the government could redraft Clause 21 to seek to stop the exploitation but they must do one or the other.”

She said some schemes were not transparent about tax avoidance during the sales process and had caused “misery” for workers.

“The government and HMRC are well aware schemes are still being mis-sold to people, including mid and low paid public service workers, nurses, doctors in the NHS and other clinical specialists, teachers and social workers. And also many in the private sector, IT, business services and so on.”

Levelling the playing field

However, Dave Chaplin, CEO of contracting authority ContractorCalculator, said he did not think it was likely the government would follow Cadbury’s suggestion. “Why should the honest umbrella companies suffer because of the few that are up to no good,” he asked?

“The alternative option is to update the existing Finance Bill to rule out skulduggery, and make all umbrellas operate on a level playing field. That would be the more sensible way forward, and there are some options that might be possible.

Crawford Temple, CEO of Professional Passport, expressed a similar view. “Closing down a whole sector that provides such crucial support to the entire contingent workforce would be an over-reaction. We agree with Ruth Cadbury and have indeed been making the point to HMRC for many years that limiting the ability of disguised remuneration and non-compliant operators to enter the market is essential.

“However, the proliferation of these arrangements is a direct consequence of ill-thought through legislation with the responsible stakeholders in the sector all aligned on highlighting these problems in their responses to previous consultations that have been ignored.

“I would suggest that a collegiate and joined-up approach is what is needed right now to drive up standards and stamp out the unethical practices that are giving the entire sector a bad name.”

More enforcement needed

Phil Pluck, chief executive of the Freelancer & Contractor Services Association, which gave evidence to the APPG for its report, added that it is not only regulation but also enforcement action that is needed.

“The key suggestion is that regulation should apply to the umbrella sector, which the FCSA has been campaigning for for a number of years. But we would go further and say that this also requires robust and visible policing. HMRC are caught between maximising tax revenue and prosecuting tax avoidance criminals. This conflict means that not enough prosecutions end in convictions and not enough directors see the inside of a prison cell.”

He said IR35 reform made this need all the more pressing. “The IR35 reforms will see an increase in contractor numbers and an increased opportunity for unscrupulous agencies and umbrella firms to further exploit this population.

“The FCSA is already looking at how it can bring in greater compliance standards in order to create a more transparent and fairer playing field for these workers but the government must stop dragging its heels on regulation and the resources to prosecute unlawful elements in this market.”

Clarke Bowles​, Director of Strategic Sales at Parasol Group, backed the call for more enforcement. “Investing time pressing government for a single enforcement body helping to drive proper regulation would be far more effective than making sweeping statements about an entire industry, most of whom uphold very high standards of compliance.”

Overly simplistic

Bowles added that Cadbury’s dismissal of the need for umbrella companies was misguided. “A quote from Ruth during the speech said ‘The legislation as originally drafted would have meant that the agency would have to put the worker on their own payroll where they would have enjoyed the protections of existing agency legislation.’

“This ignores the fact that agency workers employed by a compliant umbrella company already enjoy and benefit from full employment rights. Whilst there is no obligation on the fee payer to offer employment rights, adopting this strategy could create large numbers of zero right employees, creating a much bigger issue.

“Ruth suggests that clause 21 be struck out and recruitment agencies run their own payroll ‘as they do anyway for their own staff.’ This completely ignores the complexity of fee payer responsibilities, deductions and the benefits for temporary workers that come with the continuity of employment, benefits packages, employment rights and protections.

“In addition, not all recruitment businesses are able to run their own payrolls, many simply do not have the resources, infrastructure or expertise to do so.”

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A new survey of more than 2,700 contractors reveals just 14% will accept an inside IR35 decision, raising fears that UK companies could be on the verge of a massive talent exodus.

Overall, 69% of contractors said that if they were deemed inside IR35 they would either leave or charge a higher fee, according to research by specialist insurance broker Kingsbridge in the lead-up to the introduction of new off-payroll rules on Tuesday, April 6.

This potential exodus of contractors from talent pools is further exacerbated by the struggles this group have faced over the past year. According to Kingsbridge’s research, a staggering 70% of contractors have gone without government support so far during the pandemic, suggesting that a significant proportion of the flexible workforce could soon be lost to employers.

Tough job ahead for recruiters
Andy Vessey, Head of Tax at Kingsbridge, said the findings are alarming reading for recruiters trying to attract highly skilled and flexible contractors. “It’s clearly been a difficult year for contractors, with the combined effects of Covid-19 and Brexit already weighing heavily on their shoulders, and IR35 is yet another challenge to contend with. Engagement and communication…will be key to ensuring that this significantly valuable resource doesn’t dwindle after April 6.

“IR35 reforms can seem complicated and troublesome for recruiters who have new responsibilities and liabilities under the rules. However, if the legislation is understood, enacted fairly and communicated effectively, then contractors will be able to keep working in the way that they want to, and end clients can prove that they are employing them legitimately and legally outside IR35.”

The research highlighted that, while 73% of contractors felt prepared or somewhat prepared for IR35, 55% did not believe their recruitment agency was ready.

Third-party sellers ‘a compliance risk’
Crawford Temple, CEO of Professional Passport, a large independent assessor of intermediary compliance, warned recruiters to be wary of third-party sellers and sales lead generation companies, which typically offered introduction incentives of up to £400 each.

“With umbrella charges typically equating to around £20 per week, it is difficult to understand how these large financial incentives can be offered through standard compliant offerings,” he said. “Many of these organisations seek to front their offering with an accredited provider to create a perception of compliance. Once leads are received, and where the individuals are looking for higher returns, they are often introduced to a different offering.

“Many of the ‘high return’ models operate significantly higher charges whilst at the same time returning larger take home pay for workers. Where compliant tax arrangements are used, the take home pay from providers will be broadly the same, with the only difference being where the charge varies, which should only result in a few pence difference to a worker.”

Beware the ‘ghost’ system
Temple also urged recruiters to be alert to ‘ghost’ systems, where providers seemingly operate compliant offerings with many workers engaged by a standard umbrella style arrangement.

“Behind this seemingly compliant offering lies a separate offering that is only offered to workers who express a desire for higher returns,” he said. “These non-compliant offerings typically fail to provide workers with pay slips or other communications relating to the breakdown of pay so that these would have to be requested by the recruitment company directly from the provider. The examples provided do not reflect the reality of the arrangements and are designed to mislead.”

Tell-tale sign of non-compliance
A tell-tale sign for recruiters that something is wrong is a sudden increase in workers operating through a specific provider for no apparent reason.

“Ignorance is no defence, and the supply chain needs to work together to drive up standards and promote the importance of compliance,” Temple said. “The message is clear: work with compliant partners that you trust and be wary of firms that seem to be aggressively cashing in on new upcoming legislative changes.”

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Concerns that recruiters may be taken to court over unlawful deductions of employers’ national insurance contributions (NICs) have created a cloud of confusion ahead of new IR35 rules coming into effect for the private sector on Tuesday April 6.

Amid the news that group litigations are being prepared to seek compensation from employment agencies or umbrella companies that have deducted NICs from contractors’ gross pay since IR35 was introduced in the public sector in 2017, Apsco issued a statement in a bid to address recruiter concerns ahead of new off-payroll working rules being introduced to the private sector next week.

Changing from outside to inside IR35
Tania Bowers, Legal Counsel and Head of Public Policy for APSCo, said it was important that companies clearly differentiated between “outside IR35” rates and PAYE/umbrella rates.

“When a contractor changes from outside to inside IR35, our advice to members has always been that the cleanest approach is to terminate the original contract with the PSC and issue a new one on new terms,” she explained.

“This is generally required as most workers – as we saw from the 2017 reforms and are already seeing now – provide their services through an employment solution at an umbrella company rather than continue to work inside IR35 under their PSC. However the contractor works, inside IR35 or umbrella, if clients are unwilling to increase their rates then our members are left in a position where they need to offer the contractor a new contract, but on different fee rates, as employers’ NICs and apprenticeship levy contributions – where applicable – must be paid. The Key Information Document is intended to address the issue of transparency over pay, but currently it is not having the impact hoped for.”

 

“The recruitment company must pay the umbrella a sum which covers the employment costs, including holiday pay, apprenticeship levy contributions, NICs and worker gross pay. This means that the worker’s gross pay will be less than the amount paid by the recruitment agency to the umbrella. As an HMRC spokesperson explained recently, ‘it is legitimate for umbrella companies to deduct employers’ national insurance contributions from the payment they receive from the recruitment agency’.”

 

Financial burden to recruiters

David McCormack, CEO of employee benefits and outsourced payroll provider HIVE360, explained the financial burden for recruiters.

 

“Recruitment businesses running an in-house payroll of 400 workers will add over £30,000 each year in administration and resource costs. Those using an umbrella company to pay workers are forcing workers to carry the burden of processing costs on average £20 per worker per week – that’s around £1,000 a year based on an average £18,000 salary.

 

“Recruitment companies have three options – either return to in-house payroll, cut workers’ pay, or outsource payroll to a recommended PAYE-compliant specialist. If agencies offer workers a fair comparable PAYE rate, the workers are better off financially being paid via a PAYE model – to work it out, deduct the weekly fee and all costs of employment going through an umbrella company and see the real ‘take-home pay’ for workers.

 

“Obviously, if there are hidden tax schemes behind the umbrella (mini umbrella, micro umbrella or elective deduction models sometimes called Hybrid), then it’s likely that agencies won’t offer a directly comparable PAYE rate.”

New HMRC off-payroll report ‘too little, too late’
APSCo is critical of the timing of the release of a new report from HMRC and IFF Research into the impact of off-payroll reforms on employment companies, citing the research as being “too little, too late”.

“The research revealed a number of insights that were to be expected, with some recruitment firms already noting a drop in contractor numbers and client demand for PSC contractors,” Bowers said. “It is reassuring to see, though, that most staffing companies have been preparing ahead of the deadline. It is, however, disappointing that this research has come to light so late in the day…leaving little time for action from HMRC.”

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By Dawn Gibson

Major recruiters continue to report big profit slumps as permanent placement activity remains low across world markets.

The latest profit results for Hays, Kelly and RTC show that tough operating conditions relentlessly pounded profits through to the tail end of 2020, although there are signs trading activity is bouncing back in early 2021.

Hays

The Hays Group reported a 75% dive in operating profit to £25.1 million (2019: £100.1 million) on the back of a 24% decline in net fees in its half year report for the six months ended December 31.

In the UK and Ireland, the group recorded a £1 million operating loss, with temp fees down 21%, improving through the half, and perm declining by 35%.

In Australia and New Zealand, operating profit was down 42% on the back of a 34% drop in perm fees and a 18% drop in temp fees, while in Germany profit was down 76%, with perm down 34% and temp down 45%.

Trading in all major markets improved through the half, however, showing promise of a better 2021.

“With recovery in fees and our profits accelerating in Q2, this provides us with confidence to resume paying core dividends at our full-year results in August,” said Hays Chief Executive Alistair Cox. “We have also identified £150 million of surplus capital, which we also intend to return to shareholders in phases via special dividends, again commencing at our results in August.”

Kelly

Kelly Services reported an operating loss for the full year of 2020 of $93.6 million, compared to earnings of $81.8 million reported for 2019. On an adjusted basis, earnings from operations were $44.3 million compared to $90.8 million in 2019.

The group reported Q4 operating earnings of $9.5 million, or earnings of $13.9 million as adjusted, compared to earnings of $28.8 million in the corresponding quarter of 2019 as adjusted. Q4 revenue was down 7.2% year-over-year as the continuing effects of the pandemic impacted customer demand.

President and CEO Peter Quigley pointed to sequential quarter-over-quarter revenue improvement in Q4 as a sign of gradually improving economic conditions. “We’re optimistic that we’ll benefit from a recovery that gains momentum throughout 2021, with pipelines for both organic and inorganic growth strengthening,” he said.

RTC

For the year ended December 2020, RTC reported a 14% drop in group revenue to £81.4 million, down from £94.9 million for 2019, and a 45% slump in profits from operations to £1.1 million, down from £2 million in 2019.

However, net cash inflow from operating activities rose 76% to £5.1 million and net cash increased to £1.9 million, up from net debt of £2.8 million in 2019. No final dividend is proposed.

Commenting on the results, CEO Andy Pendlebury pointed to the impact of the pandemic as the story behind the numbers. “Given the seismic impact of the closure of large parts of our economy, I believe our results are extremely respectable and our cash position significantly enhanced,” he added.

Staffing 360 Solutions

Staffing 360 had some positive news with its preliminary fourth quarter results for the year ended December 2020. The company predicted unaudited Q4 revenue of $53.8 million, an increase of 11%, over Q3, citing rises in gross profit and demand.

The company has raised approximately $19.7 million (approx. $18 million net) in a public offering of 21,855,280 shares of its common stock at $0.90 per share. Since June 2020, Staffing 360 has reduced $55 million of debt to $26.8 million, a reduction of $28.3 million, or 55%.

“Completing this raise of $19.7 million gross proceeds is the latest step forward toward improving our balance sheet, setting the stage for further growth and progress in 2021,” said CEO and President Brendan Flood.

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Industry research from the REC and WEC under-estimates growth in UK recruitment. This is according to the latest Top UK Recruiters Report, published by TALiNT International, which features 825 recruitment companies that each have a UK turnover in excess of £5 million per annum.

 

Using up to date Companies House information, and data supplied by these recruitment firms, it found that total revenues from the 825 companies is £39.7 billion. This is higher than the £35.7 billion highlighted in the Recruitment and Employment Confederation’s (REC) Recruitment Industry Trends report for 2017/18. The Top UK Recruiters Report also estimates that 148,000 people are working in the sector, compared to 115,000 claimed by the REC.

 

While 39,232 businesses are registered under the recruitment related SIC codes at Companies House, with 8,448 newly formed companies in 2018, the Report’s author, David Head, observes that many of these are sole traders.

 

“If pushed, TALiNT International would say that there is a maximum of 20,000 fully functioning businesses operating in the sector,” he said. “What is not a matter of conjecture is that the sector remains on a growth curve and shows little sign of a slowdown.

 

Based on its estimate of 20,000 trading recruitment companies, the Report claims that turnover for the entire UK recruitment industry is in the region of £48 billion, or €55 billion – much higher than the €31.8 billion recorded by the WEC.

 

“The recruitment industry has remained one of the most resilient sectors in UK business, continuing to grow and prosper despite Brexit uncertainty, skills shortages, record employment and just about everything else that the new technology disrupters can throw at it,” adds David Head. “There are, quite simply, some outstanding businesses with truly exceptional leaders operating in the sector and they are continually pushing up standards, both in levels of expertise and service, as well as in actual raw financial performance.

 

“This is why there should always be robust data and information that charts and records the growth of the recruitment industry. There has to be a source that can be viewed as the ‘go to’ reference point for the sector and that remains the purpose of the Top UK Recruiters Report.”

 

The Report lists 825 recruitment businesses in turnover order and drills into key metrics including turnover, NFI and PBT per employee, perm and temp turnover, region and over 30 sector disciplines. “If you use any form of contingent worker, engage with staffing and recruitment companies, RPOs, MSP or executive search firms, this is the definitive guide to the sector,” Head concluded.

 

To order your copy of TALiNT International’s 2019 Top UK Recruiters Report head to: https://www.eventbrite.co.uk/e/top-uk-recruiters-report-2019-tickets-60523479356.

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Recruiters and associated HR services placed over 1.1m people into permanent jobs in 2017/18, and were responsible for placing more than 1m agency workers on any given day, according to new data published today by the Recruitment & Employment Confederation (REC).

The REC’s annual Recruitment Industry Trends report for 2017/18 showed that the total industry turnover from permanent and temporary/contract placements, and other HR services, reached £35.7 billion, an increase of 11% on last year. £30.85 billion was generated through temporary/contract placement activity, and approximately £4.84 billion through permanent placements.

The number of businesses operating in the UK recruitment industry grew by almost 10% in the year to March 2018, totalling 30,430, and the industry employed approximately 115,000 people.

Other figures from the 2017/18 report include:

  • Almost two thirds (64%) of temporary assignments were for 12+ weeks, while one in five (20%) were for 6+ months (compared to 61% and 20% respectively in 2016/17)
  • 85% of contract placements were for 12+ weeks, and 45% of contract workers were on assignment for 6+ months (compared to 80% and 44% respectively in 2016/17)
  • The average value of permanent placements from the wider recruitment industry was £4,238 (up by 6.4% on the average in 2016/17)
  • The average annualised turnover of each temporary/contract worker on assignment was £34,976 (up 20% on the average in 2016/17)

Recruitment Industry Trends 2017/18 also includes the REC’s forecast for the next three years, which remains positive despite the unknowns in the political landscape. The REC forecasts that the UK’s recruitment industry will grow by 4 per cent in 2018/19, 4.5% in 2019/20 and 5 per cent in 2020/21.

REC chief executive, Neil Carberry, said, “It has been an extraordinary year for recruitment and recruiters. Tight labour markets and quickly shifting skills needs have driven the growth of the industry – but only because recruiters have adapted swiftly to changing times. We see this increased value for clients reflected in our monthly survey feedback – recruitment is a key part of the UK’s world-leading professional services sector. We should celebrate an industry which boosts the economy and transforms candidates’ lives every single day.

“The path ahead is uncertain – Brexit, immigration reform, tax changes, technology. But this report shows that recruiters can look at that uncertainty and see the opportunities. Whatever the coming months and years bring, recruiters will continue to use their skills and knowledge to boost the UK’s labour market and find people their perfect job.”

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Danny Brooks, CEO of VHR

With just six months to go until the UK leaves the European Union, and no deal yet in place, 61% of employers are worried about leaving the EU. How will Brexit affect UK recruitment?

How will Brexit affect hiring candidates?

Although 25% of UK businesses currently employ staff from the EU, an August 2018 survey reveals that over 50% UK business leaders would be put off employing someone from the EU after Brexit changes the UK’s immigration laws.

Recruiting EU nationals currently working in the UK – In July the Home Office published the new mandatory registration scheme for EU nationals. After Brexit occurs on 29th March 2019, all 3.8 million EU nationals living in the UK and EU nationals wanting to enter the UK will need to register for ‘settled status’ to continue to work and live in the UK. Settled status, with its supporting technology still in the testing phase, aims to protect the rights and jobs of EU nationals currently working in the UK, but what about recruiting EU nationals after Brexit?

Recruiting EU nationals after Brexit – From 1st July 2021, EU citizens and any family members living with them must hold or have applied for UK immigration status to legally work in the UK. This new status could present a challenge for hiring managers and recruiters, who may have to adapt candidate selection processes to comply with new editions of immigration law in the next three years. The new status will require UK businesses to adopt a longer-term talent attraction strategy that either focuses on existing UK-based talent pools or accommodates the required time and resources to bring EU nationals to work in the UK for the first time.

Increased skills shortages – The effects of Brexit could be further exacerbated by existing UK skills shortages across industries. In Q4 2017, 22% of UK engineering business leaders and 42% of UK aviation industry leaders identified a labour shortage as the most urgent challenge they will face in the next five years. Global demand for aviation skills alone is set to overtake supply by 2027, and with skilled candidates already under-represented amongst a rapidly reducing workforce, skills shortages will become an increasingly dominant UK business issue.

Increased need for marketing and talent attraction – In May 2018, LinkedIn reported that 96% of hiring strategies had already been impacted by Brexit. The same study found that 44% of recruiters believe that working in the UK is becoming a less attractive prospect to EU citizens, with 39% seeing international candidates who are reluctant to move to London.

How can we mitigate against the effects of Brexit on recruitment?

Retain existing workforces – To protect against the possibility of losing employees who are EU citizens, business leaders can ensure employees are aware of their eligibility to apply for British citizenship or settled status before Britain leaves the EU and communicate the specific details and urgency of registering for settled status.

Build UK-based skills from wider talent pools – As 67% of UK graduates say that they now work in a role completely unrelated to their degree and 1 in 3 graduates are unhappy in their current job, fewer young people than ever are getting into apprenticeships and joining industries such as manufacturing, engineering, aerospace and automotive. VHR’s divisional director and aviation recruitment specialist, Ryan Abbot, advises on the UK skills shortage, “In a globally connected world where students are bombarded with choices, we need to shout louder to reach potential talent who are unaware of what our industries can offer. Business leaders and recruiters can partner with colleges and schools to directly engage with students and show them the variety of successful careers open to them across UK industries.”

Outsource from non-EU countries – The world is rich with talent just waiting to be found. Depending on local labour laws and specific remits, business leaders could turn their recruitment strategies towards candidates based outside the EU and secure the expat workers needed for business growth and success. VHR ethically recruits skilled and experienced candidates across 45 countries and four continents – find out more.

Picture courtesy of Pixabay

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