Ann Swain, Chief Executive of ATSCo, said “If implemented, these regulations will herald an unprecedented period of poaching and predatory tactics in the IT industry. Smaller IT recruitment companies will be endangered, contractors will be bought and sold and consolidation will drive out competition.

“For the IT sector these regulations are completely unnecessary. The IT recruitment sector is a highly competitive market with well over 1000 specialised agencies. Agencies charging prohibitive costs are unable to maintain a market position. Competition within the 13-week cap, as suggested by industry, would both protect workers and enable the market to find its own level. In a highly competitive sector such as IT recruitment, informed negotiation allows the market to find mutually acceptable contracts. Less complex sectors may not suffer as greatly with shorter quarantine periods.”

Quarantine periods refer to the time that must elapse before a temporary worker may:

· Become directly employed on a permanent basis (temp to perm)
· Transfer to direct employment on a temporary basis (temp to temp)
· Transfer their employment contract to administration by another recruitment agency (temp to third party)

The Government’s Draft Regulations on the Conduct of Employment Agencies and Employment Businesses published on February 1 are in danger of destroying competition and labour market flexibility by encouraging ‘predatory action’ say ATSCo.

Companies or other agencies wishing to take on a worker before this, currently pay a fee to the original recruitment agency. This enables agencies to cover their heavy upfront costs involved in finding these specialist workers. The quarantine period is freely negotiated at the start of the contract between the agency and end-user.

Ann Swain continued, “It has never been satisfactorily explained to us why competition within a clearly defined limit of 13 weeks is not satisfactory to the Government. It fails to recognise the investment agencies must make to deliver the standards of service end users and work seekers demand. This is a ‘one size fits all’ solution that fails to meet the needs of the IT sector. If these regulations go unchanged it will be a disaster.

Howard Butterfield, Director of Plexian and ATSCo Executive Committee member, added “This, in my opinion, seriously calls into question the Government’s whole attitude to any form of consultation process and what appears to be a pre-occupation with regulation and red tape. It is now only a matter of time to see whether the amendments go far enough to avoid damaging the industry.”

Related stories:

Agency regulations
Government’s 'temp to perm' quarantine debate intensifies
Minister’s substitute talks about transfer fees

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Richard Powell