We recently had this posted on our discussion forum:
Just had this from a client..
We will continue to pay your fees as per our previous agreements however we are changing our internal new employee terms. Currently if an applicant leaves within their 1st 6 months, we ask them to repay 50% of their fee or we recoup in final paycheck or by other means – we recently have taken an ex employee to court and got a judgement against them.
This year for any employee taken on by introduction through an agency, we will ask them to repay 100% of their fee across their first few wage packets – the amount of months will depend on their role, the fee and what we can legally deduct but will be between a minimum of 3 months and maximum of 12 months. This is not if they leave, but a term of their employment regardless
Thoughts??
You can read the responses on the thread – but most people really couldn’t believe that a company would do that.
I thought it would be interesting to get the legal angle (if there were one) and this is what my friendly recruitment law specialist, Louise Fernandes-Owen of Field Fisher Waterhouse LLP, has to say:
In the current economic climate, there is little doubt that the priority for most employers is to save costs wherever possible. In the context of recruitment, agency fees are often an obvious target and many employers are reviewing their recruitment processes in order to make savings. However, rather than stop using recruiters altogether, some employers have taken the controversial step of recovering agency fees directly from the wages of employees hired through agencies. In extreme cases, employees who are required to repay agency fees in their first year of work could therefore receive very little in the way of actual salary. This unusual practice is, arguably, not too far removed from the colonial times of “indentured servitude”, which generally required workers to work for a fixed period in exchange for transportation, food, clothing and lodging rather than wages.
Whilst employers can technically require new employees recruited through an agency to repay the agency fees in full from their salary, this practice gives rise to a range of issues. From a legal perspective, employers would need to ensure that the new employees have given their prior written consent to such deductions being made from their salaries. Employers would also need to take care that the employees’ salaries did not fall below the national minimum wage by virtue of the deductions. Issues may also arise in relation to employees who decide to leave before repaying the agency fee. If, for example, an employee was not permitted to leave employment until he or she had earned enough to repay the agency fee in full, this could be an unlawful restraint of trade.
Legal issues aside, if employers begin to recoup agency fees in this way on a regular basis, it may well have a detrimental impact on recruiters. Certainly, for applicants on lower salaries who are less able to meet the cost of agency fees (which are negotiated with businesses, rather than individuals, in mind), it is likely to be an incentive to sidestep recruitment agents entirely. Although there are obvious savings for employers, the recruitment industry will undoubtedly suffer in the long run. Whether this practice will become widespread remains to be seen…
Legal issues aside, I would advise any recruiter to steer well clear of this sort of organisation. In fact I wish I knew who they were so I could name and shame … and maybe get their side of the story.
I can understand an employer claiming back the fee if the employee leaves after 6 months, but I’d never give them permission to take money out of my wages for somebody else’s job. It’s like paying to have a job when it should be the other way round!
Well … I would advise that company to stop using agencies.. but then perhaps they would try to recoup advertising fees… anybody worth their salt wouldnt accept employment conditions like this. The act of a stupid company or madman!
I think there may be a few laws broken here!
Concerning and doesn’t say much about the employer but could bring pressure on agencies to reduce fees