Employees working on the government’s joint venture with the recruitment giant Reed have been sacked after their bosses discovered ‘irregularities’ in the way they were reporting job placements.

Reed has admitted that it has launched an investigation into the conduct of 13 employees at Reed in Partnership, which finds work for young jobseekers under the government’s New Deal scheme.

In a statement, Reed promised to pay back any money it owed to the government because of the mistakes.

A source close to the company claims the money could amount to a seven-figure sum, an amount strenuously denied by Reed who say the real figure is a fraction of that amount.

The news is a blow to the government’s plans to involve private organisations with its New Deal project.

Under the New Deal, Reed receives taxpayers’ money from the government for each candidate it successfully places in work or in work-related training.

Individual recruitment consultants also receive bonuses for each successful New Deal placement.

The allegations centre around Reed in Partnership’s New Deal operation in Hackney, London, which is run from an office on Holloway Road.

Our source claims Reed recruitment consultants forged placements from Jobseekers’ Allowance claimants who had signed off the register but had not found work. They then used the forged placements to claim bonuses from the government. Reed staff also used Employment Services data of New Deal candidates who found work independently of Reed to ‘top up’ numbers when they missed targets, according to the claims.

Chris Melvin [pictured], managing director of Reed in Partnership, said: ‘In July last year we did have an issue with a small number of staff about the way they were reporting jobs. We suspended them - seven subsequently resigned, six others were dismissed.’

Three of the staff suspended by Reed are alleging constructive dismissal and are taking the company to the employment tribunal.

A spokesperson for the government said: ‘We are aware of the investigation and this is a matter for Reed in Partnership. This is in no way a reflection of the New Deal.’