A leading recruitment business broker is calling for the industry to organise a financial bonding scheme that would cover temporary workers’ pay if a recruiter becomes insolvent and cannot cover payroll costs.

“Look at ABTA [the Association of British Travel Agents],” John Bissell of LBA told Recruiter. “What happens is, if a travel firm goes bust, others have spare seats and can fly travellers home.

“If a £10m temp agency goes bust, and £100,000 is needed to cover that week’s payroll, that’s a relatively small sum of money. I would think agencies would be delighted to cover that — they don’t lose any money and people who help out benefit” by being able to sign some, or all, of the temporary workers onto their own books.

“A bond is just a category of insurance — it’s a vehicle to sort things out. But it needs somebody to organise it,” Bissell said.

He said the REC trade body was “the logical body” to do it. However, the UK’s 10 largest agencies might also be able to organise such a move. “They would need someone to mediate, so there was no scramble to get the temps.”

At the REC, Fiona Coombe, director of professional services, told Recruiter the trade body explored a bond proposal in 2005. However, it was not seen as a viable prospect then and “this position has not changed”, Coombe said.

Recruiter also contacted agencies for reaction. A spokeswoman for Adecco UK and Ireland said: “While it is too early to comment on this specific suggestion, Adecco is always open to hearing about new ways of providing temporary workers with greater protection, particularly
in the current economic climate. We would welcome further details.”