FROM DECEMBER'S RECRUITER MAGAZINE

“New government rules could tighten pre-pack arrangements or ‘phoenixing’. What effect, if any, might this have on the recruitment industry?”

Natasha Makhijani Founder, Oliver Sanderson

“The new rules will perhaps be a stronger deterrent, but the government needs to be clear what the parameters are. In a recent case, a business was pre-packed because its main client went into administration and the company could not meet its temporary staff payroll. Was that the company director’s fault? Maybe, because their client concentration was too great and therefore risky. But in a situation such as this, the business that went into administration was the catalyst. The recruiter appears to have stretched themselves too far to try to accommodate the non-payment from that client. In all these cases it is the worker who loses out, so perhaps the government could look at this and find a compensation rule, so the workers are not the biggest losers.”

Wayne Brophy Managing director, Cast UK

“This is a much-needed step to clamp down on ‘phoenixing’. Directors of any business (not solely recruitment) have a duty of care to honour contracts with suppliers. Failure to do so should result in prosecution to deter irresponsible behaviour. I’ve been in business for over 10 years and during that time I’ve paid every supplier on time and never over-exposed the business. This creates rewarding relationships built on trust, as well as ensuring a safe and secure environment for my employees. I feel passionate about this as I’ve been on the receiving end of it. Even the term ‘phoenixing’ suggests there is some form of associated glory, when actually in reality it’s the polar opposite.”

Richard Hooper Sales director, Balance Recruitment

“I don’t see the new rules having a big impact on the recruitment industry, although they should help to enforce a more cautious approach from the recruitment business owners who are too heavily focused on achieving rapid headcount growth regardless of sustainability. They should also offer some encouragement and safeguarding for recruitment businesses who invest a significant amount of time working with SMEs [small and medium enterprises] and start-up businesses, which can prove to be very profitable clients, but also very costly if things go belly-up, particularly those that rely on contractors and temporary staff.”

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