Contracting Matters

Parasol Agency Relationship Manager, Bruce Hunter writes on the important topic of mitigating tribunal risk for Agencies…

It doesn’t matter where you look these days, whether it be the recruitment press, web forums or on many of the panels at HR conferences, there is one theme tasking recruitment companies large and small. It’s the increase in the number of employment tribunals being issued against recruitment companies and their clients by temporary workers. Particularly where there is an early termination involved.

Invariably, it’s the recruitment company who falls on their sword to save the all important recruiter – client relationship. It’s costly, it’s time consuming, and it’s on the increase. Why so? Clearly seasoned contractors had not been used to early terminations happening. When it has happened in the past, there’s been a buoyant market and there’s been another opportunity – maybe better money. So these days when the early termination comes knocking, the free of charge employment tribunal is a potential way of the contractor keeping afloat financially.

This is the reality of today’s market. It’s impacting on profits at a time when margins are being squeezed. Bad news.

Just as this is happening, Parasol is finding that the reverse is the case. How so when the 10,000 people who work for one of the UK’s largest PAYE umbrella company are all on temporary assignments?

There are three main factors which have influenced this remarkable trend:

1.       The appointment of Derek Kelly as Technical Director and main Board Member of Parasol. Derek had previously been regional Head of Employment Taxes at KPMG. Derek’s involvement with the redrafting of the Guaranteed Hours Contract of Employment which Parasol has with all its employees has been key in ensuring that all points are covered, and covered well.

2.       The early involvement of Parasol’s in house CIPD qualified outreach Human Resources Team. In Derek’s department, this team are involved on a daily basis with a whole host of issues from Parasol’s growing base of contractors and freelancers. Dealt with early on, compassionately and professionally, Parasol believes that it is the work of this very valuable department which heads off many of the issues. If those issues were left unattended, many would, Parasol believes, escalate ultimately to the issuing of a tribunal (ET1).

3.       The case history when tribunals have been issued simultaneously against Parasol, the agency and the end client. The two cases of Field v Parasol and Dr Evans v Parasol both proved the same points. Firstly that Parasol was the employer, and secondly that there was no compensation to be paid due to the fact that the correct procedures had been followed.

These three points are allowing Parasol to clearly differentiate its product offering right now in a fairly congested umbrella company market. More and more it is these compelling arguments, coupled with Parasol’s award winning contractor services, which are winning Parasol ”bid” business, and putting the company firmly at the top of agency PSLs.

For the 12 months up to 1st April 2009, Parasol dealt with in excess of four hundred early terminations, a dramatic increase on the previous year. Of these, there were over one hundred which needed some kind of further intervention from Parasol’s HR department. All but two instances were resolved by this stage, referred to above.

The key point on all this is that in over four hundred cases Parasol completely carried the employment risk. Both the agencies and the end clients were totally protected.

2009 is a defining year for us all – certainly one in which it is worth looking at the Parasol model, and how it will help your agency mitigate risk.