Business secretary Vince Cable’s announcement last week that the government will compel large companies to publish details of their payment practices has met with near derision from experts in the recruitment and employment industry for not going far enough to tackle the problem.
Late payments by large corporations have an especially negative impact on small- and medium-sized employment intermediaries, from recruiters to Umbrella Companies, all of whom are involved in the employment supply chain. The failure of the government to set a compulsory limit for payments to suppliers has led several experts to voice concerns that the current proposal is simply inadequate.
Mike Wynn, MD of Construction and Property Recruitment, believes that the proposals do not go far enough and that companies taking more than 35-40 days to pay should be compelled to pay interest charges to staffing companies such as his for servicing their debt.
The chairman of the Association of Recruitment Consultancies, Adrian Marlowe, said: “We don’t think this goes far enough. There is no good reason for delaying prompt payment when labour has been supplied and work properly done.”
The Recruitment and Employment Confederation’s head of policy, Kate Shoesmith, echoed Mr Marlowe’s sentiments, saying: “Legislation around late payments has been long overdue and government action is a welcome development as late payment is often raised by REC members as a major issue for agencies of all sizes.”
Both Ms Shoesmith and Sam Hurley, APSCo’s head of external affairs, raised concerns about the growth of ‘pay when paid’ clauses, which have made it increasingly difficult for employment intermediaries to access affordable finance.