Ethics - Where we stand

There is hardly an agency around that will not boast of how well it treats its temporary staff. They are, after all, the lifeblood of every agency. Behind the boasts, however, lies the undeniable fact that a substantial majority of agencies exploit their workers in order to maximise profits and reduce prices.

Behind the extravagant claims of the benefits that accrue to temps when they work for an agency there is often a commercial imperative at work which denies temps their basic rights and squeezes every last penny from their wage packet.

Sheltering behind the reality that most temps entering the world of unskilled, temporary work are just keen to find work and are unlikely to be aware of their entitlements, the smoke and mirrors approach that so many companies adopt – encouraged by flabby legislation, ineffective enforcement and the knowledge that most temps do not have the resources to engage in legal challenges – tarnishes the reputation of the recruitment industry and those that work within it. It also exposes end users to reputational risk that can be devastating.

Government and HMRC have been negligent in failing to police the recruitment industry and this has led to ample opportunities for companies who wish to entertain the many tax avoidance options available and the startlingly large number of ways in which workers can be exploited.

At Extraman, we do not follow the herd. Our success derives from scrupulous observance of all entitlements, partly because it is the only way we wish to run our company, and also because we believe that the benefits that our clients derive from a well treated and contented workforce far outweigh the price advantages that can be gained by those that operate on the margins of compliance.

 
But how do our clients and temporary workers know that we practice what we preach?  Can we prove our claims?  Yes.  By being accountable to all the following guarantees, all of which are open to audit by our customers.

Extraman has campaigned vigorously to expose the exploitation that is rife within the recruitment industry. Our "News" section (05/05/15) contains a television interview with our MD, explaining how various agency scams work and how lawless the recruitment industry has become. More recently, he wrote an article in The Guardian, also available under "News" (08/05/17) on a similar theme, and also discussed at length with Sir David Metcalf, the Director of Labour Market Enforcement, many of the problems he addressed when making a raft of recommendations in summer 2018. Many of these recommendations were implemented in April 2020 and, in addition, the scope and power of the Employment Agency Standards Inspectorate is due to increase. Until now, it has been a severely underfunded and toothless body but we are promised it will be more effective from that date. Better liaison with HMRC and the GLAA (Gangmaster and Labour Abuse Authority)should reduce the ease with which recruitment agencies can dodge their responsibilities.

Furthermore, April 2021 saw the reform of IR35 - postponed from April 2020 due to the pandemic. There is uproar in the recruitment agency world about this. Claims have been made that either the price of temporary staff will need to rise by up to 25% or the wages of those staff will fall by a similar amount. Without going into the complexities of an emotive subject, people working through "personal service" companies, or masquerading as self-employed through umbrella companies will now have to pay the same levels of tax as the rest of us. While it is widely reported that the government has botched the legislation, the direction of travel can only be good for companies such as Extraman, who have never used tax avoidance mechanisms. The IR35 changes will have zero impact on our prices, or the wages of our staff.

The case for using a recruiter whose ethics can be guaranteed has become ever more essential; the reputation and share price of Sports Direct in 2016 have been hammered by revelations about workplace practices. Asos, Boohoo and JD Sports have also been the subjects of adverse media scrutiny. Many more companies who rely heavily on recruitment agencies to supply their workforce are also likely to be exposed where they have chosen agencies which circumvent both the rules and ethical considerations. The largest company within the industrial recruiting marketplace, Staffline has, at the time of writing, seen its share price diminish by 95% from its peak, with much of that decline due to effects of malpractice in failing to pay National Minimum Wage for a large number of its staff. Without a shareholder bailout in summer 2019, it would most likely have gone bust. The Best Connection, another giant in our field, holds the unenviable record of being fined the record amount for National Minimum Wage transgressions. 

In May 2021, there have been more dramatic revelations, with the BBC, The Guardian and Private Eye all exposing the Mini Umbrella scam, whereby companies split their workers between vast numbers of small comapnies in order to eliminate Employers' National Insurance contributions. The BBC has so far identified 48,000 mini companies set up to facilitate this fraud, all of them UK based but with Filipino directors.

The HMRC response to this could not be plainer: "There is no standard mini umbrella company fraud model and arrangements are constantly evolving as organised criminals try to hide their fraudulent activities from HMRC. These criminals create multiple limited companies and only a small number ot temporary workers are employed by each one. These are set up to enable fraud. If you are a business that uses temporary labour, you should be aware of the potential dangers of mini-umbrella company fraud in your supply chain..........A fraudulent supply chain can lead to financial and reputational damage to your business."

One of the UK's largest privately owned labour providers has been implicated as using these schemes; many others do so under the radar.

Our approach, which has never varied and never will, is that recruitment companies should be rewarded by the quality of their service not the depths of their corruption. Latest developments, including a consultation on umbrella companies, indicate that the direction of travel is that users of agency staff may before too long be liable for compliance within their supply chain and potentially subject to making good suppliers failures to pay workers their full entitlements or account correctly for tax. As is being seen, in a slightly different context with the Uber drivers' case, these penalties in arrears can be vast.

Extraman directors are instantly accessible to all customers and all temps. In the extremely unusual instance of a dispute, our response will be instant. We do not hide behind third parties, we do not pass the buck and we do not avoid confronting difficulties. We are accountable for everything we do, and everything we do is 100% compliant and ethical. And, yes, we can prove it.



July 2023