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252 Plays9 months ago
News for the week beginning 29 January 2024 and Question of the Week: 'What should recruiters know about their terms of business and how to explain them to clients?'
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Transcript
Australian Employment Data Overview
00:00:08
Speaker
This is the news for the week beginning the 29th of January 2024. I'm Ross Clennett. Australia's seasonally adjusted unemployment rate remained steady at 3.9% in December as the previous month's record high participation rate dropped half a percentage point to 66.8% according to ABS labour force data released two weeks ago.
00:00:30
Speaker
Overall, the labour market shared 65,100 jobs with a 106,600 drop in full-time employment, countered by a 41,400 increase in part-time employment. According to Jobs and Skills Australia's Recruitment Experiences Report for December 2023, 20% of surveyed employers were forecasting to add headcount in the following three months, and only 5% were expecting to cut headcount
00:00:56
Speaker
The recruitment difficulty rate fell by 5 percentage points over the month to 51% of recruiting employers. 12 months previously, 65% of employers reported recruitment difficulty.
00:01:08
Speaker
The peak of recruitment difficulty remained 75% recorded in July 2022.
Employer Hiring Plans and Employee Tenure Trends
00:01:14
Speaker
Robert Half's latest survey of hiring manager intentions for the first six months of 2024 revealed 50% of Australian employers are planning to add permanent staff, while 33% said they will add contract staff. The survey polled 500 hiring managers, including 100 CFOs and 100 CIOs.
00:01:36
Speaker
In recently analysed data to discover which ASX100 companies have the longest tenured employees, Australia's financial services sector fared best with financial services companies appearing six times within the top 20, although no financial services company made the top five. Melbourne headquartered BlueScope Steel easily took the top spot by 1.1 years with 9.7 years median employee tenure.
00:02:04
Speaker
The research undertaken by resume.io using employee profiles on LinkedIn ranked the top 10 as follows. Blue Scope, Qantas, Illumina, Brambles, Telstra, Santos, Origin, ANZ, Bendigo and Adelaide Bank and rounding out the top 10 was Lend Lease. Some of the lowest median employee tenure came from tech companies
00:02:30
Speaker
with Atlassian second ranked at 1.1 years median tenure with carsales.com.au, REA Group and SEEK also appearing on the list. Electric vehicle battery developer Lion Town Resources was the ASX100's worst performing company with respect to median employee tenure at just 7 months.
Recruitment Sector Challenges and Profit Declines
00:02:53
Speaker
The three largest London headquartered publicly listed recruitment groups operating in Australia all reported poor quarterly December 2023 results. Hayes ANZ reported December 2023 quarterly gross profit fill by 20% on a like for like basis. Kemp decreased by 16% with Perm down 27%. Private sector GP decreased by 25% with public sector GP down 13%. By country,
00:03:22
Speaker
Australia gross profit declined 19% while New Zealand gross profit dropped 35%. By region, New South Wales declined the most with a 24% drop. And by specialism, construction and property, the largest specialism locally dropped by 23%. Hayes A&Z headcount dropped from 1,006 at the end of September to 895 at the end of December, an 11% decline in the quarter.
00:03:49
Speaker
Across the 2023 calendar year, headcount declined by 225, a 20% decline. On a group basis, gross profit was down 10% and Chief Executive Dirk Hahn announced a half-year profit guidance of £60 million, which was below the low end of analysts' expectations.
00:04:10
Speaker
For the same December quarter, page group reported group gross profit decreased by 8.9% on a
Global Staff Reductions and Fee Income Drops
00:04:17
Speaker
constant currency basis to £237.3 million, with all the drop coming from permanent recruitment down 14%, as temp and contract net fee income climbed 5%.
00:04:30
Speaker
In the Asia-Pacific region, gross profit for Q4 was down 10.3% against 2022 to £35.9 million, with Page Group Australia reporting a 24% year-on-year decline in quarterly gross profit. Globally, the company shed 224 or 3.7% of its fee-earning roles and 57 back-office jobs in the final three months of 2023.
00:04:55
Speaker
with reductions made across all its regions worldwide. Overall the group had 5,851 global fee earners and a total headcount of 7,859.
00:05:08
Speaker
Robert Walters most recent trading update in the fourth quarter ended 31 December 2023 reported group net fee income was down 10% in constant currency with the Asia Pacific region dropping 9% to 39.6 million pounds. Robert Walters Australia's gross profit was down 27% year on year in the December 2023 quarter.
Legal Disputes in Recruitment Contracts
00:05:33
Speaker
A New Zealand company has lost its disputes tribunal case against a recruitment agency and the on-hire worker had engaged through the agency after the tribunal referee noted the company had extended the original contract with the worker even after performance issues had emerged. The company didn't pay the workers last five invoices totalling $14,000. The recruitment agency took the company to the tribunal hoping to have those wages paid to its contractor
00:06:01
Speaker
but the company counter claimed for $30,000 which is the amount it says its former employee costed in mistakes. The company said the recruitment firm misrepresented the man's abilities while the agency says any vetting should have been done by the employer before it hired the man. The tribunal referee Elizabeth Peyton Simpson ruled against the company saying in her ruling the contract does not specify the work to be achieved only the hours to be worked.
00:06:29
Speaker
She pointed to a clause in the employment contract between the company and the recruitment agency, which stated, you are responsible for supervising, directing and controlling the manner, time and place in which the contingent worker carries out work for you during the assignment. Hayden Simpson also pointed to another clause in the same agreement, which stated that the agency wouldn't be liable for any damages or losses arising from the performance of any worker hired by the company through it.
Impact of ELE Holdings Receivership on Employment
00:06:58
Speaker
Auckland-based construction and labour hire firm ELE Holdings Limited and an allied transport business have been placed in receivership with about 1,000 workers laid off just before Christmas. ELE recruited staff in New Zealand and overseas for the building, manufacturing and healthcare sectors and also offered refrigerated transport and freight services through a subsidiary. Workers were told the week before Christmas they no longer had jobs. About 60% of the company's workforce is believed to consist of migrant workers.
00:07:28
Speaker
ELE's sole director is Brent Mulholland, who formerly was GM for AWF, owned by publicly listed Accordant, parent company of Madison Recruitment and Absolute IT, where he was employed for just over 10 years until 2014. ELE was listed in Deloitte, New Zealand's Fast 50 in both 2018 and 2019.
Australia's Apprenticeship Priority List Expansion
00:07:52
Speaker
The Australian Government is adding 19 occupations to its Australian Apprenticeship Priority list, making apprentices, trainees and their employers eligible for financial support. In an announcement earlier this month, Skills and Training Minister Brendan O'Connor said the occupations on the list are based on hard evidence drawn from public and private data that has been analysed by Jobs and Skills Australia.
00:08:16
Speaker
The newly added occupations include Ambulance Officer, Architectural Draftsperson, Flight Attendant, Furniture Maker, Nursing Support Worker, Out of School Hours Care Worker and Sound Technician among others. The list is used by the Australian Apprenticeship Incentive System which extends financial and non-financial support to apprentices and their employers in a bid to boost commencements and completions.
Outsourcing Inc's Management Buyout and Fraud Issues
00:08:43
Speaker
The world's 10th largest staffing firm by revenue, Outsourcing Inc, owner of local brands, Clicks, Hoban, Bluefin Resources, PM Partners, Jigsaw Talent Management and Horizon One will go private in a deal announced just before Christmas. The firm currently trades on the Tokyo Stock Exchange. The transaction is styled as a management buyout with the backing of US-based Bain Capital Private Equity. The company has been forced to issue amended results for several past years because of fraudulent reporting.
00:09:13
Speaker
series of investigations wrapped up last month. Based on a calculation supplied by the company, the aggregate tender offer price is the equivalent of US$1.53 billion.
CFOs' Risk Concerns: Inflation and Interest Rates
00:09:27
Speaker
After topping Deloitte's CFO sentiment risk agendas for the last five surveys since mid-2020, securing and retaining key talent dropped to fifth place with 46% of respondents nominating it
00:09:43
Speaker
as their largest risk concern down from 71% six months ago in the latest survey published just before Christmas. CFOs now rank inflation and interest rate movements as the biggest risks to their business over the next 12 months. Inflation is the largest risk concern nominated by 71% of respondents and is up from 51% six months ago.
00:10:08
Speaker
Ranking immediately below securing and retaining key talent in equal six place was data management, cybersecurity and analytics capability and change in regulations or government policy.
US Job Growth and Economic Performance
00:10:21
Speaker
The US labor market continues to produce strong results with December's monthly employment rise of 216,000 jobs, easily beating analyst forecasts. The unemployment rate remained at 3.7%.
00:10:35
Speaker
Employer sentiment in the US remains robust with Robert Half State of US hiring survey reporting 57% of respondents plan to increase headcount in the first six months of the year and 67% expect to hire contract workers. According to the survey, 90% of hiring managers report difficulty finding skilled professionals and 58% said it takes longer to hire for open roles compared to one year ago.
00:11:00
Speaker
The bullish US labor market aligns with recent economic data with last week's advance estimate of US real gross domestic product in Q4 2023 by the US Bureau of Economic Analysis showing a 3.3% annual growth rate. Economists polled by Reuters had forecast GDP growth of just 2%. And now your news is up to date for the week commencing the 29th of January 2024.
Recruiter-Client Relationship Management
00:11:37
Speaker
The question of the week comes from the news article this week in New Zealand about the recruitment agency that took their client to the disputes tribunal around clauses in their terms of business and was successful in fact in having the recommendation from the tribunal referee stating that their contract or terms of business was able to or would recommend that the client adheres to it.
00:12:06
Speaker
The question is, what should recruiters know about their terms of business and explaining them to clients? I think this is a really important part of our industry. So Ross, what would you say we should know and how best to explain? Well, the first thing to say, Adele, is when I started as a recruiter a long time ago, in both of my first two employers, that's now known as Hayes and then Recruitment Solutions,
00:12:36
Speaker
I was trained in being able to understand and explain the terms of business and I was tested on it and I needed to pass the test. So it was a very important part of my induction and initial training. So perhaps I'll just go through what I think are the four most important things from a perm recruitment point of view and then maybe you might look at that from a temple contract point of view.
00:13:06
Speaker
So let's start with how the services are charged. So if you're a perm recruiter, the most typical way perm services are charged, it's a percentage of the successful candidate's first year remuneration. And it's critical that the client understands whether that percentage is based on just the base salary, the base salary plus super, base salary plus super plus benefits.
00:13:35
Speaker
because most recruitment agencies will charge on base salary plus super plus benefits, but not all. So you need to explain how those services are charged. So for example, if it's a $150,000 package, so base plus super plus benefits adds up to 150 and you have a 20% fee, then you explain to the client,
00:14:02
Speaker
It's a $30,000 fee plus GST if you're in Australia. It's plus GST. So that's.
00:14:11
Speaker
the first thing to explain how the services are charged. Now, if you're a retained recruiter and you're charging separate invoices, not just one invoice, and the client is agreeing to a retainer, then you explain what the first retainer is, either the percentage of the fee or a set dollar amount.
00:14:33
Speaker
and when that will be invoiced, and then when the second stage, if you are charging a second stage and a third stage. So there is no ambiguity about the way in which the services are charged and the amount. The second critical thing is the timing of the invoice.
00:14:52
Speaker
very important for the client's cash flow. So using the example of a contingent recruiter where you are charging once for a success fee, some agencies but not all charge after the candidate has signed the employment contract and returned it to the client. Some agencies but not all charge on the first day or invoice on the first day of the candidate's employment.
00:15:20
Speaker
So again, you need to make it clear with the client exactly when the invoice or invoices will be issued. Third thing, payment terms in permanent recruitment, most but not all agencies charge on 14 days. So what are your payment terms?
00:15:40
Speaker
And the fourth thing, which is the guarantee period, is also related to the payment terms, because if you've got a guarantee period of, for example, a free replacement in the first three months, but that replacement is contingent upon
00:15:56
Speaker
the invoice being paid within the payment terms, then you need to say that to the client so they fully understand. If your payment terms are other than 14, explain that. If your guarantee is something other than a free replacement, so if it's money back or if it's a sliding scale, again, explain that.
00:16:19
Speaker
So they're the four most important things that a perm recruiter must know and must communicate to the client verbally when they're having the conversation about the assignment. Yeah I would agree with those on perm and there are a few differences for temp recruitment of course but I think it is important that point you're making Ross around
00:16:43
Speaker
explaining them to the client and not assuming that they know these things and not assuming that they're the same for every agency as well. Assuming that, you know, you might think, oh, they've worked with other agencies before, they would know this. So on the temp side, I would say it's the provision of the services themselves. So what exactly are we providing when we're providing a temp or a contractor? We are providing the sourcing of the worker and that introduction to their work site, but we're not performing the work, nor are we responsible.
00:17:11
Speaker
for the worker when they're on site. So I think that provision of the service is really critical in temp recruitment. I think when the invoices are issued, so what the pay week is, do you start on a Sunday? Do you start on a Monday? What is the interval in terms of your pay week? And again, don't assume it's the same for every agency because it's not. In fact, my experience, I think it's been different for every company that I've worked for. And also, when,
00:17:39
Speaker
when you're expecting to be paid on those invoices because we have paid the worker, we are likely to pay the worker as soon as the work is complete and the timesheet has been approved and invoice issued and what are the payment terms then? If it's seven days, you need to really enforce that to the client or sorry, explain that to the client. And then the timesheet is really important. That's the sign off on the hours. That's their approval that the work
00:18:05
Speaker
has been completed and has been performed in those hours. So really explaining to the client the importance of the timesheet and what it means and how that triggers the payment to the worker and the generation of your invoice. I think that's a really important part of temp recruitment responsibility in explaining these to clients. The fourth one is about that article. It comes from that article around who's responsible for the worker.
00:18:31
Speaker
It's important to explain to the client that they are responsible for the worker at all times. They're responsible for the induction, for the training, for the ongoing supervision of the person while they're on site the whole time. And that also includes occupational health and safety obligations and liabilities. So explaining that to the client up front would stop the situation that happened with that article, maybe not help prevent it at least so that the client understands that they are responsible for the worker.
00:18:59
Speaker
And then your final job as a temp recruiter would be about making sure they understand the hourly rates and the overtime parameters or allowances or any variations to the way the person will be paid or what they might be paid for. So, you know, temp recruiters need to be really familiar with the way awards are structured and overtime parameters and how to read awards and all of that sort of information as well.
00:19:25
Speaker
Hopefully those bits of information give everybody a bit of an idea around what recruiters need to know in both perm and temp like Ross and I have explained. But I think the really important factor we want to make in this is it's about explaining them to clients. It's not just a transaction where you say, well, this is a legal document. This is a contract. Here you go. Sign it. If you have any questions, let me know and keep your fingers crossed. Hope they don't ask anything.
00:19:54
Speaker
It is your job to make sure the client understands it. Yes. And it's your job to know your terms better than your client knows them. And if your client asserts something that's inaccurate or is a misrepresentation of your terms, you need to correct them immediately. If your client makes a statement about the award that is inaccurate,
00:20:21
Speaker
Your knowledge of the award should mean that you'll be able to jump on them and not literally, obviously, figuratively jump on them and tell them that that's not accurate.
00:20:33
Speaker
you cannot rely on the document to do the heavy lifting for you. It is your responsibility as the recruiter to know your terms, to know them intimately and to be able to explain them, explain them to the client because it's these sorts of conversations that you have upfront that prevent, I would say 90 to 95% of issues that turn up further down the track with respect to terms and conditions of business.
00:21:03
Speaker
Yeah, and look, I'm going to give both of us a bit of a plug on this, Ross, because I know in my own recruitment training course and in your rookie program as well, we cover this part of the role. We cover the requirement about understanding the terms and how to explain them to a client. So if you've got people working for you who are talking to your clients, whether they're bringing in the business or not, they're having these discussions with clients, they may get asked questions by the client around terms.
00:21:31
Speaker
you have to make sure they know what they're talking about. So, you know, speak to Ross and myself if you think someone in your team needs some training. Completely agree with that Adele.