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Episode 139 When does the hiring process turn into unpaid work?
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Episode 139 When does the hiring process turn into unpaid work? In new we cover the sale of WorkPac, Ephram advertising recruiting roles, Staffing Industry Metrix results as well as Sourcr on the wrong side of the discrimination act. Announcement of the TIARA results too.
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Transcript
Wingman Recruitment's Global Impact
00:00:09
Speaker
This episode is made possible by Wingman Recruitment, the offshoring solution changing lives. Not only do they help Australian recruiters scale by integrating fully trained remote professionals into their teams, they're also creating real career opportunities in the Philippines. It's smart growth with heart. Visit wingmangroup.com.au and click on the services tab to find out more.
Tasmania Limited's Acquisition of WorkPack
00:00:33
Speaker
This is the news for the 2nd of December, 2025. Ross Clennett.
00:00:39
Speaker
And I'm Adele Last. Australia's largest privately owned staffing business, WorkPack, is set to be acquired by Tasmania Limited on December 1, 2025, for up to $60.7 million, dollars including potential earnouts.
Challenges and Decline at WorkPak
00:00:55
Speaker
The acquisition will position WorkPack at the centre of Tasmania's new workforce solutions segment, enabling rapid sourcing and deployment of skilled personnel to support the company's nationwide specialist trade services, for major maintenance and shutdown projects.
00:01:11
Speaker
Ross, perhaps you could summarise the WorkPak story. Sure. Adele, WorkPak was set 1997 Phil Smart, who was previously a qualified carpenter and builder and made his initial fortune in real estate. He became an investor in the recruitment industry and after a couple of years seeing the returns that he could make, he closed out that investment and established WorkPak. WorkPack grew pretty rapidly for the first 10 years, closed in on $200 million dollars revenue, temp and permacribut, but mainly temp, industrial predominantly and predominantly in the mining sector.
00:01:51
Speaker
The sales then kept climbing and finished up reaching an all-time high of $1.41 billion dollars for financial year.
00:02:03
Speaker
with a pre-tax profit of $18.8 million. After that, like many other companies in the Australian recruitment sector, after the COVID hit, things didn't go as well and sales did fall subsequently.
00:02:21
Speaker
And for the 2023 financial year, revenue had dropped by about $250, nearly $300 million, dollars so down to $1.14 billion, and profitability was at
Legal Battles and Financial Strain
00:02:40
Speaker
$8.7 million. dollars Now, WorkPak is a familiar name to many in the industry, and I recall they were involved in the double-dipping case, Ross.
00:02:49
Speaker
They were. So for those who were around at the time, 2018, there was a claim made against WorkPAC by truck driver Paul Skeen. Skeen was contracted as a casual employee. However, he asserted he was working and was therefore employed as if he was a permanent employee, had not been paid his full entitlements for his two years. And ultimately, the federal court ruled in his favour. There was an appeal by WorkPAC to the full federal court and they lost comprehensively. And then there was a case, what was known as the Rosato case, which was a similar case.
00:03:31
Speaker
And again, WorkPAC lost. Stellar recruitment at Hayes were also on the wrong side of that decision as well. And although no specific figures were ever publicly released,
00:03:42
Speaker
I'd say certainly that cost WorkPak millions and millions, if not something between about $10 and $20 million dollars in losing that case. So that's got to have hit their profitability, surely.
00:03:55
Speaker
Without doubt. um But more importantly, I think Adele focus. I mean, if you're a CEO or the board and you're running these court cases and then you're appealing, a lot of money it costs, but it also, it's just a massive, massive distraction for the senior leaders. And clearly that was very unhelpful in WorkPak's momentum because they had fantastic support momentum pre-COVID and pre-Skeen and Rosato decisions, but subsequently they've never been the same company since.
The Disappointing Sale of WorkPak
00:04:28
Speaker
Still, they can't be unhappy with a $60 million dollars payout for the sale of it, do you think? Well, depends what you're comparing it to, Adele. I found a headline from the Australian Financial Review pre-COVID, which um suggested that there may have been a sale in the offering for $400 million dollars for WorkPak. So, i mean, it was just speculation. But even if it was half that, then clearly a $61 million dollars maximum sale price would seem a pretty disappointing return. for FeelSmart and the other WorkPak shareholders.
00:05:05
Speaker
And I believe Ephraim is advertising Ross. Well, he's back in action. The Ephraim's LinkedIn page last week posted an update with a heading, Australia's most ambitious recruitment roles are now open. Multiple recruitment consultant opportunities all level, Sydney, Melbourne, Brisbane, Perth.
00:05:24
Speaker
Hang on. Is he recruiting for himself or is he recruiting for other recruitment agencies? Well, the post is ambiguous. It says, we're working with several of Australia's largest and fastest growing specialist recruitment firms, businesses built for high performers who want real autonomy, real progression and real earning potential.
00:05:44
Speaker
So he sounds like he's ah become a wreck to wreck. He's recruiting on behalf of other agencies. This is a really strange one. Yeah, I suspect it's for his Leo Jackson business. And there's certainly some familiar points there. People who joined Collar, this would be deja vu. Industry leading salary and commission structures, progression into senior principal leadership and equity pathways, award-winning tech stack hybrid work from home, exceptional leadership teams who invest heavily in their people. Do you think that's ringing Some bells for some ex-collar people out there, Adele. Sounds all too familiar. And I really hope he doesn't break his promises like he did the last, what, three times now, Ross?
00:06:30
Speaker
Well, I don't know who's going to be applying for those jobs, Adele, because I suspect every person in the Australian recruitment industry has heard the Ephraim Stevenson story by now. And I suspect 99.9% of them are probably thinking to themselves, thanks, but no thanks.
Profit Margins in a Shifting Market
00:06:49
Speaker
Ross, you and i caught up with Nigel Haas last week from Staffing Industry Metrics. This is a business that collects data about recruitment agency results and provides benchmarking data. You have some stats to share with us?
00:07:06
Speaker
Yes, it's the most recent financial year, Adele. So July 2024 to June 2025 compared to the previous financial year. The headline result is gross profit margin has gone up. It's gone up from 17.37% 19.12%. So up by one and three quarter points.
00:07:27
Speaker
And EBITDA margin has also gone up from 24.03% to 24.94%. So these are very encouraging results, even though sales declined and income producer headcount declined.
00:07:45
Speaker
Nigel's commentary says in part, the past 12 months have told a compelling story of strategic adaptation. and operational excellence in the face of market headwinds. The 175 basis point improvement in gross margin is particularly impressive when contextualised against the revenue decline.
00:08:04
Speaker
The sector achieved this through strategic cost management, total direct costs decreased by 19% and outpaced the 17.2% revenue decline, indicating more efficient service delivery.
00:08:18
Speaker
Premium service positioning enhanced margins suggest a shift towards higher value work with improved pricing discipline. And the third um achievement was operational efficiency defending and improved margins in a soft market demonstrating robust operational management.
00:08:37
Speaker
Overall, I think this is a pretty good sign about the quality of financial leadership in our industry. So if you're an agency owner or CEO interested in benchmarking your agency's financial data against the rest of the industry, then please contact Nigel Haas at Staffing Industry Metrics.
Recruitment Policy and Maternity Leave Issues
00:08:55
Speaker
And on to news from one of our listeners. And this concerns the fully owned subsidiary of SEEK Sourcer. Jenny Lloyd, the owner of Lloyd Connect here in Melbourne, contacted us about what she perceived as potential discrimination and unfair treatment from one of her consultants by Sourcer. This started when one of her recruiters, Amy, went on maternity leave in late September.
00:09:23
Speaker
A regular stream of emails from Sourcer were sent noting Amy's inactivity and reminding her she would, under Sourcer's current policy, lose her recommended recruiter badge and if there was 90 days of inactivity.
00:09:38
Speaker
And that wasn't the only concern. Lloyd Connect was advised that if they temporarily removed Amy from their profile, it might trigger recalculations of the agency's review scores. On top of that, she'd lose access to the placement history she'd built, which is pretty impactful for her professional profile.
00:09:55
Speaker
Exactly. So from Jenny Lloyd's perspective, she's got someone away from the office on legitimate leave and suddenly her agency's metrics, badges and visibility are all under threat that would understandably feel like one of her employees is being professionally penalised during what should be a protected break.
00:10:17
Speaker
Jenny raised the regulatory side too under the Fair Work Act and the Workplace Gender Equality Act, people on parental leave shouldn't be disadvantaged. So a system that unintentionally reduces someone's professional standing while they are on maternity leave would be out of step with that principle. yes Yeah, maternity leave, mental health leave, even extended health absences. If a platform can't handle these situations fairly, it risks disadvantaging the very people it celebrates.
00:10:45
Speaker
Ultimately, it appears these systems may have been created by men who haven't really considered or cared about how people on parental leave might be impacted by this. I do suspect SAUSA set up this model so that agencies couldn't hold on to high ratings from consultants who had left their company, but they obviously didn't consider parents who may have been on extended periods of absence from their employment.
00:11:09
Speaker
ah I think the solution is is not complicated. Preserve achievements, protect visibility, and an enable an option to show that a recruiter is on extended leave. But what's the final outcome on this, Ross?
00:11:21
Speaker
Well, good news, Adele. Sourcer has committed to Jenny Lloyd that they will fix the problem. They will provide an option on a recruiter's profile to signify that they are on extended leave. So ultimately, well done to Sourcer for doing the right thing. But it's hard to understand how this problem wasn't anticipated and solved long before now.
Celebrating Excellence at the 2025 Tiara Awards
00:11:40
Speaker
And our final news item is the announcement of the winners of the 2025 Tiara Awards, which were announced on the 21st of November in Sydney. I believe there were some agencies that won multiple awards, Ross.
00:11:53
Speaker
Yes, the multiple award winners, first Adele, Client Service and DE&I, Globe 24-7, Candidate Experience and Training and Development, Hoban, Growth and Specialist Recruitment Company, Civitas Talent. Back office team, launch recruitment.
00:12:11
Speaker
Best use of technology, Sirius. Community impact, UNU recruitment partners. Recruitment brand, Telenza. RPO solution, Chandler McLeod. Best new recruitment company, EOC Group.
00:12:24
Speaker
Best recruitment company to work for, Horizon One. And recruitment leader of the year, Laurie Breeze, Evolve Talent. Congratulations to all the winners. And now your recruitment news is up to date for the 2nd of December 2025. Stay tuned now for question of the week.
Ethical Concerns in Recruitment Practices
00:12:48
Speaker
a Question of the week. When does the hiring process turn into unpaid work?
00:12:54
Speaker
I suspect this might have come from LinkedIn. yes Tell me Adele, where did it come from? There was a post recently, Ross, on LinkedIn by a man called Amish, calls himself Ammo on LinkedIn. He's a TA recruiter in the States, in America, and he posted a post about a company called Crisp, who is a marketing promotional company for law firms, who asked for recruiters to apply for work and
00:13:26
Speaker
But what they described as part of the assessment appeared to be more like paid work. And I'm going to just read out the first paragraph of the LinkedIn post. It says, Crisp is currently requiring recruiter candidates to spend two to four hours sourcing real candidates for active roles listed on their careers site as part of a five-part skills assessment. Part one of the task requires nine LinkedIn profiles align to three current go-to-market job descriptions that match Crisp's current needs.
00:14:02
Speaker
Yeah, so I'm looking at the LinkedIn post and wow, when you dig into the specifics that that are required, let me just read it out. Part one, candidate calibration and prioritisation. You receive three new recs at once, client success manager, urgent backfill, BD rep,
00:14:21
Speaker
New headcount, VP of marketing, critical but vague scope. How do you prioritize and why? Identify the top five must-have competencies for each role. What are your top three calibration questions you would ask the hiring manager for each role to avoid misalignment in the first seven days?
00:14:38
Speaker
For each role, present three LinkedIn profile URLs that you believe match Crisp's needs. For each profile, include a short rationale, four to six bullet points explaining why you believe they are a fit for the role. So that's just part one. That's...
00:14:55
Speaker
That is unbelievable, Ross. Apart from that being a lot of work, you know, that is yeah more than two to four hours work for a start. The fact that they're asking people to use real data from LinkedIn, actually go and source candidates from LinkedIn for their current jobs is just unethical.
00:15:13
Speaker
It's not on. I'm sorry, that definitely moves into the territory of asking candidates to do work for which they should be paid.
00:15:25
Speaker
But this isn't a new phenomenon. This isn't something that's totally unique. I mean, clients, agencies and companies have been asking people to do pieces of work to prove their competence in the role as a means of being able to show they can do the role.
00:15:42
Speaker
And that's fair enough to a degree. But there absolutely is a line where it crosses from a reasonable request as part of a hiring process. into effectively requesting candidates do unpaid work. I've personally not had that experience in any jobs that I've gone for, although it's been decades since I've applied for a job. Have you had any experience of this at all? Yeah, I've got experience of this, Ross, actually from the employer side. So I worked for a period in my career internally. I worked for a large government department, federal government department, sorry, state government department, And we were assessing candidates for a role at a very senior level. So we're talking sort of $250,000, $300,000 salary. And we came down to two candidates. So we're on a panel of three people. We'd narrowed it down to two candidates. One was internal, one was external. And we really couldn't split the difference. Both candidates were very suitably qualified for the role. They demonstrated all the right competencies for the role and were both, you know, equally interested in the position. And it was really hard to make that decision.
00:16:55
Speaker
We got to a point where we couldn't make the decision and we decided to try to ask them to differentiate themselves in the mean in the way of seeing how they would apply some of their leadership knowledge because that was the area that probably for both of them was weakest and we wanted to see whether they had that capacity to plan and resource as a leader. So we actually asked them to go ah away and produce a 90-day plan as if they had got the role.
00:17:21
Speaker
So they're in the role. What does the first 90 days look like? We asked that they prepare this and come back to us to present it. It was ah not allowed to be more than three slides long, so it had to be brief and succinct. We didn't want a lot of detail. They were told to make whatever assumption assumptions they needed to about their knowledge of the organisation and and current strategies and projects, et cetera.
00:17:45
Speaker
And they were asked um to do that. I believe we gave them something like two days or three days in which to do it, but we only wanted a very short, um succinct presentation. They both came back and presented their content to us ah both visually with the PowerPoint kind of slides and then verbally, obviously, in their delivery. And interestingly, after that assessment, we went with the external candidate who was just able to ah put together a sharper plan, apply their commercial knowledge really well and deliver it really well. So it was a really good way for us to split the difference, to find the best candidate to get them to rise to the top.
00:18:25
Speaker
So I think what you're mentioning falls into what I would regard as a reasonable request because there are, I suppose there are four things that to me would make it reasonable.
00:18:38
Speaker
So the first thing, which was clear, it was the final step in the process. So I think it's very important. This sort of thing is not early on. If you're trying to differentiate 10 candidates, then 10,
00:18:50
Speaker
I'm sorry, that's that's not fair. It literally has to be the final step in the process. Secondly, limited time. i mean, really, I think an hour asking someone to go away and do something, like for it to take an hour is probably reasonable. Beyond that is probably not.
00:19:09
Speaker
Third, it is testing a critical competency required for success in the role. And then I think the fourth thing that you shared is that it was bigger picture. It wasn't sort of an executable plan. It was showing the candidates thinking how they would go about something, putting a little bit of meat on the bone, but not too much. So I believe what you've described meets the criteria of something that is fair and reasonable.
00:19:43
Speaker
Well, that seems to be a lot of the comments ah in this LinkedIn post. There's actually over 100 comments, actually, in one hundred and 168 engagements with this post. that The comments tend to be around the fact that the commerciality of this is just a no-no, the fact that they're using real jobs that are live, they're using real candidate data, and they're being asked to produce this ah in great detail, as you said, which potentially could be executable. They could just, the company could go and contact these candidates and say, great, we've got a shortlist. We don't need to hire a recruiter anymore.
00:20:17
Speaker
And off we go. Completely. And ah the other thing that just sort of struck me is that it's not a level playing field. Like if you're someone who doesn't have a job at the moment, then you've got many more hours to devote to doing this sort of preparation. If you're someone in employment, then effectively you're penalised. Because if you're in a full-time job, then you've got at least 40 hours a week that you can't devote to this. And again, you've got to have these sorts of steps in the hiring process as fair and as equitable as possible.
00:20:50
Speaker
It sort of sounds like they're trying to really assess the person on an outcome instead of the person's competency in a particular, you know, an attribute that they might be able to possess. And And no one's going to be able to do that job 100% until they're in the job. We know that, right? yeah We're assessing the best possible fit at the time. We're trying to find the best possible match of a candidate at the time. And I think that's really important if you, as a recruiter, have a client that comes to you with these kinds of assessments in the process. And let's say they've met that criteria. It's at the end of the process. They're being you know sensitive of the timeframe, all of those things. I think it's still worth being sensitive to ask some more detail about any assessments that your candidates are being given. So you can prep the candidate for one, obviously, but two, that you can actually make sure it is going to assess the candidate's skill and ability to apply the competency to the role, not just, you know, here's an outcome I produced and do they like the outcome or not?
00:21:50
Speaker
Yes. Yeah, no, completely agree. And this is something i suspect recruiters will have to, agency recruiters will have to be more vigilant around as the consequences for hiring become more significant and there's more senior people on the market. And how do you really differentiate? But then again, does it then show those that can really use chat GPT to produce outcomes? It's, I don't know. I think it's a it's a big can of worms here, Adele.
00:22:20
Speaker
Well, that's the interesting thing. As soon as you start asking candidates to go through what is essentially a written assessment here, they're asking for answers to these questions and production of of candidate details. It's very easy to just get your AI to do this now. So is it really assessing the person or not?
00:22:39
Speaker
Yeah, ah I hope. this is not a sign of things to come. I mean, this is something from the US. I've certainly not heard of this level of detail in Australia. I've certainly seen posts from people, particularly in marketing, where for senior marketing jobs, they're asked to compile a a brief that in many cases, sounds more like unpaid consulting work.
00:23:01
Speaker
But some i yeah I really hope this is not something that turns into another reason to take advantage of candidates, another reason to stretch out the hiring process and create unnecessary hurdles and unfair hurdles for candidates who are already stressed enough about trying to find a new job.
00:23:22
Speaker
And these are recruiters too. it's hard enough as it is. Yeah, we don't need to make it any harder. Yeah. So recruiters, be vigilant. If you have heard or have seen or have witnessed something like this, please get in contact with Adele and We'd be fascinated to know of any local examples you might have.