What Are The Pitfalls Of Recruiting Into Certain Sectors?

The recruitment industry is so versatile that placements can be made into any sectors that have a vacancy.  Although most placements only require the agency to fulfil the clients requirements from a job specification and complete a limited amount of compliance (i.e. reference checking and ID checks), there are a few industries that are not so simple to fill a role and require a more in-depth understanding of both the roles and further compliance checks.  There are also additional pitfalls that need to be taken into consideration in some sectors in to minimise any loss of profit, or expose the agency to any risks from HMRC.

Before an agency start to venture into any new sector it needs to ensure that it can meet the demands set by the compliance required (as there may be initial costs and lead times on certain documents) and also ensures that it is aware of any restrictions when it comes to recruitment.

Below are 3 industries that we have identified to have certain restrictions and pitfalls that need to be taken into consideration when making placements:-

  • MEDICAL AND HEALTHCARE – The medical and healthcare sector is currently in need of qualified staff to fill the shortages that we hear about every week on the news.  However, making placements in this sector is easier said than done due to the large levels of compliance required to place a qualified candidate and the restrictions of placing staff if you are not on a government framework.  The compliance required to place a candidate include DBS checks, immunisations, references, qualifications, GMC/NMC checks, insurance and training to name a few which all takes time to collate and also needs renewing.  The Government Frameworks are PSL agreements which allow agencies to be able to place candidates within certain NHS hospitals and trusts, and are monitored and audited on a regular basis.  If you are not on a Government Framework then making placements within the NHS can only be done with hospitals and trusts who are not registered on a framework, or who are willing to make a placement outside of this PSL – these are few and far between.   If an agency is on the framework they will also be restricted by the margins they can make which often means they need large volumes of contractors/temps in order to turn a large enough profit margin on their agency.
  • CONSTRUCTION – The construction sector currently appears to be booming currently – you only need to look at the number of cranes on a city skyline or the number of housing projects in your local area to see this. However, making placements in the construction industry can be riskier due to the credit history of the sector and the Construction Industry Scheme (CIS) when receiving funds and paying contractors.  The credit history risk on the sector is due to the number of company closures during previous recessions and also the unfortunate fact that construction companies are not the best payers and will often have restrictions on agencies using factoring arrangements.  The CIS element also can affect the cash-flow of new start up construction recruitment agencies due to the clients holding back 20% of the funds due on invoices until the agency has obtained its “gross status” from HMRC.
  • EDUCATION – The education industry, like the medical sector, is often in the news due to shortages of teachers and teaching assistants in the class rooms, meaning that agencies can be vital to plug the gap. However, similar to the medical sector, in order to make a placement there is an element of compliance that needs to be collected prior to a placement being made and the agency has to ensure they can survive outside of term times.  Although the compliance on teaching placements is less than required on a medical placement, it is still time consuming and needs to be renewed at regular intervals while a contractor is registered with your agency.  Also, the teaching year is only based on 39 working weeks compared to all other sectors mainly basing themselves on 48 working weeks, and the holidays weeks are similar across all schools.  This means that during the month of August there is little to no recruitment able to be done, which means no profit generated so the agency needs to plan for this in advance.

TBOS works with many different agencies who recruit into a variety of sectors and offers any help and advice it can to ensure they are making their placements compliantly and abiding by any requirements set by the government or HMRC.  TBOS also has experience of working with construction recruitment agencies to ensure they remain compliant within the Construction Industry Scheme.  Also due to the TBOS fee structures, it ensures that education agencies do not have fees due when their teachers and teaching assistants are on school holidays.

For more information on how TBOS can offer help and advice to agencies moving into new recruitment sectors, please contact our office.