A workable code of conduct could be drawn up to improve payment conditions for recruiters when they supply labour to a client via a managed service provider (MSP) or recruitment process outsourcer (RPO).

This idea was put forward by most attendees at the Recruitment Supply Chain Business Forum, which took place last Friday (11 March) in London.

In a vote taken at the end of the Association of Professional Staffing Companies/Asset Based Finance Association event, 77% of the 160 attendees agreed that such a code of conduct could be put in place for suppliers (recruiters), MSPs/RPOs and end users to deal with current problems around ‘pay when paid’ clauses in labour supply agreements.

Under ‘pay when paid’ clauses, the MSP/RPO has no obligation to pay for the labour supply unless or until the end user pays it, and the recruiter has no knowledge of whether or not the end user has made payment. The use of such clauses has risen since the start of the global economic downturn, creating nervousness among financiers to the recruitment industry and difficulty for recruiters in obtaining finance.

Attendees at the morning event were also asked:

• Does the way that temporary labour is currently supplied create a level playing field for all participants in the market? (No, 68%; yes, 24%; undecided, 8%)
• Do the restrictions on the ability of suppliers to raise finance make the current supply chain practice unsustainable? (Yes, 80%; no, 13%; undecided, 7%)
• Would regulation of the contract chain assist the supply chain? (Yes, 57%; no, 32%; undecided, 10%)
• Would adoption of a code of practice assist with the participants’ ability to raise finance? (Yes, 64%; no, 21%; undecided, 15%)
• Should ABFA and APSCo carry on working to highlight this area of concern? (Yes, 99%; no 0%; undecided, 1%)

Read more about this event in the 23 March issue of Recruiter.