Temp to perm with a twist

Sterling Debt Recovery - case study series

Temp to perms are usually fairly simple cases, the candidate is taken on as a temporary worker or contractor on day rate, they reach the end of their placement, some time later you find they’ve been hired on a permanent contract, a transfer fee is due. This case is a little different.

Our client, an agency specialising in the education sector, placed a candidate as a temp with a private school for a 3 month period. All went well, the school paid the fees, but then in the second month the school’s headmaster contacted the agency to let them know that they wanted to take the temp on permanently. Our client informed them of the transfer fee, and even offered a substantial reduction, the headmaster wasn’t keen and said he’d go away and think about it.

Several weeks later the temp stopped submitting timesheets and called our client saying that she’d decided to work for the school via another agency. She explained that she wanted to go on a permanent contract with the school, but the headmaster was adamant that he would not pay a transfer fee. So she had checked the recruiter’s terms of business and had figured out that by moving to another agency and working via them for a further 6 months she would then fall outside of our client’s 9 month fee period, and could then sign a permanent contract without a transfer fee being due.

Whilst the temp and headmaster had been inventive and had gone to fairly extreme measures to avoid the transfer fee, they were also very misguided. The transfer fee would be due as soon as the temp moved to another agency.

Our client emailed the headmaster who was happy to confirm that indeed he had hired the temp via a different agency. Our client then called to explain that a fee would still be due, but the headmaster refused to accept it as he was convinced he had been clever enough to find a loophole. Our client invoiced the school for the transfer fee and the school refused to pay. Once the due date passed the client passed the debt to Sterling.

The recruitment sector is an odd one when it comes to bad debts, there probably isn’t another market where debtors are so regularly convinced that they are morally right not to pay for services rendered. In this case, for whatever reason, the headmaster had convinced himself that he’d paid the recruiter sufficiently over two months and should not have to pay a penny more.

Sterling sent a letter to the debtor setting out the case in full, and explaining precisely why the transfer fee was due in relation to the terms of business. We then followed this up with a call with the headmaster, explaining this again in detail over the phone. Whilst he was still struggling to accept that the debt was morally due, he was starting to appreciate that legally he did not have a leg to stand on. We gave the headmaster some time to seek advice and set a deadline for payment.

After a week of further discussions with the headmaster, in which he first insisted on paying only the discounted fee first offered, and then refusing to pay late fees, we finally convinced him that it would be in his best interests to pay the full amount due. Our client received the full transfer fee, plus late payment fees and costs of recovery. This meant that the headmaster effectively covered the cost of Sterling’s service.

The lesson in this case is for the headmaster and people like him. Recruitment terms of business have been tested for most eventualities over many years, and whilst there can be the odd weakness in them (see more details here), they are generally water-tight provided the recruiter complies with them. Trying to find ways of avoiding payment generally ends up being more expensive than just paying the fee due, if the recruiter is using the right debt recovery agency of course!

A note on our case studies:

You’ll notice that we do not publish the name of our clients on most of our case studies testimonials. Sterling’s debt recovery service is provided in a confidential manner, in most cases our client prefers that we do not use their name due to the customer relationship sensitivities involved.

Sterling are happy to arrange reference site calls on request, usually with a client working in the same or similar sector. If you would like to speak to one of our clients please contact us to discuss your requirements.

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