Appendix 1 Issues related to the business model commonly referred to as recruitment process outsourcing.

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1 Appendix 1 Issues related to the business model commonly referred to as recruitment process outsourcing. Description of model A business (A) offering management of a hirer s recruitment processes for temporary workers (agency staff) whether introduced to H either by A from its own candidate bank (method 1), or supplied by 2 nd tier employment businesses ( agencies ) (B) to A and thence supplied by A to H (method 2), or a combination of methods 1 and 2. We refer to A as an RPO. H is the Hirer. An RPO may also introduce permanent staff to H from its own or 2 nd tier sources but this representation does not relate to any aspect of permanent introductions. RPOs are sometimes also known as Vendors, whether Master (that also supply form their own resources) or Neutral (that agree not to supply from their own resources). RPOs may act for multiple hirers at any one time. RPOs are also sometimes referred to as Managed Service Providers. Method of operation RPO enters into an agreement with H to manage all or a significant identifiable part of H s work placement requirements for agency staff. H informs RPO of the agencies with which H currently deals. RPO agrees to deal with these agencies and others to arrange procurement. RPO agrees procedures, payment terms and rates of pay with H using RPO s own market knowledge to offer terms that are advantageous to H. Such terms normally include lengthy payment terms and low rates of margin charge. RPO interposes itself between H and the agencies and under authority from H requires agencies to enter into agreements with the RPO, taking over supply arrangements under existing agreements between the agencies and H which are then cancelled and replaced with a new contract issued by the RPO. The contract issued by the RPO to the agencies usually contains clauses that only oblige the RPO to pay the agency if certain conditions are complied with, wherever agencies have supplied workers who have undertaken work for H. In other words the conditions have the effect of allowing the RPO to withhold a payment which would otherwise be due for work done by the agency workers. Accordingly there is little or no certainty that the agency will be paid for that work done within any specific timescale.

2 Effect of delayed payment In practice actual payment for work done is never received from the RPO before the agency is obliged to pay the worker. Accordingly it is normal for agencies to arrange finance to enable them to meet the payment to the worker (so as not to breach R.12(a)) before receipt of payment from the RPO this is no different from dealings with any other hirer. However because of the PWP clause the obtaining of finance becomes more difficult. Finance can take a number of forms. Most common is the use of invoice discounting and factoring, where an invoice raised is used as collateral for a payment or loan from the finance provider. Where dealing with non RPO hirers the debt period is the known payment period agreed under the contract with the hirer. The invoice discount and factoring arrangements are therefore straightforward, subject only to normal credit approval processes. In the case of an RPO agreement with a PWP clause however the payment period is wholly uncertain and indeed it is possible that payment may be significantly delayed and in some cases may not be paid at all. The risk to the lender is therefore much greater resulting in more stringent lending terms. Delayed payment can also result in refactoring, a common arrangement with invoice discounting and factoring under which if an invoice is not paid after 120 or so days the debt is taken from other payments related to other invoices for work done by other agency workers. This compounds the problems for the agency concerned, and puts payment to the worker and the success of the agency itself at risk. The conditions, examples of which are included in Appendix 1a and referred to below, are argued by RPOs to amount to commercial clauses that agencies are free to accept or decline. However if they do not accept them the result is usually the loss of the agency s business with H, in many cases the RPO or another agency taking over the workforce previously supplied by the agency. Other factors There have been some examples of company failures arising from or partly from RPO arrangements. Most notably in January 2013 in the case of the following companies: 2E2 group Morse Group Diagonal Quest

3 Failure of an RPO, which often has a light balance sheet and which may operate separately from its main brand owner, also can arise from non-payment by hirer 1 of significant sums when agency workers are supplied to hirer 2. Further, anomalies can arise in relation to insurance. For example an employment business may take out credit insurance against a debt owed by an RPO. Terms may be more stringent in the first place. The RPO may also take out insurance against the debt owed by the hirer for the same supply. If the hirer collapses both the RPO and the employment business can claim on the insurance and there are two payments out by the insurer for a single supply because under PWP terms the RPO need not pay the agency when it receives the insurance payout (resulting in pure profit for the RPO). Ruling out PWP clauses would overcome this problem. Supporting evidence We have included at Appendix 2 an from Towergate Insurance which has entirely separately from our membership expressed its concerns about the RPO model. In addition evidence that there is a real problem arises from the fact that APSCO produced a code of conduct for RPOs and MSPs two years ago seeking to address issues arising from payment terms. Apart from the issue that this code has no teeth and appears to simply be a cosmetic exercise, RPOs that have signed up to the code do not appear to have changed their practices. One ARC member ( 100m turnover) told us that when dealing with the head procurement manager of a significant RPO which had publicly claimed to have signed up to the APSCO code the manager said he was not even aware of its existence, and was not prepared to consider it. ARC has carried out extensive enquiries of members concerning this issue. All members surveyed, 12 in total in combination supplying more than 10,000 agency workers, confirmed that they have turned away RPO business because of onerous restrictions and terms (thus precluding hirers from access to their workforce), banks have refused to accept RPO terms as adequate for security, firms have taken on RPO business only because they are big enough to self-finance (implying that lesser businesses have problems in obtaining finance and are prejudiced by the onerous terms), firms have had candidates transferred away when an RPO has interposed (thus forcing agency workers to change agency), firms in several cases have lost business in excess of 1m per annum, workers have been forced to transfer, workers have been forced to operate through umbrella models.

4 Some ARC members themselves operate as Vendors/RPOS as part of their business mix, but nevertheless attach to our representations. ARC members attending meetings with BIS officials during March 2013 gave direct evidence of the impact of RPO offerings on operations. Examples of conditions clauses and their effect A. Pay when paid (PWP) The most prevalent and onerous clauses relate to straightforward payment terms. The RPO requires the agency to accept a provision that the RPO need only pay the agency for its charge for work done by each supplied agency worker after H pays the RPO for that work, excluding liability for payment otherwise. This is known in the industry as a pay when paid clause. We have provided with this representation copies of extracts from various agreements in which we have identified these clauses. Indeed our legal advisers Lawspeed advise that their standard vendor agreement includes the PWP provisions which they have included to comply with demand from clients. The existence of a PWP clause means that the agency has no certainty as to payment for work done by its supplied agency worker or for its profit. However R.12 (a) of the Regulations prohibits the agency from withholding payment to the worker on the grounds of non-receipt of payment by the hirer (in this case the RPO). There are regulations that require all employers and workers within strict time limits i, common law also implies reasonable payment terms into contracts of service and contracts for services, and R.15 requires the agency to agree payment intervals with the work seekers. We have explained the effect of delayed payment above. Working with an RPO using these terms results in low margin, high cost finance, high risk service resulting in greater chance of failure by the agency and thus greater chance of non-payment to the agency worker. B. Restrictions on assignment of debt. These clauses mean that an agency cannot assign the debt due under an invoice to a third party. Since assignment of debt is critical under factoring and invoice discounting arrangements the clause has the effect of restricting the ability to raise finance to pay the workers. This in turn can exclude an agency from the market place thus in turn excluding the opportunity for candidates of the agency to find work with any hirer represented by the RPO.

5 There can be no reason why such clauses exist save for purely commercial reasons. It is thought unlikely that the Hirers will be aware of the existence of these clauses. We have heard over time that some RPOs use the restriction to encourage agencies to use the RPOs own finance services. See also comment under G. C. Requirement to provide charging information via an electronic portal within strict time limits. RPOs mainly use electronic portals for the collection in of data for timesheets. An agreement may require that data is loaded within a timescale failing which the RPO may not pay for the work done. Where an agency worker does not provide the agency with a time sheet within the required timescale the agency cannot load the data on the RPO portal, as a result of which the agency may not be paid, despite the fact that the work has been provided. This again can prejudice payment to the worker, albeit the worker may himself be at fault. However late submission of information by the worker does not preclude payment by the agency. D. Absence of obligation to make claims promptly from hirer. Whilst all the agreements we have reviewed contain some kind of payment terms, some agreements do not place any obligation on the RPO to process and submit claims by the agencies for work done by the workers. Where there is a PWP clause this can add to the problem of late payment, but in any event the agency is left with no recourse of the RPO fails to process the claim promptly. Again payment to workers can be prejudiced if payments are not made or are late because finance is put under pressure and runs out. E. Unlimited allowance for delay on payment for technical reasons. A provision that allows an RPO to delay payment because of the failings of its own IT system once again creates uncertainty and puts payment to the worker at risk for the reasons already indicated above. Whilst it could be said that this and other provisions are commercial terms, the reality is that the impact is on pay to which a worker is entitled for work to be done.

6 F. Exclusion of right to contact the Hirer. In many cases an RPO interposes itself between an existing hirer and agency relationship. In other cases an RPO may find new agencies to supply a hirer through the RPO system. Either way, whilst the RPO will represent to the hirer that it will maintain good relations with each agency, the hirer is not necessarily aware of the impact of the arrangements on its resources. It may be attracted to the idea that the RPO will handle all enquiries, the low margins on offer and the attractive payment terms, but the reality is that the hirer is effectively precluding itself from contact with the agencies that are locating, supplying and paying the workers. When problems arise the restriction on contacting the hirer can result in the hirer failing to become aware of real issues affecting part of its workforce. Further, under the AWR agencies supplying workers must obtain information about comparable rights and facilities, including in relation to pay, in order to ensure that the agency workers rights are delivered properly. From our investigations every member we have spoken to has said that the RPO that it is dealing with fails to provide any information relevant to the AWR. This type of clause therefore permits RPOs to operate without fear of any complaint to the hirer, and precludes the agencies from obtaining information about the AWR thus likely to interfere with agency workers rights. G. Requirement on agency to use another service provided by the RPO or connected with the RPO. There have been recent examples of this. We have already referred to the restriction on assignment of debt, which can be used to encourage an agency to take up finance services offered by the RPO. However the most recent example involves an RPO requiring its agencies to ensure that their workers are employed by an umbrella company that is operated by the RPO or a company connected to the RPO. This last example demonstrates how an RPO can abuse its dominant position in the marketplace. Not only is it offensive to force an agency to breach the existing Regulations (R.5) since under this model the agency would have to insist to an agency worker that it works through the RPO umbrella company (i.e. make its work finding services conditional upon using other services for which a fee is not prohibited (R.5(1)(a)), but it is at the same time precluding choice from the agency workers

7 concerned, who may not wish to operate through or be employed by any specific umbrella company or by any umbrella company at all. It is understood that the rationale for this last example is based upon improving standards and ensuring compliance. This could be the explanation provided to hirers by the RPO. However the reality is that the agencies by default are not non-compliant, and there is no default evidence of poor standards by agencies (if there were surely the hirer and RPO would not want to deal with them). In summary RPO As RPOs have a dominant position they are able to threaten and take away business from 2 nd tier agencies, either taking up the workers themselves, or allocate them to more favoured agencies, unless the agencies comply with the RPO terms. The RPO wins business partly because it can offer lengthy payment terms to hirers and lower margins based on volume. The prejudice to agencies at least partly because of R.12 without which agencies would themselves be able to offer longer payment terms. This resulting current model adopted by some if not many RPOs has no regard for choice for the worker and as we can see from the example clauses can act against the best interests of the worker in various ways, as well as prejudice well run agencies and damage the interests of hirers. There is no criticism of the model in any respect other than in relation to provisions that affect payment, since we recognise the obvious advantages to hirers in terms of efficiencies that the model offers. Background and How to address the RPO issue Background RPO a new issue. The problem of RPO s payment terms did not exist as an issue prior to the 2003 Regulations. However issues for employment businesses arose as a result of the introduction of the restriction on withholding payment from a work seeker at R.12. Further, in 2003 the RPO model was relatively new and it is not clear that it was considered at all in the consultations at that time.

8 Those drafting R.12 were careful to ensure that the restriction on withholding payment was on several grounds including any matter within the control of the employment business, so that employment businesses could not evade the obligation to make payment. The protection for the work seeker was secured, but the ramifications for those dealing with RPOs were not immediately clear. Once this restriction was in place it became hard for employment businesses to agree lengthy payment terms with hirers without taking out costly finance. However the restriction only applies to employment businesses that supply work seekers ii. Organisations that do not fall within this definition are not bound by R.12 and in particular in any event are not liable to work-seekers, they are therefore able without financial deterrent to offer longer payment terms, their only restriction being commercial namely whether they could impose terms on 2 nd tier agencies without losing candidates for their hirers. RPOs are not employment businesses. This is because they are not in the business of supplying persons in their employment. Nor arguably do they provide work finding services as defined in the Regulations, yet they do provide work finding services in the everyday understanding of that phrase as they help agencies with the task of finding work. They are plainly offering a recruitment service to their hirer clients, yet they are careful to avoid acting as legal agents for the hirers, instead taking a place in the supply chain. Some RPOs have become more aggressive and willing to exploit their advantages to hirers since This is based upon the fact that they have no statutory obligation to make any payments within any time scale and there is no restriction on the provision of additional services from which RPOs can achieve greater profit. Whilst it could be said that hirers also have no statutory obligation it is rare for a hirers to include withholding provisions that exist in typical RPO contracts and agencies dealing with hirers always have the chance to negotiate or not accept the business before it is commenced, whereas an RPO interposing can change terms after supply has commenced. It is not clear at all that hirers condone or understand the entirety of the arrangements offered by some RPOs but even if they do perhaps they do not recognise all the ramifications. These include the potential of limiting their access to talented workers (as niche businesses decline to deal with the RPO), the possibility of loss of existing workers (for the same reason) limitation of the early

9 identification of problems, a breakdown in the communication chain notably in respect of requirements under the AWR as well as otherwise. Whilst communication issues cannot be addressed there is a need to ensure that payment terms and additional conditions for payment are fair for all in the supply chain so that workers and agencies are not prejudiced. The solution we suggest is as follows. How to address the RPO issue In posing our suggestions in this area we have considered updating terminology, at least partly taking our cue from terms used in the AWR. We have excluded any reference to the services of an employment agency for the purposes of this exercise. Our objective is to demonstrate that a fair result can be achieved without significant change, and at the same time we provide some ideas that could help towards reframing the regulations in any event. We suggest the following: 1. Change the definition of employment business ; remove work finding services and work seeker and change to recruitment services and agency worker ; Include definition of supply and hirer. As follows: Employment business means a business that is in the business (whether or not for profit) of providing recruitment services and supplying agency workers to work for and under the control of any person. [note reference to having a contract is removed as unnecessary - note also that the inclusion of recruitment services within the definition excludes umbrella companies from scope iii ] recruitment services means the services (whether by the provision of information or otherwise) provided to any person for the purposes of filling a work position under which a person filling it is an agency worker. [Note reference to acting for and under control of a hirer in the current definition of an employment business is removed from this section, and the shift to services to any person, namely whether hirer, another agency or an agency worker; also that recruitment services requires there to be an agency worker and thus applies only to temporary work.] agency worker means an individual who is supplied by an employment business to work temporarily for and under the supervision and direction of a hirer, but an individual is not an agency worker if the contract the individual has with any person has the effect that the status of that person in respect of the services provided is that of a client or customer of a profession or business carried on by the individual. [Note that we have taken this wording and modified it from the AWR. Note also that there is a terminology conflict here as the AWR refers to supervision and direction whereas the

10 Regulations refer to acting for and under the control of a hirer. We have also excluded anything to do with personal services since services are always personal save where the contract is a business to business contract. We have included reference to business to business contracts, again taking our cue from the AWR R.3(2) which we have modified to make simpler, subject of course to your view on how you wish to deal with limited companies and opt outs, i.e. R.32. However as mentioned in the executive summary we do not think that any business to business or opt out arrangement should be capable of affecting arrangements between one employment business and another.] supply means any arrangement under which an agency worker is contracted, whether directly or indirectly, to provide services temporarily to a hirer under which the hirer is not a party to the contract with the agency worker [Note this means that introductions of permanent employees and temporary direct hire (both where the hirer engages the worker direct) are thus excluded from the meaning of supply ] hirer means a person to whom individuals are supplied, to work temporarily for and under the supervision and direction of that person [note this taken from the AWR but reference to economic entities have been removed] 2. Change R.12 as follows An employment business shall not, (1) in respect of a work-seeker an agency worker whom it supplies to a hirer, withhold or threaten to withhold whether temporarily or otherwise or whether directly or indirectly from the work-seeker agency worker or another employment business involved in the supply of the agency worker (whether by means of the inclusion of a term in a contract with the work-seeker or otherwise) the whole or any part of a payment in respect of work done by the work-seeker agency worker on any of the following grounds [Note that this does not apply to margin payments, only payments for work done by the agency worker] - (a) non-receipt of payment from the hirer or any party responsible for payment in respect of the supply of any service provided by the employment business to the hirer or another employment business [Note we have included any party to avoid the situation where payments are pushed through another party that is not an employment business]; (b) the work-seeker's agency worker s failure to produce documentary evidence authenticated by the hirer of the fact that the work-seeker agency worker has worked during a particular period of time, provided that this provision shall not prevent the employment business from satisfying itself by other means that the work-seeker agency worker worked for the particular period in question; (c) the work-seeker agency worker not having worked during any period other than that to which the payment relates; or (d) any matter within the control of the employment business.

11 (2) make a contract with another employment business either directly or indirectly, expressly or impliedly, conditional upon the use by the other employment business of any additional service for which a charge is made, whether provided by the employment business or otherwise [note this addresses contracts that require a party to use an umbrella or a finance service, or making payment for the use of the RPO s online system which is clearly integral to the RPOs service overall] (3) include any term within a contract with another employment business (a) that provides for payment dependent upon receipt of payment from any other party or conditional upon any event other than a specific period of time after a claim is made for payment in respect of work done by the agency worker.[note that this leaves the RPO able to propose payment terms of any length so long as they are not conditional upon payment from a hirer. Note also we have suggested that the payment terms must declare a specific period for payment after a specific point, namely a claim for payment is made using general terms. We avoid referring to an invoice date or anything that suggest validity of a claim (e.g. we will only pay you on valid claims in accordance with our policy ). This is because our advisers have seen cases where payment has been refused on the basis that the format of a claim has not been correct or does not work with the RPOs electronic system. There is no reason why an RPO should not require claims to be made in a specific format but it is all too easy for an RPO to delay or refuse payment on the basis of non-conformity (Lawspeed has seen one case where this reason was used and the agency had to write off 250,000). This will encourage RPOs to permit formats for claims that are easy for agencies to use. If however there is dispute this should not justify nonpayment by the hirer of amounts for the work done, leaving the parties to argue over the margin payments only against the backdrop that all parties should want to continue working together.] (b) that restricts, whether directly or indirectly, the ability of the other employment business from obtaining finance secured against debts due or which may become due from the employment business for the supply of an agency worker [note this addresses contracts that impose restrictions that have the effect of precluding the obtaining of finance, thus resulting in the take up of finance offered through the RPO. We have included both (2) and 3(b) in order to avoid attempts at circumvention]. We believe this would achieve the objective as it would draw in any and every intermediary involved in the supply chain, yet allow for continuing RPO single point services on a fair and proper basis. There is precedent for ruling out pay when paid clauses in the construction industry, as referred to in the extract at Appendix 2.

12 Appendix 1A EXTRACTS FROM RPO CONTRACTS References to specific organisations have been removed to preserve commercial confidentiality and the same terms used throughout for clarity: A. Pay when paid RPO will pay the Agency within ten (10) business days of RPO receipt of payment by the Client for the Work performed on an Assignment. The Agency agrees that RPO shall have no liability whatsoever to pay the Agency other than to the extent that RPO has received corresponding payment from the Client. The Agency further agrees that the Client has no obligation to pay Agency and may not pay any invoices raised by Agency in connection with the supply of any Contingent Workers supplied by the Agency to Client other than through RPO under this Agreement. RPO will, provided it has a valid VAT invoice from the Agency and the relevant corresponding invoiced and undisputed sums from the Client, and subject to not receiving instruction from the Client to do otherwise, pay the relevant invoiced amounts to the Agency within 8 Business Days of receipt of the Invoiced Amounts from the Client. The Client has agreed to pay the relevant corresponding invoiced sums to RPO within 30 days of date of RPO s invoice to the Client. In no circumstances shall RPO have any liability to pay the Agency any sums unless and until it has received such sums from the Client. RPO will process payment of all undisputed Fees on a monthly basis within 10 working days of receipt of payment of the corresponding cleared sums from the Client. RPO is on 45 day payment terms with the Client. RPO will pay the Agency s invoices subject to approval by the Client of the time worked, within 5 days of receipt of payment from the Client (or as otherwise specified in Schedule 4). And The Agency acknowledges and agrees that RPO will have no obligation to make payment of invoices submitted for work provided outside this timeframe unless RPO is able to claim back such Fees from the Client. And 4.5 RPO will not make any payments in relation to any Services or expenses arising there from that have not been provided by the Agency or that are not authorised or are disputed by the Client. Provided payment has been received from the Client, in respect of the Services provided by the Agency under this Agreement, the RPO shall pay the undisputed parts of the invoices within the time scale as set out in Schedule 3. If payment has not been received from the Client, no sums shall become due from the RPO to the Agency. For the avoidance of doubt this is a pay when paid contract; the RPO will pay the Agency within 14 days of receipt of payment from the Client. Upon receipt of an authorised timesheet, RPO will raise an invoice on behalf of the Agency and process payment in accordance with the Self-Billing agreement set out in Schedule 2. RPO will process payment of the Fee within 15 days of receipt of corresponding payment from the Client.

13 Appendix 1A/cont However, RPO shall not be liable to pay the Agency any amounts which have not been paid by the Client, although RPO shall use reasonable endeavours to recover any such amounts from the Client. In the week following the week that payment of an invoice is received from the Client, a downloadable file (self-bill invoice) will be posted in the Agency s section of the RPO Intranet (http\\ ) that corresponds to the payments made by the Client and payable to the Agency for the supply of Temporary Workers named in that invoice. The date of posting will be the Self Bill Posting Date, and it will usually be a Tuesday. subject to the RPO having received the corresponding payment from the Client, be payable by the RPO within 15 calendar days from the date the RPO receives payment from the Client. For the avoidance of doubt the RPO shall not be required to make any payment to the Agency until it has received the corresponding payment from the Client the RPO s liability for payment to the Agency is strictly limited to such amounts as the RPO have actually received from the Client with respect to Services rendered under this Agreement. B. Restrictions on assignment of debt. Neither party shall assign, transfer, subcontract, mortgage, novate or otherwise transfer or dispose of in whole or in part any of its rights or obligations under it without the prior written consent of the other party, such consent not to be unreasonably withheld or delayed. This Agreement may not be assigned or sub-contracted, in whole or in part to a third party, without prior written consent of RPO. And CLIENT SPECIFIED TIMESHEET AND INVOICING Process will be confirmed to the Agency upon engagement by the RPO Account Manager. RPO TIMESHEET AND INVOICING CLIENTS NOT USING ONLINE APPROVALS RPO will provide the Agency s Key Personnel with a login to the RPO Portal where they can download timesheets specific to their assignment. Any other format will not be processed. Submission of timesheets, invoices, expenses and supporting documentation will not be accepted by to any other address. Client authorisation RPO will not accept authorisation by and all timesheets will need to be signed if authorisation is not through online methods. Option 3 RPO TIMESHEET AND INVOICING CLIENTS USING ONLINE APPROVALS

14 Appendix 1A/cont RPO will provide the Agency s Key Personnel with a login to the RPO Portal where online timesheets can be completed and submitted for Client approval. Appropriate expense, etc. documentation can be downloaded to the portal here. Payment will be released to the Agency according to terms once Client approval has been received by RPO. The Agency shall not assign, sub-contract, or in any other way dispose of the Agreement or any part of it. This Agreement may not be assigned or transferred without the prior written consent of the other party and neither party shall sub-contract or delegate in any manner any or all of its obligations to any third party or agent, save that RPO may, without the consent of the Agency, assign all of its rights and obligations under this Agreement to any of its Group companies. Group shall have the meaning given to it by section 1261 of the Companies Act Agency may not subcontract, assign or delegate any of its obligations hereunder to any third party absent the explicit written approval of RPO. Notwithstanding such approval, Agency will remain in all instances responsible for the performance of any Agency Personnel, contractor or third party and will be solely obligated for all payment, compensation and expenses of any such contractor or third party. Agency will be responsible for any fraud perpetuated on RPO or RPO s Client by Agency Personnel or any subcontractor. Neither party shall assign, sub-contract or otherwise transfer all or any of its rights, obligations or liabilities under this Framework Agreement. Neither Party shall assign, sub-contract or otherwise transfer all or any part of its rights, liabilities or obligations under the SSA without the other Party s prior written consent, except that RPO may assign any right or remedy it has under the SSA to the Client. Neither party shall, without the prior consent of the other party, assign any of its rights or obligations under this Agreement or any part of this Agreement save that RPO may assign this Agreement to the Client or at the request of the Client to a third party nominated by the Client. C. Requirement to provide charging information via an electronic portal within strict time limits. the Agency shall [ ] enter all hours worked and expenses claimed onto recruitment technology or paper based system required by RPO and/or the Client. [ ] The foregoing shall be a condition precedent to the payment of the Fees. Following recruitment, the Agency shall ensure that the Consultant performs each Assignment with reasonable care and skill (to generally accepted industry standards and practices) and in a timely manner. In particular the Agency shall ensure or procure that each Consultant records and submits its timesheets, on each Friday and the last Working Day of the month (where the end of the month ends in the middle of a week), through RPO's electronic system known as "XYZ". The Agency shall not [ ] provide any temporary resource to RPO Clients other than through RPO's electronic system.

15 Appendix 1A/cont The RPO shall provide the training for the Agency in respect of the RPO System including but not limited to: Logging into the RPO System; Viewing vacancies; Submitting Candidates; Viewing and actioning interview requests; Viewing and actioning offer details; and Running reports. The self-bill invoice will be generated as a result of the information held in the RPO System. Do I have to sign-up to self-billing? Yes, it is a requirement supported by the Client that you would have to sign up in order to supply. In this case, any agencies not wishing to take up self-billing will not be able to supply in to the Client and regrettably a contract to supply couldn t be entertained. RPO will operate a self-bill system, communicating invoice details to the Agency via its website supplier.reed.co.uk on such date as is set out in Schedule 2 (self-bill posting date). Once RPO has posted it, it is the Agency s responsibility to access the self-bill. Payment will be transferred automatically by RPO to the Agency via BACS within the period set out in Schedule 2. If no period is set out, payment shall be made within forty five days of the self-bill posting date. The Agency agrees to (i) accept self-bill invoices for the duration of the SSA Invoices raised by the Agency s internal processes are not to be submitted to either RPO or the Client. It is a condition of this SSA that payment proceeds by way of the RPO self-bill invoicing system in accordance with the terms in this Schedule 2 and clause 3 of the General Conditions. The Agency agrees to operate a self-billing system as directed by the RPO. The Agency shall procure that any Contractor it supplies records the time worked on a weekly basis (using paper time sheets) or electronically (using RPO time recording system) as directed by RPO. D. Absence of obligation to make claims promptly from hirer. From agreements we have reviewed it is common for this obligation to be omitted. For example see text in italics in A above. Provided that the Agency complies with the Services reporting and Invoicing policies set out in Schedule 4 RPO will pay the Agency s invoices subject to approval by the Client of the time worked, within 5 days of receipt of payment from the Client (or as otherwise specified in Schedule 4). RPO undertakes to use all reasonable efforts to procure payment from the Client within the agreed payment terms which are available on request from RPO. E. Unlimited allowance for delay on payment for technical reasons. Without prejudice to the generality of the paid when paid provisions above, if The Agency submits timesheets for Temporary Worker Services provided to a Client more than 6 weeks after the provision of the Agency Services or Temporary Worker Services to which they relate, then RPO shall have no obligation to pay the Agency for such Temporary Worker Services. Invoices for Fees must be submitted within a maximum 45 days after the Services to which those Fees relate have been carried out by the Agency. And The Agency acknowledges and understands that no payment shall be deemed to be overdue unless the Agency has fully complied with the Dispute Resolution Process.

16 Appendix 1A/cont Should any sum be disputed, the RPO shall notify the Agency as soon as may be reasonably practicable. The Agency shall not suspend the supply of the Services due to delay or dispute regarding in payment. The Agency will be responsible for ensuring that Temporary Workers submit timesheets in a timely manner on the RPO System. The RPO will not be liable to pay for any time worked by any Temporary Worker where the timesheet has not been authorized via the RPO System on, or after, 28 days from the end of the working week in which the hours were worked, or, an expense was incurred RPO shall have no liability to make payment to the Agency where a timesheet is not submitted within 8 weeks of the period to which the timesheet relates. Prompt payment of accounts is conditional upon the receipt of timesheets/project reports that have been authorised by a duly authorised representative of the Client. The Agency expressly understands the following (as per the Conduct of Employment Agencies and Employment Businesses Regulations 2003): (i) There is under no duty to make payment for hours worked, unless it has received the relevant timesheet/project report from the Contractor, specifying those hours worked, which has been verified and signed/authorised on behalf of the Contractor. (ii) Payment may be withheld from the Agency on the sole basis that the relevant timesheet/project report has not also been verified and authorised by a duly authorised representative of the Client. However, the Agency understands and accepts that, as per the Terms of the Assignment, the failure to provide a Client-authorised timesheet/project report will lead to a delay in payment whilst the finance team conducts investigations into the hours claimed by the Agency, and the reasons that the Client has refused to authorise a timesheet in respect of those hours. (a) In the event that a timesheet/project report is received that has not been authorised by the Client, the contractor will be notified at the earliest convenience and request the Agency to resubmit the timesheet/project report, duly authorised by the Client, in order to ensure prompt payment. In the event that the Agency declines to submit a Client-authorised timesheet, the process in 4(b)(ii) shall apply. (b) Any missing details or discrepancies of addition that are contained within timesheets, project reports or invoices will lead to the incomplete or inaccurate documentation being rejected and sent back to the Agency, with a note of the missing detail or discrepancy. This documentation must then be corrected and re-submitted before it can be processed. F. Exclusion of right to contact H. All contact with the Client in connection with the Services will be through RPO, unless otherwise approved by RPO. [ ] A breach by Agency of this clause shall be considered a Material Breach incapable of remedy and shall entitle RPO to terminate the Agreement with immediate effect in accordance with clause or to lower the Agency s tiering status. All contact with the Client in connection with the Services will be through RPO, unless otherwise approved by RPO. [ ] A breach by Agency of this clause shall be considered a Material Breach incapable of remedy and shall entitle RPO to terminate the Agreement with immediate effect in accordance with clause or to lower the Agency s tiering status.

17 Appendix 1A/cont The Agency shall not contact the Client direct, however this does not exclude the Agency from entering into future tender bids. Where necessary, the Agency shall conduct all communications to the Client through nominated RPO representatives. G. Requirement on agency to use another service provided by the RPO No Temporary Resource shall be employed by an umbrella company [ ] without the prior written consent of RPO. It is understood that RPO operates an umbrella model. i See National Minimum Wage Regulations ii An employment business is currently defined as the business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity. Work- finding services are defined as services (whether by the provision of information or otherwise) provided - (a) by an agency to a person for the purpose of finding that person employment or seeking to find that person employment; (b) by an employment business to an employee of the employment business for the purpose of finding or seeking to find another person, with a view to the employee acting for and under the control of that other person; (c) by an employment business to a person (the "first person") for the purpose of finding or seeking to find another person (the "second person"), with a view to the first person becoming employed by the employment business and acting for and under the control of the second person; A work seeker is defined as a person to whom an agency or employment business provides or holds itself out as being capable of providing work-finding services. iii we can see no reason to include umbrella companies within scope as they do not provide work finding services they are a tax and employment vehicle for workers.