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Post pandemic considerations for recruitment businesses

The outlook for the recruitment sector holds considerable uncertainty due to the COVID-19 outbreak. As lockdown eases, many within the sector will face challenges and opportunities that can make or break them – and all paths will likely lead to increased risk.

Prior to the outbreak, many industries were experiencing talent shortages. An evolving Brexit environment meant more employees were staying in their roles for security, and in turn, there were less candidates in the market.

Now, after a 3-month lockdown and a stark outlook for sectors such as hospitality, the landscape is very different. Changes to the UK’s furlough scheme mean employers are finding retaining staff unsustainable and many have had to let workers go. To add to this, companies going through rounds of redundancies will find it much harder to justify hiring permanent placements.

These factors are causing a glut of talent for recruitment firms, far less demand for workers, and an overall push towards temporary placements. Together, these challenges are creating a tipping point for firms in the recruitment sector and how it is addressed could drastically affect their risk profiles.

Placement challenges and hirer terms of business during the pandemic

The hirer has a duty of care to provide a safe workspace for temporary recruits. However, the current environment places hirers in a leveraged position: There may be occasions where the hirer chooses to amend terms of business to divest some liability onto the recruiter.

It is essential during testing and highly competitive times to ensure that you understand and are comfortable with a hirer’s terms of business. Speak with your broker about any changes to terms of business to see if they may affect your liability.

Diversification for survival - COVID-19 challenges

For recruiters that currently specialise in sectors heavily impacted by COVID-19, such as hospitality, opportunities for diversification may be necessary for survival. 

Catering for a new sector may also come with a new set of challenges and risks. You must consider any regulation related to working in that sector. In addition, you will need to find out if workers need additional training or certification to operate in these sectors. This is likely if there are safety-critical aspects to the new area of work.

It is essential that you inform your insurer when you choose to diversify into different sectors. You will need to ensure that your current recruitment insurance coverage service this new area, particularly if it is a sector with higher risk. For some sectors, you may need specific insurance; not having it could nullify a future claim.

When exploring diversification, consider your level of penetration in that space; weighing possible additional insurance costs against a limited number of placements may highlight unviable avenues.

These are trying times for many, and the future of the recruitment sector is dependent on how other sectors bounce back. For those recruitment firms for whom survival is key, taking measured steps forward will be necessary.

For more information on being prepared for the post-pandemic world, read our in-depth report.