Several prominent graduate recruitment companies have scrapped “exit fees” that threatened newly-hired staff with charges of thousands of pounds if they quit, after they were criticised for “trapping” young people.
FDM, QA Talent and Sparta Global, which recruit, train and supply thousands of workers to organisations such as HSBC and government departments, previously issued contracts that left employees on the hook for thousands of pounds in training costs if they quit before the close of their initial two-year contracts.
But after pressure from campaigners, FDM and Sparta said no one will be liable to pay the fees while QA Talent said they would only apply in exceptional circumstances.
The decision frees potentially thousands of employees from the threat of fines if they leave their roles, bringing a tentative end to what campaigners have called a “scandal” in graduate recruitment.
However several other companies known to charge fees, including Kubrick Group which places recruits with AstraZeneca, have not indicated any change in policy.
Kubrick said it assessed individual circumstances before deciding whether to ask recruits to pay a “portion of costs” if they left. AstraZeneca declined to comment.
Tanya de Grunwald, who spearheaded a campaign against exit fees, said in the last four years she had heard from “hundreds of graduates trapped by exit fees, in jobs they hate”.
Companies such as FDM operate a “recruit, train, deploy” model, hiring young graduates, or career-changers, training them in in-demand skills areas such as technology, and placing them in large companies as consultants.
FDM says it plugs skills gaps for employers while offering trainees a route into a lucrative career. However, they have been criticised for “exit fee” clauses in contracts, which mean new hires were liable to reimburse some training costs if they left within their two-year contracts.
In a petition signed by more than 6,000 people and calling on the government to take action on exit fees, one FDM employee said they were “not free to leave” without paying the fees.
FDM disputed some of the details of the petition, and said it had not pursued graduates for fees for several years.
De Grunwald said exit fees had had a debilitating effect on graduate mental health. “This was always about fear, and making the graduates believe they were trapped,” she said.
In correspondence seen by the Financial Times, FDM on Tuesday wrote to graduates stating that all consultants joining from April 1 had signed new contracts that no longer allowed FDM to “request a contribution” towards training costs if they left within two years.
It said that contracts issued before April allowed FDM to demand reimbursement, but that no payments had been made “for several years”.
“The opportunity to join FDM and become an IT professional continues to attract record applications,” the recruiter said in a statement. “We have been evolving the way we work with our employees for some years now and changing the way we work.”
Sparta confirmed former and current employees were no longer bound to pay exit fees and had been clearly informed they would no longer be enforced.
“The removal of exit fees is just one part of Sparta Global’s evolution into a social impact business that wishes to remove all perceived barriers to entry for individuals looking to work in tech,” it said.
QA Talent in March wrote in a blog that it was “no longer charging repayment exit fees . . . except in exceptional circumstances”.
De Grunwald said more needed to be done to improve oversight given that so many managers had “turned a blind eye” to exit fees.
“Big companies need better ways to scrutinise and dump bad suppliers,” she said. “They accept responsibility for international partners — yet ignored a scandal right under their noses here in the UK.”